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ASOS PLC (ASC)

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Wednesday 23 October, 2013

ASOS PLC

Final Results

RNS Number : 1411R
ASOS PLC
23 October 2013
 



                                                                                                                                           

23 October 2013

ASOS plc

Global Online Fashion Destination

Final Results for the year ended 31 August 2013

 

Summary results table

£'000s

Year to

31 August 2013

(Audited)

Year to

31 August 2012

(Unaudited)

Change

Group revenues1

769,396

552,854

39%

Retail sales

753,807

537,887

40%

  UK retail sales

276,027

205,258

34%

  International retail sales

477,780

332,629

44%

Gross profit

398,580

282,857

41%

  Retail gross margin

50.8%

49.8%

100bps

  Gross margin

51.8%

51.2%

60bps

Profit before tax and exceptional items

54,670

44,473

23%

Profit before tax

54,670

40,010

37%

Diluted underlying earnings per share2

49.2p

39.6p

24%

Diluted earnings per share3

49.2p

35.6p

38%

Net funds4

71,139

27,884

155%

1Includes retail sales, delivery receipts and third party revenues

2Underlying earnings per share has been calculated using profit after tax but before exceptional items

3Earnings per share has been calculated using profit after tax and exceptional items of £nil (2012: £4.5m)

4Cash and cash equivalents less bank borrowings

 

Highlights:

·      Retail sales up 40% (UK retail sales up 34%, International retail sales up 44%)

·      Retail gross margin up by 100bps and gross margin up by 60bps

·      International retail sales accounted for 63% of total retail sales (2012: 62%)

·      Profit before tax and exceptional items up 23% to £54.7m

·      Net funds of £71.1m (2012: £27.9m)

·      7.1 million active customers5 at 31 August 2013 (2012: 5.0 million)

·      Step-change in capex investment to c.£55m in each of the next two years

 

Nick Robertson, CEO, commented:

 

"I am pleased to report another strong performance for ASOS for the year ended 31 August 2013, with retail sales up 40% to £754m and profit before tax and exceptional items up 23% to £54.7m.

 

During the year we continued to make progress towards our goal of being the world's number one fashion destination for 20-somethings. We reached the milestone of 7 million active customers worldwide, following significant investment in our product offer, delivery options, customer experience and marketing. We also successfully launched our dedicated website in Russia during May 2013 and will soon launch our China operation.

We have started the new financial year positively.  Our £1 billion sales target is now firmly in our sights and we have  stepped up our investment in people, technology, logistics and marketing to support the significant global potential of the ASOS business."

 

5Defined as having shopped in the last 12 months

 

 

Investor and Analyst Meeting

There will be a meeting for analysts that will take place at 9.30am today, 23 October 2013, at Greater London House, Hampstead Road, London, NW1 7FB. A webcast of the meeting will be available both live and following the meeting at www.asosplc.com. Please register your attendance in advance with College Hill using the details below.

 

For further information:

 

ASOS plc


Nick Robertson, Chief Executive Officer     

Tel: 020 7756 1000

Nick Beighton, Chief Financial Officer


Greg Feehely, Head of Investor Relations


Website: www.asosplc.com/investors 




College Hill


Matthew Smallwood / Justine Warren / Jamie Ramsay 

Tel: 020 7457 2020



JPMorgan Cazenove 


Luke Bordewich / Gina Gibson  

Tel: 020 7742 4000



Numis Securities


Alex Ham 

Tel: 020 7260 1000

 

 

Background note

ASOS is a global fashion destination for 20-somethings. We sell cutting-edge 'fast fashion' and offer a wide variety of fashion-related content, making ASOS.com the hub of a thriving fashion community. We sell over 65,000 branded and own-brand products through localised mobile and web experiences, delivering from our UK hub to almost every country in the world.

 

We tailor the mix of own-label, global and local brands sold through each of our eight local language websites: UK, US, France, Germany, Spain, Italy, Australia, Russia and, soon to launch, China.

 

ASOS's websites attract 21.3 million unique visitors a month (31 August 2012: 18.8million) and as at 31 August 2013 had 13.2 million registered users (31 August 2012: 9.2 million) and 7.1 million active customers* (31 August 2012: 5.0 million).

*Defined as having shopped in the last 12 months

www.asos.com 

www.us.asos.com

www.asos.de

www.asos.fr

www.asos.com/au

www.asos.it

www.asos.es

www.asos.com/ru

www.asos.com/cn

m.asos.com

marketplace.asos.com

fashionfinder.asos.com

 

 

ASOS plc ("the Company")

Global Online Fashion Destination

Final Results for the year ended 31 August 2013

Business Review

 

The Group has performed strongly in the year, with revenues up 39% to £769.4m (2012: £552.9m) and profit before tax and exceptional items up 23% to £54.7m (2012: £44.5m) as we invested in future growth, particularly in our people, technology, logistics and marketing.

Our fashion

 

Our product offer remains focused on our global, fashion-conscious 20-something customers and we constantly review both our own-label and branded ranges to ensure we lead fashion trends, are globally relevant, and offer appropriate price points. The global relevance of our product range is increasingly important and we have introduced specific 'counter seasonal' ranges as well as adding more locally relevant brands.

