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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Asos Plc | LSE:ASC | London | Ordinary Share | GB0030927254 | ORD 3.5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 5.40 | 1.55% | 353.00 | 352.00 | 354.80 | 355.00 | 347.00 | 355.00 | 24,201 | 09:54:48 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Womens Accesory, Spcl Stores | 3.55B | -223.1M | -1.8747 | -1.88 | 420.34M |
From Apr 2019 to Apr 2024
TIDMASC
RNS Number : 8017D
ASOS PLC
02 April 2014
2 April 2014
ASOS plc
Global Online Fashion Destination
Interim Results for the six months ended 28 February 2014
Summary results
Hot Features
Premium
GBP'000 Six months Six months Change
to 28 February to 28 February
2014 2013
----------------------------- ---------------- ---------------- -------
Group revenues(1) 481,726 359,731 34%
Retail sales 472,319 352,263 34%
UK retail sales 182,040 137,579 32%
International retail sales 290,279 214,684 35%
Gross profit 243,087 179,604 35%
Retail gross margin 49.5% 48.9% 60bps
Gross margin 50.5% 49.9% 60bps
Profit before tax 20,097 25,694 (22%)
Diluted earnings per share 18.5p 23.3p (21%)
Net funds(2) 36,914 45,224 (18%)
----------------------------- ---------------- ---------------- -------
(1) Includes retail sales, delivery receipts and third party revenues
(2) Cash and cash equivalents less bank borrowings
Highlights
-- Retail sales up 34% (UK retail sales up 32%, international retail sales up 35%) -- 8.2 million active customers at 28 February 2014, up 36% on prior year -- Retail gross margin up 60bps -- Accelerated investment in IT and warehousing; full year capex of GBP68m -- Profit before tax of GBP20.1m (2013: GBP25.7m)
Nick Robertson, CEO, commented:
"I am pleased to report another strong trading performance for the six month period, with retail sales up GBP120m to GBP472.3m, a 60bps expansion of retail gross margin and growth of 36% in our active customer base to 8.2m. Customer engagement remains high with growth in visits, conversion and average basket value. We are now investing in the capacity to support a truly global business with sales of GBP2.5 billion as the next staging post on our journey.
This continued strong growth was achieved at the same time as acceleration in our investment in logistics, our IT platform and our overall customer offering, whilst also continuing to invest in our China start-up. Our GBP68 million investment during the current year will more than double the sales capacity with greatly enhanced efficiencies at our UK warehouse, a new Eurohub in Berlin, an expanded facility in Ohio in the US and a new warehouse in Shanghai.
This increased pace of investment has reduced our profitability in the period, but will deliver significantly increased capacity as well as efficiencies in the longer term. ASOS is not and has never been about the short-term; the scale of the global opportunity remains as exciting as ever and we are investing for the many opportunities ahead."
(3) Defined as having shopped in the last twelve months
Investor and Analyst Meeting
There will be a meeting for analysts that will take place at 9.30am today, 2 April 2014, 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 Instinctif Partners 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 Instinctif Partners Matthew Smallwood / Justine Warren / Jamie Tel: 020 7457 2020 Ramsay 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 75,000branded 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 nine local language websites: UK, US, France, Germany, Spain, Italy, Australia, Russia and China.
ASOS's websites attract 71 million visits per month (February 2013: 52 million) and as at 28 February 2014 had 8.2 million active customers(1) (28 February 2013: 6.0 million), of which 3.2 million were located in the UK and 5.0 million were located in our international territories (28 February 2013: 2.5 million in the UK and 3.5 million internationally).
(1) 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
Interim Results for the six months ended 28 February 2014
Business Review
The Group has delivered another strong trading performance during the six months to 28 February 2014 with retail sales growth of 34% to GBP472.3m (2013: GBP352.3m). We have accelerated our infrastructural investment in warehousing and technology to create capacity for sales of up to GBP2.5 billion per annum, with some associated short-term incremental costs, as well as continuing to invest in our China start-up operation and in our overall customer proposition. Profit before tax for the six month period has therefore decreased by 22% to GBP20.1m (2013: GBP25.7m).
Our fashion
Our product offer remains focused on our global, fashion-conscious 20-something customer. Key to our product strategy is leading fashion trends, global relevance, amazing choice and great value for money. Over the last 18 months we have invested sourcing gains into our price proposition and we continue to offer great value through our own label and expansion of value brands such as New Look and Monki. We have delivered a 240bps increase in our full price sales mix during the period along with a reduction in markdown and discount and continued progress in our sourcing strategy.
