IFRS Re-Statement 2005/2006
ASOS PLC
24 November 2006
FOR RELEASE 7.00 am 24 November 2006
ASOS plc
('ASOS' or 'the Company')
(Leading online fashion retailer)
IFRS RE-STATEMENT OF 2005/2006 RESULTS
Ahead of the interim results to be released on Tuesday, 28 November 2006, ASOS
today releases financial information prepared under International Financial
Reporting Standards (IFRS) for the twelve months ended 31 March 2006 and
explains the impact of the adoption of IFRS on these results.
Under IFRS, ASOS's Profit before Tax and Amortisation for the year ended 31
March 2006 reduces from £1.65m under UK GAAP to £1.53m under IFRS. Profit before
Tax increases from £1.42m to £1.53m. Net assets at 31 March 2006 increases from
£4.98m to £5.46m.
It is estimated that the adoption of IFRS in the financial year ending 31 March
2007 will reduce Profit before Tax and Amortisation by £350,000 and reduce
Profit before Tax by £120,000.
The adoption of IFRS represents an accounting change only, and does not affect
the underlying operation of the business or ASOS's cash flows.
Interim results for the 6 months to 30 September 2006 prepared in accordance
with IFRS will be announced on Tuesday, 28 November 2006.
ASOS plc
Nick Robertson, Chief Executive Tel: 020 7240 7070
Jon Kamaluddin, Finance Director
Website: www.asos.com
Cubitt Consulting
Brian Coleman-Smith / Nia Thomas Tel: 020 7367 5100
Seymour Pierce
Mark Percy / Nicola Marrin Tel: 020 7107 8000
Background note:
ASOS plc is an Internet Retail and Marketing Services Group, established in June
2000 and admitted to AIM in October 2001. Its principal business is ASOS.com, a
leading online fashion and beauty retailer. Aimed primarily at an Internet savvy
18-34 year old, ASOS had over 1,075,000 registered users at 10 October 2006 and
offers over 4000 products across womenswear, menswear, footwear, accessories,
jewellery and beauty.
ASOS PLC
Explanation of the financial impact following adoption of IFRS
1). Introduction
The Interim Financial Statements for the 6 months ended 30 September 2006 will
be prepared using accounting policies consistent with International Financial
Reporting Standards (IFRS) for the first time. The comparative information in
those financial statements must be restated to IFRS and a reconciliation of the
differences disclosed. The disclosures required by IFRS 1 concerning the
transition from UK Generally Accepted Accounting Practice (UK GAAP) to IFRS are
set out below in schedules a) to e) of section 3. Reconciliations from UK GAAP
to IFRS of ASOS's net assets at 1 April 2005, 30 September 2005 and 31 March
2006 and ASOS's net profit and loss for the 6 months ended 30 September 2005 and
year ended 31 March 2006 are also included. The next annual financial statements
of the Group will be prepared in accordance with International Financial
Reporting Standards as adopted for use in the EU.
The IFRS standards that principally affect adjustments between UK GAAP and IFRS
are:
IFRS 1 - First Time Adoption of International Financial Reporting Standards
IFRS 2 - Share Based Payments
IFRS 3 - Business Combinations
IAS 19 - Employee Benefits
IAS 12 - Income Tax
IFRS 1, First Time Adoption of IFRS, outlines how to apply IFRS for the first
time. ASOS's transition date is 1 April 2005, and the standard permits certain
exemptions from the full requirements of IFRS at that date.
2). Exemptions
ASOS has taken the following exemptions or options available as at transition
a). Business Combinations
ASOS has taken the option not to restate business combinations that occurred
prior to 1 April 2005 on an IFRS 3, Business Combinations basis. Consequently,
goodwill balances relating to ASOS's acquisitions have been frozen at 1 April
2005.
b). Share-based Payments
ASOS has applied IFRS 2, Share-based Payment only to equity instruments that
were granted after 7 November 2002, and which had not vested before 1 April
2005.