 

Our ongoing investment in even better value for our customers has been well received and resulted in a higher mix of full-price sales and a lower level of discounting, particularly during our Spring/Summer 2013 campaign. We were joined by our new Sourcing Director in August 2013 and during the new financial year will focus on rationalisation of our supplier base to drive further retail gross margin efficiency and reduce lead times, whilst enhancing fashionability and quality.

 

Womenswear and Menswear have both performed strongly during the period. We continued to diversify our Womenswear offer through enhancements to our casual and separates ranges and an increased breadth of product in our specialist Petite, Maternity and Curve ranges in response to consumer demand. We also extended our size range across all product categories to increase relevance in our international markets, particularly in the US and Asia.

 

We strengthened our own-brand range in both Womenswear and Menswear and this accounted for 52.3% of sales over the year (2012: 51.5%). We added new product categories including men's underwear and women's 'Reclaimed Vintage' and also launched several exclusive designer collaborations including Markus Lupfer for ASOS Black, Marios Schwab Lingerie, Antipodium Shoes, Elliot Atkinson Nightwear, Sophia Kokosolaki and Puma for ASOS Black Menswear.

 

Third-party brands remain a key part of our business; our portfolio includes c.800 brands and we continually review the relevance of our branded offer. During the year we added new brands including New Look, Monki, Only, Boy London, Stussy and The Kooples and, following the year end, Jack Wills and Pull & Bear.

 

Operations

 

Technology

 

We constantly enhance our websites to ensure we offer the most engaging customer experience, with particular focus on developing and improving our mobile sites and apps as these represent an ever-increasing proportion of our traffic and sales. Our goal is to offer our international customers the same mobile and tablet access we offer our UK customers and we launched dedicated mobile sites in all markets where we already have local language websites during July 2013. In the UK we upgraded our mobile site in April 2013 and released our upgraded iOS apps and a new android app during October 2013. We will be launching US versions of our android and iOS apps during the first half of the new financial year, and our next focus will be on developing mobile apps to serve our other strategic markets.

 

Customer Experience

 

We added new functionality including 'Buy-the-Look', 'Recently Viewed' and larger product image sizes. We also launched our new women's and men's homepages featuring engaging live dynamic content including our daily feature, 'This Just Happened', which gives our customers a continuous stream of the latest fashion news.

 

We continued to make structural changes to our checkout process to support our global expansion, and as part of this process introduced additional payment methods to serve our customers in Germany and the Netherlands, which are already driving increased sales in these territories.

 

We have also seen a significant uplift in subscribers to our annual Premier membership scheme, supported by a price reduction in the UK and launch in the US, Australia and Germany. This entitles members to unlimited free express delivery, special offers, a monthly magazine, previews and priority access during sale periods.

 

Delivery and returns

 

We improved our delivery and returns experience through enhancements to our carrier network. In the UK we extended our next day delivery cut-off to 9pm and introduced a 15-minute delivery slot on these orders. Internationally we introduced a new express service for our Russian customers and reduced our express delivery lead-time by one day in 17 countries and our standard delivery lead-time by one day in the US, France and Germany. This was achieved alongside improved order tracking in the US and France, where 100% of our standard-delivery parcels are now tracked. Finally, we reduced our returns processing lead-time by four days for our customers in France and Germany and have seen a reduction in customer contact regarding returns in these territories as a result. We introduced a next day delivery option for our French customers early in the new financial year.

 

Warehousing

 

Our Barnsley fulfilment centre has shown further improvement in the year with labour cost per unit (LCPU) down 11% to 63p per unit (2012: 71p). Although subject to change as we build out our warehousing capability,  our medium-term goal is to deliver an LCPU of 50p, and we progressed towards that target with the transition to a new service provider in August 2013 and the launch of our mechanised despatch sorter in October 2013. We also gained bonded warehouse status in January 2013 and commenced building work on extending the 530,000 sq. ft. site by 140,000 sq. ft., which will provide the storage capacity for the required unit volumes to exceed our £1bn sales target.

 

We expect to launch our mechanised picking solution during the financial year ended 2015 and continue to review our medium-term warehousing requirements to ensure we have the capacity to meet our growth ambitions, including planned capital investment of £25m-£30m on our Barnsley hub during the year to 31 August 2014.

 

Our international logistics strategy has continued to evolve. We relocated our Australian returns centre in March 2013, to reduce costs and provide capacity for future volume growth. During May 2013 we completed the transition from our existing US returns processing centre in Atlanta to a new and more advanced operation in Ohio. We are now fulfilling from returns in the US, and the new facility is the foundation for a full US logistics operation in the future. Finally, we established a logistics partnership in China and will shortly commence domestic distribution to our Chinese customers.

 

Global expansion

 

We deliver to 237 countries and territories and continue to improve our international proposition, particularly in our strategic country markets where we have dedicated websites and in-country teams, and offer locally-relevant products, payment methods, currencies and delivery options.

