AO World chief defends lacklustre flotation

The founder of AO World has defended the online appliance retailer's flotation as the shares languished below their offer price.

Reporting his first set of results since February's initial public offering (IPO) John Roberts said institutional shareholders, including Aviva and hedge fund manager Crispin Odey, were happy with their investments.

"They are not trying to make a flip with us in eight weeks. These are high quality investors. These are not thick people," he said. "People who speculate in short-term returns on a pop at our IPO I can't get too concerned about. They don't give a shit about me so I don't give a shit about them."

Annual operating profit before the £15.4m cost of the IPO fell 2.4% to £8.2m on revenue up 40% to £385m. Including IPO costs AO made a £7.2m loss.

AO, which sells kitchen appliances and televisions online from its warehouse in Crewe, floated at 285p a share. The price soared on the day of the IPO, valuing AO at almost £1.6bn, but the shares have traded below the offer price since 10 April. They fell a further 5% on Thursday to 248p, valuing AO at £1.04bn.

AO was the first retail IPO of a year in which a series of retailers have listed on the stock market. But investor appetite has cooled after various newly listed shares dropped below their IPO prices. Roberts, who founded the business in 2000 for a bet, made £86m by selling some of his shares before the flotation.

Setting out plans to open in Germany, Roberts said Europe was ripe for his combination of low prices, reliable delivery and good customer service.

"I think the German consumer is just as logical as UK consumers. People ask how can a business be valued at that when you make 11m quid. But if you believe in that [growth in Europe], wow it's cheap."

AO's earnings before interest, tax and other costs were £11.2m.