3. Reconciliations to International Financial Reporting Standards
a) Consolidated balance sheet as at 1 April 2005, IFRS reconciliation
UK GAAP UK GAAP IFRS IFRS
(1) (ii) (iii)
Presentation Share Employee Total
Options Benefits IFRS
Fixed Assets
1,248,482 1,248,482 1,248,482 Goodwill
Intangible Assets 1,248,482 (1,248,482) (1,248,482) - Intangible
Assets
Tangible Fixed 327,315 327,315 Property Plant &
Assets Equipment
270,000 270,000 270,000 Deferred Tax
asset
_______________________________________________________________
Fixed Assets 1,575,797 270,000 - - 270,000 1,845,797 Non Current
Assets
Current Assets
Stocks 1,587,308 1,587,308 Inventories
Debtors 1,216,615 (270,000) (270,000) 946,615 Trade & Other
Receivables
Cash at bank and on 2,059,581 2,059,581 Cash & Cash
hand Equivalents
_______________________________________________________________
Current Assets 4,863,504 (270,000) - - (270,000) 4,593,504 Current Assets
(273,446) (273,446) (273,446) Current Tax
Liabilities
Creditors: amounts (2,827,586) 273,446 (17,382) 256,064 (2,571,522) Trade and other
falling due within 1 Payables
year
_______________________________________________________________
(2,827,586) - - (17,382) (17,382) (2,844,968) Current
Liabilities
Total Assets less 3,611,715 - - (17,382) (17,382) 3,594,333 Total Assets
current liabilities less current
liabilities
Creditors: Amounts - - - Non Current
falling due after 1 Liabilities
year
_______________________________________________________________
Net Assets 3,611,715 - - (17,382) (17,382) 3,594,333 Net Assets
===============================================================
Capital and Reserves
Called up share 2,511,026 2,511,026 Ordinary Shares
capital
Share premium 2,995,931 34,936 34,936 3,030,867 Share premium
Profit and loss (1,895,242) (34,936) (17,382) (52,318) (1,947,560) Retained
account Earnings
- Other Reserves
_______________________________________________________________
Shareholders' Funds 3,611,715 - - (17,382) (17,382) 3,594,333 Shareholders
(All equity) Funds - Equity
===============================================================
b) Consolidated Income Statement reconciliation for the year ended 31 March 2006
UK GAAP UK GAAP IFRS IFRS
(i) (ii) (iii) (iv)
Share Employee Deferred Total
Goodwill Options Benefits Tax IFRS
Turnover 18,807,980 18,807,980 Revenue
Cost of Sales (10,028,398) (10,028,398) Cost of Sales
_________________________________________________________________________________
Gross Profit 8,779,582 - - - - - 8,779,582 Gross Profit
Distribution
Costs (315,656) (315,656) Distribution
Costs
Administration
Expenses (9,547,458) 228,334 (102,638) (13,917) 111,779 (9,435,678) Administration
Expenses
Exceptional Exceptional
item - item -
Business Business
disruption 2,439,078 2,439,078 disruption
_________________________________________________________________________________
Operating
Profit/(Loss) 1,355,546 228,334 (102,638) (13,917) - 111,779 1,467,325
Interest Interest
Receivable 61,774 61,774 Receivable
Interest Interest
Payable and Payable and
Similar Similar
Charges (426) (426) Charges
_________________________________________________________________________________
Profit/(Loss) Profit/(Loss)
on ordinary on ordinary
activities 1,416,894 228,334 (102,638) (13,917) - 111,779 1,528,673 activities
before tax before tax
Tax charge (65,000) 279,519 279,519 214,519 Tax charge
_________________________________________________________________________________
Profit/(Loss) Profit/(Loss)
for the for the
Financial Year 1,351,894 228,334 (102,638) (13,917) 279,519 391,298 1,743,192 Financial Year
After Tax After Tax
Earnings per share
Basic 1.88p 0.32p (0.14p) (0.02p) 0.39p 0.55p 2.43p
Fully Diluted 1.81p 0.31p (0.14p) (0.02p) 0.37p 0.52p 2.33p
c) Consolidated balance sheet as at 31 March 2006, IFRS reconciliation
UK GAAP UK GAAP (1) (i) (ii) (iii) (iv)
Share Employee Deferred Total
Presentation Goodwill Options Benefits Tax IFRS IFRS IFRS
Fixed Assets
1,020,148 228,334 1,248,482 1,248,482 Goodwill
Intangible Intangible
Assets 1,020,148 (1,020,148) (1,020,148) Assets
Property
Tangible Fixed Plant &
Assets 990,426 990,426 Equipment
Investments -
205,000 279,519 484,519 484,519 Deferred Tax
Assets
_______________________________________________________________________________________
Fixed Assets 2,010,574 205,000 228,334 - - 279,519 712,853 2,723,427 Non Current
Assets
Current Assets
Stocks 2,563,862 2,563,862 Inventories
Debtors 2,082,197 (205,000) (205,000) 1,877,197 Trade & Other
Receivables
Cash at bank Cash & Cash
and on hand 3,743,551 3,743,551 Equivalents
_______________________________________________________________________________________
Current Assets 8,389,610 (205,000) - - - - (205,000) 8,184,610 Current Assets
Creditors:
amounts Trade and
falling due Other
within 1 year (5,420,109) 354,996 354,996 (5,065,113)Payables
Current Tax
(354,996) (31,298) (386,294) (386,294)Liabilities
________________________________________________________________________________________
Current