 

In May 2013, we launched our dedicated Russian website, and have seen subsequent strong growth in this territory.  We now have a team of Russian nationals based in our London headquarters to support this market and offer a proposition which is tailored to our Russian customers including local language customer care, dedicated marketing and social media activities and a dedicated express delivery solution.

 

Our operation in the People's Republic of China is now in final testing phase and will be launched imminently. We have a dedicated Chinese-language desktop and mobile site initially offering around 2,000 locally-relevant own-brand styles, an in-country multi-disciplinary team, dedicated delivery solutions and payment methods, local language customer care and a domestic distribution partner. Initial testing shows that these elements are all functioning effectively and will provide the foundations to maximise the long-term potential of the Chinese market.

 

Our international focus during the next six months will be in further establishing and growing our Chinese operation and continuing to grow our proposition and market share in our key strategic country targets of the UK, US, France, Germany, Australia and Russia.

 

People

 

We have further enhanced the strength and depth of our management team with the arrivals of our new Supply Chain Director, Chief Information Officer, Director of Finance, Performance Marketing Director, Sourcing Director and our in-country management teams. These appointments ensure our senior team has the diversity of skills, experience, and capabilities to deliver our future growth ambitions.

 

The Group's total headcount increased by 318 employees during the year to 1,352, principally in our Womenswear, Merchandising, Marketing, Technology and Customer Care departments as well in our in-country teams, including 17 employees who form our multi-disciplinary ASOS China team.

 

During August 2013, ASOS appointed Ian Dyson as Senior Independent Non-Executive Director, replacing Peter Williams. Peter will step down from the Board with effect from the Company's Annual General Meeting on 4 December 2013 and we are very grateful for his contribution to ASOS over the last nine years. Ian previously held both executive and non-executive directorships at FTSE100 and FTSE250 consumer businesses including, most recently, Marks & Spencer and Punch Taverns, and brings a wealth of experience and knowledge of both the retail industry and of technology. Ian's appointment took effect on 1 October 2013.

On 16 July, Kate Bostock, Executive Director Product and Trading, resigned from the company and stepped down from the Board with immediate effect. Maria Hollins has since been promoted to the role of Retail Director and we have further strengthened her retail management team.

As previously announced, Jon Kamaluddin stepped down from the Board in October 2013. Shaun McCabe joined the Executive Board of ASOS in September 2013 in the role of International Director, following six years in the role of Vice President: Finance at Amazon Sarl EU.

Trading operations

 

The Group has achieved another strong performance during the year ended 31 August 2013, with growth in sales and profits across all territories.

 

Revenue

Year to 31 August 2013

International


(Unaudited)




£'000s

UK

US

EU

RoW

Total

Group total

Retail sales

276,027

77,678

177,708

222,394

477,780

753,807

Growth

34%

57%

51%

35%

44%

40%








Delivery receipts

5,314

1,456

2,212

3,028

6,696

12,010

Growth

(25%)

39%

37%

65%

49%

3%








Third party revenues

3,579

-

-

-

-

3,579

Growth

7%

-

-

-

-

7%








Group revenues

284,920

79,134

179,920

225,422

484,476

769,396

Growth

32%

56%

51%

35%

44%

39%

 

Total Group revenue increased 39%, with total retail sales up 40% on the prior year, driven by strong growth in both the UK (34%) and in our international territories (44%). International retail sales now account for 63% of total retail sales compared to 62% last year. 

 

The UK's performance was ahead of expectations, driven by a particularly positive response to our Spring/Summer 2013 proposition, following a strong peak Christmas trading period. We retained our first place position in the UK for unique visitors to apparel retailers in the 15-34 age range (Comscore, August 2013).

 

Our strongest growth was in our strategically important international markets. The US was the fastest growing segment with retail sales growth of 57%, following the establishment of our US in-country team early in the financial year and subsequent targeted investment in digital marketing and social media and improvements to our service proposition.

 

Our EU retail sales growth of 51% was driven by strong performances in the countries where we have dedicated websites (France, Germany, Italy and Spain), and was further enhanced by the establishment of our in-country teams in France and Germany at the start of the year as well as the introduction of new payment methods tailored to our customers in Germany and the Netherlands.

 

Retail sales in our Rest of World segment grew by 35%. This segment continues to be dominated by Australia, where growth slowed due to macro-economic factors and our improved stock management, as Australia has historically consumed a high proportion of markdown product. Despite this, we have comfortably maintained our first place Comscore ranking in this territory.  Russia is a growing portion of this segment, with strong performance following the launch of our dedicated Russian website in May 2013.

 

Despite retail sales growth of 40%, delivery receipts increased by only 3% since last year as an increasing percentage of our customers enjoy the benefits of our improved free shipping offers, particularly in the UK where we improved our free standard delivery offer from six days to four days and reduced the annual subscription charge for our ASOS Premier service.

Third party revenues, which mainly comprise advertising revenues from the website and the ASOS magazine, increased by 7% as we continued to grow revenues from our existing platforms.

 

Trading key performance indicators

 

ASOS's journey to becoming the world's no. 1 fashion destination continued as we surpassed 7m active customers1 for the first time, with 7.1m customers across the globe having shopped with us during the financial year. This represents a significant increase of 42% over last year. We also surpassed 4m international active customers for the first time, another key milestone in our international expansion.

 

The 1% decline in average basket value was driven by a 6% reduction in average selling price following the restructuring and investment in our pricing architecture during the first half of the year, which was largely offset by a 5% increase in average units per basket. This reflects our quality, price and range improvements, new functionality such as our 'buy-the-look' feature, and well-received free international express delivery offers above a minimum spend threshold.

 

Year to 31 August 2013


International


(Unaudited)

 

KPIs

UK

US

EU

RoW

Total

Group total

Average basket value2

£63.69

£59.13

£59.88

£57.80

£58.93

£61.03

Growth

(1%)

3%

(2%)

(2%)

(1%)

(1%)








Average units per basket

2.41

2.47

2.52

2.55

2.52

2.47

Growth

5%

9%

5%

3%

5%

5%

 

Average selling price per unit2

£26.46

£23.95

£23.74

£22.69

£23.36

£24.69

Growth

(6%)

(5%)

(7%)

(5%)

(6%)

(6%)

 

Number of orders ('000)

8,536

1,917

4,652

4,267

10,836

19,372

Growth

36%

58%

56%

39%

49%

43%








Total visits ('000)3,4

20,745

9,015

18,849

19,263

47,127

67,872

Growth

47%

53%

52%

35%

45%

46%








Active customers ('000)1

2,814

897

1,960

1,407

4,264

7,078

Growth

25%

57%

61%

48%

56%

42%

1As at 31 August, defined as having shopped with ASOS during the last 12 months

2Including VAT         3During August

4Total visits previously included only website visits; now includes website and mobile site visits. Prior year comparatives have been restated.

 

Gross profit

 

The Group generated gross profit of £398.6m during the year (2012: £282.9m), up 41% on last year.

 

Year to 31 August 2013 (Unaudited)

£'000s

UK

International

Group total

US

EU

RoW

Total

Gross profit

136,235

46,447

91,055

124,843

262,345

398,580

Growth

33%

51%

53%

39%

46%

41%








Retail gross margin

46.1%

57.9%

50.0%

54.8%

53.5%

50.8%

Change

120bps

(180bps)

90bps

140bps

70bps

100bps








Gross margin

47.8%

58.7%

50.6%

55.4%

54.2%

51.8%

Change

20bps

(190bps)

70bps

60bps

 

During the year, retail gross margin increased by 100bps to 50.8% (2012: 49.8%), largely as a result of improved stock management which delivered substantial markdown improvements particularly during our Spring/Summer 2013 campaign. These impacts were partially offset during the first half of the year by significant investments in our own-brand product price points, which was most marked in the US as this segment traditionally consumes the highest proportion of own-brand products. Gross margin (including delivery revenues) increased by 60bps to 51.8% (2012: 51.2%).

 

Investment in our operating resources

 

The Group increased its investment in its operating resources and capability ahead of future sales growth, particularly in the areas of marketing, people and distribution costs. Overall, operating expenses increased by 45% to £344.1m, excluding exceptional items (2012: £237.3m) and the total operating costs to sales ratio increased by 180 bps.

 

£'000s

Year to

31 August 2013

(Audited)

Year to

31 August 2012

(Unaudited)

Change

Distribution costs

(115,172)

(79,076)

46%

Payroll and staff costs

(75,587)

(50,070)

51%

Warehousing

(44,302)

(32,702)

35%

Marketing

(40,934)

(21,233)

93%

Production

(4,360)

(3,780)

15%

Technology costs

(10,225)

(8,023)

27%

Other operating costs

(40,061)

(32,167)

25%

Depreciation and amortisation

(13,484)

(10,224)

32%

Operating costs excluding exceptional items

(344,125)

(237,275)

45%

Operating cost ratio  (% of sales)

44.7%

42.9%

(180bps)

 

We invested in increased marketing activities during the year, particularly in digital marketing, including pay per click and affiliate marketing, and in country-specific campaigns. Our digital marketing expenditure was targeted on the UK, US, Australia, France and Germany, and our marketing campaigns included our peak 'Best Night Ever' campaign in the UK, US and Australia, and local magazine partnerships in France and Germany. The results of these activities are already visible in the strong worldwide growth in sales and active customers during the year, and we expect continued returns on this investment in each of our strategic markets during the new financial year.

 

Our total headcount has increased by 318 employees during the year to support our future growth plans. We also implemented a new ASOS Long-Term Incentive Plan for senior management and recognised an associated non-cash charge of £2.8m during the year. As a result of these investments in our people, our payroll cost ratio increased by 70bps to 9.8% of revenue (2012: 9.1%).

 

We continued to invest in our customer delivery proposition, making improvements to our next day, express and standard options, with both reduced lead-times and improvements to our service levels including shorter delivery windows and an increased proportion of tracked parcels. We also offered free international express delivery above a minimum spend threshold. As a result, our distribution cost ratio has increased by 70bps to 15.0% (2012: 14.3%).

 

We maintained tight cost control and delivered operating leverage in our warehouse, production and technology activities. The Barnsley fulfilment centre continued to perform strongly, with a decline in average labour cost per unit for the year of 11% compared with last year, resulting in an increase of only 35% in total warehouse costs compared to a 43% increase in the number of orders.