(5,420,109) - - - (31,298) - (31,298)(5,451,407)Liabilities
Total Assets Total Assets
less current Less Current
liabilities 4,980,076 - 228,334 - (31,298) 279,519 476,555 5,456,630 Liabilities
Creditors:
Amounts falling
due after 1 Non Current
year - - Liabilities
_______________________________________________________________________________________
Net Assets 4,980,076 - 228,334 - (31,298) 279,519 476,555 5,456,630 Net Assets
=======================================================================================
Capital and
Reserves
Called up Ordinary
share capital 2,516,649 2,516,649 Shares
Share premium 3,006,776 137,574 137,574 3,144,350 Share Premium
Profit and Retained
loss account (543,350) 228,334 (137,574) (31,298) 279,519 338,980 (204,370)Earnings
- Other Reserves
_______________________________________________________________________________________
Shareholders' Shareholder
Funds (All Funds
equity) 4,980,075 - 228,334 - (31,298) 279,519 476,555 5,456,629 Equity
=======================================================================================
d) Consolidated Income Statement reconciliation for the 6 months ended 30 September 2005
UK GAAP UK GAAP IFRS IFRS
(i) (ii) (iii) (iv)
Share Employee Deferred Total
Goodwill Options Benefits Tax IFRS
Turnover 8,345,022 8,345,022 Revenue
Cost of Sales (4,332,884) (4,332,884) Cost of Sales
_____________________________________________________________________________
Gross Profit 4,012,138 - - - - - 4,012,138 Gross Profit
Administation Administation
Expenses (4,052,984) (42,522) 5,152 (37,370) (4,090,354) Expenses
_____________________________________________________________________________
Operating Operating
Profit before Profit before
Amortisation Amortisation
of Goodwill (40,846) - (42,522) 5,152 - (37,370) (78,215) of Goodwill
Amortisation Amortisation
of Goodwill (114,167) 114,167 114,167 - of Goodwill
_____________________________________________________________________________
Operating Operating
Profit/(Loss) (155,013) 114,167 (42,522) 5,152 - 76,797 (78,215) Profit/(Loss)
-
Interest Interest
Receivable/(Pa Receivable/
yable) 34,615 34,615 (Payable)
_____________________________________________________________________________
Profit Profit
BeforeTax (120,397) 114,167 (42,522) 5,152 - 76,797 (43,600) BeforeTax
Tax charge 66,978 66,978 66,978 Tax charge
_____________________________________________________________________________
Profit/(Loss) Profit/(Loss)
for the for the
Financial Year (120,397) 114,167 (42,522) 5,152 66,978 143,775 23,378 Financial Year
After Tax After Tax
Earnings per share
Basic (0.17p) 0.16p (0.06p) 0.01p 0.09p 0.2p 0.03p
Fully Diluted (0.16p) 0.15p (0.06p) 0.01p 0.09p 0.19p 0.03p
e) Consolidated balance sheet as at 30 September 2005, IFRS reconciliation
UK GAAP UK GAAP (1) (i) (ii) (iii) (iv) IFRS IFRS
Presentation Goodwill Share Employee Deferred Total
Options Benefits Tax IFRS
Fixed Assets
1,134,315 114,167 1,248,482 1,248,482 Goodwill
Intangible Intangible
Assets 1,134,315 (1,134,315) (1,134,315) - Assets
Property
Tangible Fixed Plant &
Assets 921,254 921,254 Equipment
Deferred Tax
270,000 66,978 336,978 336,978 Assets
_____________________________________________________________________________________
Non Current
Fixed Assets 2,055,569 270,000 114,167 - 66,978 451,145 2,506,714 Assets
Current Assets
Stocks 1,487,346 1,487,346 Inventories
Trade & Other
Debtors 1,553,975 (270,000) (270,000) 1,283,975 Receivables
Cash at bank Cash & Cash
and on hand 1,398,605 1,398,605 Equivalents
_____________________________________________________________________________________
Current Assets 4,439,927 (270,000) - - - - (270,000) 4,169,927 Current Assets
Creditors:
amounts
falling due Current
within 1 year (3,004,183) (12,230) (12,230)(3,016,413) Liabilities
Total Assets Total Assets
less current Less Current
liabilities 3,491,313 - 114,167 - (12,230) 66,978 168,915 3,660,229 Liabilities
Creditors:
Amounts falling
due after 1 Non Current
year - - Liabilities
_____________________________________________________________________________________
Net Assets 3,491,313 - 114,167 - (12,230) 66,978 168,915 3,660,229 Net Assets
=====================================================================================
Capital and
Reserves
Called up
share capital 2,511,026 2,511,026 Ordinary Shares
Share premium 2,995,931 77,458 77,458 3,073,389 Share Premium
Profit and Retained
loss account (2,015,644) 114,167 (77,458) (12,230) 66,978 91,457 (1,924,186) Earnings
- Other Reserves
_____________________________________________________________________________________
Shareholders' Shareholders
Funds (All Funds -
equity) 3,491,313 - 114,167 - (12,230) 66,978 168,915 3,660,228 Equity
=====================================================================================
4). Explanation of Principal Changes Under IFRS
Note a). To e). contain reconciliations to assist in understanding the nature
and value of differences between UK GAAP and IFRS that affect ASOS.