Depreciation and amortisation costs increased by 32%, largely as a result of investment in our IT infrastructure.

 

 

Group profit

 

The Group generated profit before tax and exceptional items of £54.7m, up 23% on last year (2012: £44.5m).

 

£'000s

Year to

31 August 2013

(Audited)

Year to

31 August 2012

(Unaudited)

Change

Revenue

769,396 

552,854 

39%

Cost of sales

(370,816)

(269,997)


Gross profit

398,580 

282,857 

41%

Distribution costs excluding exceptional items

(115,172)

(79,076)


Administrative expenses excluding exceptional items

(228,953)

(158,199)


Operating profit before exceptional items

54,455 

45,582 

19%

Finance income

283 


Finance expense

(68)

(1,109)


Profit before tax and exceptional items

54,670 

44,473 

23%

Exceptional items

(4,463)


Profit before tax

54,670 

40,010 

37%

Income tax expense

(13,744)

(10,473)


Profit after tax

40,926 

29,537 

39%

 

Exceptional items

The transition to our new warehousing facilities was completed by 31 March 2012 and all related property provisions were utilised by 31 August 2012. There is therefore no exceptional cost or cash outflow during the year ended 31 August 2013.

The main components of the exceptional charge to the profit and loss account were as follows:

 

£'000s


Year to

31 August 2013

(Audited)

Year to

31 August 2012

(Unaudited)

Dual site decollation costs


-

(228)

Vacant property costs


-

(1,435)

Impairment of assets


-

(2,800)

Total


-

(4,463)

 

Taxation

The effective tax rate before exceptional items for the Group was 25.1%, 90bps lower than the prior year (2012: 26.0%), as a result of a reduction in the prevailing UK corporation tax rate. Going forward, we would expect the effective rate of tax pre-exceptional items to be around 150 bps higher than the prevailing UK corporation tax rate due to permanent disallowable items, including the charge in respect of the ASOS Long-Term Incentive Plan.

 

Earnings per share

Basic underlying earnings per share1 increased by 18% to 50.1p per share (2012: 42.5p), and diluted underlying earnings per share1 increased by 24% to 49.2p per share (2012: 39.6p).

 

Basic earnings per share2 increased by 31% to 50.1p per share (2012: 38.1p), and diluted earnings per share2 increased by 38% to 49.2p per share (2012: 35.6p).

 

Dividend

The Board is of the opinion that shareholder's interests are best served by continuing to reinvest the cash generated by the business to exploit the substantial global growth opportunities both in the UK and internationally. Accordingly, it has decided not to pay a dividend for the year ended 31 August 2013. This policy remains under regular review.

 

1 Underlying earnings per share has been calculated using profit after tax but before exceptional items.

2Earnings per share has been calculated using profit after tax and exceptional items of £nil (2012: £4.5m).

 

 

Statement of financial position

 

The Group enjoys a robust financial position including a strong cash balance and a clean stock position as we begin the new Autumn/Winter season. During the year, net assets increased by £53.8m to £159.8m (31 August 2012: £106.0m), driven by profit after tax for the year.  The summary statement of financial position is shown below.

 

£'000s

As at

31 August

2013

(Audited)

As at

31 August

2012

(Unaudited)

Goodwill and other intangible assets

39,686 

23,236 

Property, plant and equipment

30,031 

27,293 

Deferred tax asset

8,902 

8,111 

Non-current assets

78,619 

58,640 

Working capital

12,257 

19,038 

Net funds*

71,139 

27,884 

Derivative financial assets

225 

- 

Current tax (liability)/asset

(2,441)

425 

Net assets

159,799 

105,987 

* Cash and cash equivalents less bank borrowings

 

 

Statement of cash flows

 

The Group generated cash of £43.3m during the year (2012: £13.7m) and the closing cash balance was £71.1m at 31 August 2013, up from £27.9m at 31 August 2012. Net funds were £71.1m (31 August 2012: £27.9m). The summary statement of cash flows is shown below.

 

£'000s

Year to

31 August 2013

(Audited)

Year to

31 August 2012

(Unaudited)

Operating profit

54,455 

41,119 

Exceptional items

4,463 

Operating profit before exceptional items

54,455 

45,582 

Depreciation and amortisation

13,484 

10,224 

Losses on disposal of assets

298 

Working capital

5,391 

(9,876)

Share-based payments charges

4,005 

953 

Tax (paid)/received

(3,353)

1,883 

Other non-cash items

(104)

Cash inflow from operating profit before exceptional items

74,176 

48,766 

Operating cash outflow relating to exceptional items

(1,695)

Cash inflow from operating profit

74,176 

47,071 

Capital expenditure

(31,328)

(21,654)

Proceeds from issue of ordinary shares

299 

463 

Net cash inflow/(outflow) relating to Employee Benefit Trust

160 

(1,337)

Acquisition of subsidiary

36 

Repayment of revolving credit facility

(10,000)

Net finance expense paid

(88)

(842)

Total cash inflow

43,255 

13,701 

 

Cash generated from operating profit before exceptional items increased by £25.4m, due to EBITDA improvements of £12.1m and a favourable working capital movement of £15.3m. This is the result of a one-off VAT and duty benefit of £6.7m as we gained approval to operate a bonded warehouse at Barnsley from January 2013, as well as timing of supplier payments. Capital expenditure increased by £9.7m on the prior year as we invested in our IT infrastructure to drive future growth.

 

Our investments are funded by operating cash flows, with additional short-term and medium-term facilities to support working capital movements and planned capital expenditure. At 31 August 2013, the Group had in place an undrawn £20.0m revolving loan credit facility which includes an ancillary £10.0m guaranteed overdraft facility and which is available until July 2015.

 

Fixed asset additions

£'000

Year to

31 August 2013

(Audited)

Year to

31 August 2012

(Unaudited)

IT

21,337

14,832

Office fixtures and fit-out

3,842

2,437

Warehouse

7,791

3,786

Total

32,970

21,055

 

The majority of fixed asset additions were to enhance our websites and underlying IT infrastructure to support future growth and create a truly global platform, including the development of our ASOS China operation and Russian website. We also developed our new mechanised despatch sorting process and commenced the extension to our Barnsley fulfilment centre.  

 

During the next two years, we will significantly increase our investment in our IT and logistics infrastructure to c.£55m per year to support our future growth plans, including expenditure of £25m-£30m on our Barnsley logistics hub during the year to 31 August 2014.

 

 

Outlook

We have started the new financial year positively.  Our £1 billion sales target is now firmly in our sights and we have stepped up our investment in people, technology, logistics and marketing to support the significant global potential of the ASOS business.   

 

 

 

 

Nick Robertson

Nick Beighton

Chief Executive Officer

Chief Financial Officer

 

 



 

Audited Consolidated Statement of Comprehensive Income

For the year ended 31 August 2013

 




Year to 31 August

2013

5 months to 31 August 2012




£'000

£'000






Revenue



769,396 

238,023 

Cost of sales



(370,816)

(117,892)






Gross profit



398,580 

120,131 






Distribution expenses



(115,172)

(35,906)

Administrative expenses



(228,953)

(70,883)






Operating profit



54,455 

13,342 






Finance income



283 

Finance expense



(68)

(97)






Profit before tax



54,670 

13,245 






Income tax expense



(13,744)

(3,341)

Profit for the period



40,926 

 

9,904 






Net exchange adjustments offset in reserves



(45)

Fair value gain on derivative financial assets



225 






Other comprehensive income for the period



180 

 

- 

Total comprehensive income



41,106 

 

9,904 






Profit attributable to:





Owners of the parent



40,928 

9,904 

Non-controlling interest



(2) 

- 




40,926 

9,904 






Total comprehensive income attributable to:





Owners of the parent



41,108

9,904 

Non-controlling interest



(2)

- 




41,106

9,904 






Earnings per share





Basic



50.1p

12.5p 

Diluted



49.2p

11.9p 






 

 

 

Audited Consolidated Statement of Changes in Equity

For the year ended 31 August 2013

 



 

 

 

Called up share capital

   Share premium

Retained earnings1

Employee Benefit Trust reserve

Hedging reserve

Translation reserve

Equity attributable to owners of the parent

Non-controlling interest

Total equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000











Balance as at 1 April 2012

2,699

5,749

89,719 

(2,932)

- 

- 

95,235 

- 

95,235 

Shares allotted in the period

155

356

- 

- 

- 

- 

511 

- 

511 

Cash received on exercise of shares from Employee Benefit Trust

 

-

 

-

 

- 

9 

- 

- 

9 

- 

9 

Transfer of shares from Employee Benefit Trust on exercise

-

-

(459)

459 

-

- 

- 

- 

- 

Share based payments charge

-

-

344 

- 

-

- 

344 

- 

344 

Profit for the period and total   comprehensive income

-

-

9,904 

- 

-

- 

9,904 

- 

9,904 

Deferred tax on share options

-

-

(1,949)

- 

-

- 

(1,949)

- 

(1,949)

Current tax on items taken

directly to equity

 

-

 

-

 

1,933 

 

- 

-

- 

 

1,933 

- 

 

1,933 

Balance as at 31 August 2012

2,854

6,105

99,492 

(2,464)

- 

- 

105,987 

- 

105,987 

 

Shares allotted in the year

36

263

- 

- 

-

- 

299 

- 

299 

Net cash received on exercise of shares from Employee Benefit Trust

-

-

- 

160 

-

- 

160 

- 

160 

Transfer of shares from Employee Benefit Trust on exercise

-

-

(534)

534 

-

- 

- 

- 

- 

-

-

4,005 

- 

-

- 

4,005 

- 

4,005 

Profit/(loss) for the period

-

-

40,928 

- 

-

- 

40,928 

(2)

40,926 

Other comprehensive income for the period

-

-

- 

- 

225

(45)

180 

- 

180 

Deferred tax on share options

-

-

991 

- 

-

- 

991 

- 

991 

Current tax on items taken

directly to equity

-

-

7,251 

- 

-

- 

7,251 

- 

7,251 

Balance as at 31 August 2013

2,890

6,368

 152,133 

(1,770)