1). Presentation Adjustments
The financial information is in IFRS format, and reflects a number of
differences in presentation between UK GAAP and IFRS as follows;
1). Disclosure of Goodwill as separate from Intangible Assets on the balance
sheet;
2). Disclosure of Deferred Tax Asset as a separate item on the face of the
balance sheet; and
3). Disclosure of Current Tax Liabilities as a separate item on the face of the
balance sheet
2). IFRS Adjustments
(i) IFRS 3 - Business Combinations
Under UK GAAP, goodwill arising on business combinations is amortised over a
period not exceeding twenty years. Under IFRS 3, regular amortisation of
Goodwill is prohibited. Instead, an annual impairment test is required to
support the carrying value of goodwill.
Amortisation of goodwill arising on the purchase of ASOS.com Limited and
Entertainment Marketing (UK) Limited ceased on 1 April 2005 resulting in an
increase in pre tax profits of £228,000 in the twelve months ended 31 March 2006
and an increase of pre tax profits of £114,000 in the six months to 30 September
2005. As at both 1 April 2005 and 31 March 2006 an impairment review was carried
out as required by IAS 38. The board believe there has been no impairment of
Goodwill.
Goodwill Restatement in line with IFRS 3
UK GAAP IFRS
31 March 2006 31 March 2006
At Cost 3,690,119 Goodwill 1,248,482
Amortisation Impairment
Brought forward (2,441,637) Brought forward -
Charge for period (228,334) Impairment -
Charge
Carried Forward (2,669,971) Carried Forward -
NBV 1,020,148 Carrying Value 1,248,482
(ii) IFRS 2 - Share Based Payment
IFRS 2 requires a charge to be made to the income statement for the cost of
providing share options to employees. The expense is calculated as the fair
value of the award on the date of grant and is recognised over the expected life
of the grant. The Black Scholes method has been used to calculate the fair value
of options on their grant date. ASOS has applied the provisions of IFRS 2 only
to awards made after 7 November 2002 that had not vested at the IFRS effective
date (1 April 2005), an exemption allowed on transition by IFRS 1.
The result of adoption of IFRS 2 has meant an adjustment to the balance sheet at
1 April 2005 of £35,000, a charge to retained profit with a corresponding
increase to equity.
In the twelve months ending 31 March 2006, the application of IFRS 2 results in
a pre tax charge to the income statement of £102,600.
In the six months ending 30 September 2005 , the application of IFRS 2 results
in a pre tax charge to the income statement of £42,500.
(iii) IAS 19 - Employee Benefits
Under UK GAAP, no provision is made for annual leave accrued. Under IAS 19 the
expected cost of compensated short term absences should be recognised at the
time the related service is provided. As a result, on transition, a provision of
£17,400 has been recognised. The result on pre tax income for the year ended 31
March 2006 is an additional expense of £14,000, for the six months to 30
September 2006 a reduction in staff costs of £5,100.
(iv) IAS 12 - Income Tax
Under UK GAAP, no deferred tax asset was recognised in respect of Share Options.
Under IAS 12 a deferred tax asset can be recognised for all deductible temporary
differences. The calculation of deferred tax asset on transition should be based
on the facts, circumstances and probabilities that existed at the time of
preparation of the UK GAAP financial accounts. As a result, on transition, there
was no increase in the deferred tax asset. For the year ending 31 March 2006 an
additional deferred tax asset of £280,000 has been recognised. In the income
statement this has had the effect of reversing the £65,000 charge to a credit of
£215,000. For the six months to 30 September 2005 an additional deferred tax
asset of £67,000 has been recognised.
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