225

(45)

159,801 

(2)

159,799 

 

1Retained earnings includes the share-based payments reserve

 

 

 

Audited Consolidated Statement of Financial Position

As at 31 August 2013

 


As at

31 August

2013

As at

31 August

2012


£'000

£'000

Non-current assets



Goodwill

1,060 

1,060 

Other intangible assets

38,626 

22,176 

Property, plant and equipment

30,031 

27,293 

Deferred tax asset

8,902 

8,111 


78,619 

58,640 




Current assets



Inventories

143,348 

100,263 

Trade and other receivables

18,420 

19,066 

Derivative financial asset

225 

Current tax asset

425 

Cash and cash equivalents

 71,139 

27,884 


233,132 

147,638 




Current liabilities



Trade and other payables

(149,511)

(100,291)

Current tax liability

(2,441)


(151,952)

(100,291)




Net current assets

81,180 

47,347 




Net assets

159,799 

105,987 







Equity attributable to owners of the parent



Called up share capital

2,890 

2,854 

Share premium

6,368 

6,105 

Employee Benefit Trust reserve

(1,770)

(2,464)

Hedging reserve

225 

Translation reserve

(45)

Retained earnings

152,133 

99,492 


159,801 

105,987 




Non-controlling interests

(2)




Total equity

159,799 

105,987 

 

 

Audited Consolidated Statement of Cash Flows

For the year ended 31 August 2013

 









Year to

5 months to




31 August

31 August




2013

2012




£'000

£'000






Operating profit



54,455 

13,342 






Adjusted for:





Depreciation of property, plant and equipment



7,005 

2,542 

Amortisation of other intangible assets



6,479 

2,511 

Loss on disposal of non-current assets



298 

Increase in inventories



(42,882)

(19,689)

Decrease in trade and other receivables



787 

437 

Increase in trade and other payables



 47,486 

18,068 

Share-based payments charges



4,005 

344 

Other non-cash items



(104)

Income tax paid



 (3,353)

Net cash generated from operating activities before exceptional items



74,176 

17,555 

Cash outflow relating to exceptional operating items



- 

(935)

Net cash generated from operating activities



 74,176 

16,620 






Investing activities





Payments to acquire other intangible assets



(21,770)

(5,672)

Payments to acquire property, plant and equipment



(9,558)

(2,345)

Finance income



240 

Acquisition of subsidiary



36 

- 

Net cash used in investing activities



(31,052)

(8,017)






Financing activities





Proceeds from issue of ordinary shares



299 

321 

Net cash inflow relating to Employee Benefit Trust



160 

9 

Repayment of revolving credit facility



- 

(5,000)

Finance expense



(328)

(364)

Net cash generated from/(used in) financing activities



131 

(5,034)






Net increase in cash and cash equivalents



43,255 

3,569 






Opening cash and cash equivalents



27,884 

24,315 






Closing cash and cash equivalents



71,139 

27,884 

 

 

 

Reconciliation of net cash flow to movement in net funds

 






Year to

31 August

2013

£'000

5 months to

31 August

2012

£'000





Net funds at beginning of the period


27,884

19,315

Increase in cash and cash equivalents


43,255

3,569

Decrease in revolving credit facility liability


-

5,000

Net funds at end of the period


71,139

27,884 

 

 

 

 

Notes to the Financial Information

For the year ended 31 August 2013

 

1.   Preparation of the audited condensed consolidated financial information

 

a)   Basis of preparation

 

Whilst the information included in this audited condensed consolidated financial information ("preliminary announcement") has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRSs") as adopted for use in the European Union and as issued by the International Accounting Standards Board, this preliminary announcement does not itself contain sufficient information to comply with IFRSs.

 

The financial information contained within this preliminary announcement for the year to 31 August 2013 and five months to 31 August 2012 do not comprise statutory financial statements within the meaning of section 434 of the Companies Act 2006. The Report and Accounts for the five months to 31 August 2012 have been filed with the Registrar of Companies and those for the year to 31 August 2013 will be filed following the Company's annual general meeting. The preliminary announcement for the year to 31 August 2013 has been prepared on a consistent basis with the financial accounting policies set out in the Accounting Policies section of the ASOS Plc Report and Accounts for the five months to 31 August 2012.

 

The condensed consolidated financial information should be read in conjunction with the Group's Annual Report and Accounts for the year ended 31 August 2013, which have been prepared in accordance with IFRSs as adopted by the European Union. The auditors' report on those accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under s498(2) or s498(3) of the Companies Act 2006.

 

The Group's business activities together with the factors that are likely to affect its future developments, performance and position are set out in the Business Review. The Business Review describes the Group's financial position, cash flows and borrowing facilities and also highlights the principal risks and uncertainties facing the Group. The Annual Report and Accounts for the year ended 31 August 2013 includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk.

 

The Directors have reviewed current performance and forecasts, combined with expenditure commitments, including capital expenditure. After making enquiries, the Directors have a reasonable expectation that the Group has adequate financial resources to continue its current operations, including contractual and commercial commitments for the foreseeable future despite the current uncertain economic outlook. For this reason, they have continued to adopt the going concern basis in preparing the financial statements.

 

In preparing the preliminary announcement, the Directors have also made reasonable and prudent judgements and estimates and prepared the preliminary announcement on the going concern basis. The preliminary announcement and management report contained herein give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group.

 

b)   Accounting policies

 

The financial statements have been prepared in accordance with the accounting policies set out in the Group's Annual Report and Accounts for the year to 31 August 2013.

 

 

2.   Segmental analysis

 

IFRS 8 'Operating Segments' requires operating segments to be determined based on the Group's internal reporting to the Chief Operating Decision Maker.  The Chief Operating Decision Maker has been determined to be the Executive Board.  The Executive Board has determined that the primary segmental reporting format is geographical by customer location, based on the Group's management and internal reporting structure.  The Executive Board assesses the performance of each segment based on revenue and gross profit after distribution expenses, which excludes administrative expenses and exceptional items.

 

 

 

Year to 31 August 2013


UK

US

EU

RoW

Total


£'000

£'000

£'000

£'000

£'000

Retail sales

276,027 

77,678 

177,708 

222,394 

753,807 

Delivery receipts

5,314 

1,456 

2,212 

3,028 

12,010 

Third party revenues

3,579 

3,579 

Total revenue

284,920 

79,134 

179,920 

225,422 

769,396 

Cost of sales

(148,685)

(32,687)

(88,865)

(100,579)

(370,816)

Gross profit

136,235 

46,447 

91,055 

124,843 

398,580 

Distribution costs

(26,140)

(27,804)

(27,046)

(34,182)

(115,172)

Segment result

110,095 

18,643 

64,009 

90,661 

283,408 

Administrative expenses





(228,953)

Operating profit





54,455 

Finance income





283 

Finance expense





(68)

Profit before tax





54,670 








5 months to 31 August 2012


UK

US

EU

RoW

Total


£'000

£'000

£'000

£'000

£'000

Retail sales

81,658 

22,036 

50,855 

76,685 

231,234 

Delivery receipts

3,035 

512 

719 

904 

5,170 

Third party revenues

1,617 

1,619 

Total revenue

86,310 

22,548 

51,575 

77,590 

238,023 

Cost of sales

(45,775)

(9,579)

(26,707)

(35,831)

(117,892)

Gross profit

40,535 

12,969 

24,868 

41,759 

120,131 

Distribution costs

(8,413)

(7,102)

(7,436)

(12,955)

(35,906)

Segment result

32,122 

5,867 

17,432 

28,804 

84,225 

Administrative expenses





(70,883)

Operating profit





13,342 

Finance expense





(97)

Profit before tax





13,245 

 

Due to the nature of its activities, the Group is not reliant on any individual major customers.

 

No analysis of the assets and liabilities of each operating segment is provided to the Chief Operating Decision Maker in the monthly management accounts therefore no measure of segments assets or liabilities is disclosed in this note.

 

There are no material non-current assets located outside the UK.

 

 

3.   Earnings per share

 

Basic earnings per share is calculated by dividing the profit attributable to the owners of the Parent Company by the weighted average number of ordinary shares in issue during the year.  Own shares held by the ASOS.com Limited Employee Benefit Trust are eliminated from the weighted average number of ordinary shares.

 

Diluted earnings per share amounts are calculated by dividing the profit attributable to the owners of the Parent Company by the weighted average number of ordinary shares in issue during the year, adjusted for the effects of potentially dilutive share options.

 


Year to

31 August

2013

5 months to

31 August

2012


No. of shares

No. of shares

Weighted average share capital



Weighted average shares in issue for basic earnings per share

81,751,253

79,078,431

Effect of dilutive options

1,374,566

3,951,661

Weighted average shares in issue for diluted earnings per share

83,125,819

83,030,092

 


Year to

31 August

2013

5 months to

31 August

2012


£'000

£'000

Earnings



Underlying earnings attributable to owners of the Parent

40,928 

9,904





Year to

31 August

2013

5 months to

31 August

2012


Pence

Pence

Earnings per share



Basic earnings per share

50.1 

12.5

Diluted earnings per share

49.2 

11.9

 

 

4,000,822 shares issued on 31 May 2012 under the Management Incentive Plan are included within weighted average shares in issue for basic earnings per share. At 31 August 2012, 2,405,723 of these shares were included in weighted average shares in issue for basic earnings per share and the remainder were included in weighted average shares in issue for diluted earnings per share.

 

 

4.   Reconciliation of net funds

 



Year to

31 August 

2013 

£'000 

Year to

31 August 

2012 

£'000 

Net movement in cash and cash equivalents


43,255 

3,569

Repayment of revolving credit facility


5,000

Net movement in net funds


43,255 

8,569

Opening net funds


27,884 

19,315

Closing net funds


71,139 

27,884





Closing net funds comprises:




Cash and cash equivalents


71,139 

27,884

Net funds


71,139 

27,884

 

The Group has a £20.0m revolving loan credit facility which includes an ancillary £10.0m guaranteed overdraft facility and which is available until July 2015.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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