During Autumn/Winter 2013 we have increased customer choice by adding new third-party brands, introducing new categories, expanding existing categories and extending our size ranges to ensure we cater for all our fashion conscious 20-something customers, whatever their size or shape. We now stock over 75,000 lines, an increase of 25% over last year. New brands to our portfolio include Pull & Bear, Jack Wills, Reiss, BCBG, Majestic and Criminal Damage. We have seen significant growth within our own-label underwear and lingerie categories, and within Menswear we have added to our smart and workwear offer through more extensive choice across tailoring, shirts and ties within both own-label and third-party brands.
We now sell Womenswear products in sizes 2 to 28 and Menswear in sizes XXXS to XXXL, and have introduced an increased range of men's waist, leg-length and shoe sizes. Within Womenswear, we added to our specialist ranges, launching our own-label Tall range and adding new third-party ranges including Little Mistress Plus Size, Glamorous Petite & Tall and New Look Petite & Tall. The addition of these sizes has been particularly well received by our international customer base, especially in the US, Germany and the Far East.
Operations
Technology
We have continued to enhance our websites and technical infrastructure to ensure we offer the most engaging experience globally. In particular, we aim to offer customers in each of our strategic markets a seamless desktop, mobile and tablet experience, across both iOS and Android devices. We have made further progress towards this goal with the launch of a US version of our Android and iOS apps in March 2014, and we plan to release apps in France and Germany during the second half of the financial year.
We launched our ASOS magazine iOS app during March 2014 which is available in English, French, and German and replaces our previous content app, Fashion Up. The app delivers the ASOS magazine directly to our customer's smartphone or tablet and offers links from featured product to the relevant product page on the ASOS website.
We expect to launch phase one of our local pricing functionality during May 2014, which is another key development on our journey to becoming a truly global retailer. This will allow us to offer locally-competitive pricing and perform locally-relevant promotional activity in our strategic markets, and to sell certain brands which are otherwise restricted in a number of territories.
We have also significantly enhanced our investment in behind-the-scenes technology over the past six months to support future volume growth, global expansion and delivery of customer experience enhancements, and expect to see the benefits of this development during the next six to twelve months. In particular, we are replatforming our websites and rebuilding our checkout process to allow us to develop and release customer-facing and infrastructural software optimisations with much greater frequency, share all our content globally across a wider range of languages and devices, and significantly improve our website response times for customers in our international territories. We are also building a new data warehouse which will consolidate customer-focused data, allowing more detailed reporting and analysis to support decision-making.
Customer Experience
During the period we launched our new Quick View function on our desktop sites, which allows our customers to view product detail, add to bag or save product without breaking their browsing journey from the category pages. We also launched a trial of our 'asseenonme' function, which allows our customers to engage with other customers by uploading photos of themselves wearing ASOS products, of which a selection are included on product pages.
During the second half of the year we will launch a significantly upgraded search capability and personalised recommendation function, which will enhance our customer experience by highlighting a relevant product edit based on previous purchases and saved items. We will also launch our social sign-on function, allowing customers to sign-in on our mobile site and apps using their Facebook or Twitter details.
We launched our annual Premier membership scheme in France early in the period, following launch in the US, Australia and Germany in summer 2013. The scheme entitles subscribers to unlimited free express delivery, special offers, a monthly magazine, product previews and priority access during sale periods for twelve months. Premier customers shop with us more frequently and with higher annual contribution than our other customers.
Global expansion
Our international customers now account for over 60% of sales and we continue to focus on growing our presence and market share in our key strategic markets as well as developing our customer proposition in other fast-growing territories. In the US, Australia, France, Germany, Russia and China, where we have dedicated websites and a focused local team, we are further improving our customer offer and raising brand awareness through dedicated marketing initiatives. We are also working to enhance the ASOS.com experience in other markets by adding locally-relevant payment methods and currency options and improving our delivery proposition.
Our China operation has been a particular focus of attention and investment during the last six months following launch in October 2013, and we are pleased with progress towards our initial goal of establishing an effective operating model which provides the capability for future growth in this exciting market. We plan to launch on China's Tmall e-commerce platform during the second half of the year, which will provide an established gateway through which we can further grow brand awareness and market share.
Delivery and returns
We aim to offer our customers a best-in-class delivery proposition and have made further progress towards this goal, particularly in our strategic territories. In France, we launched our next-day delivery service early in the period and improved order tracking in this territory to cover all orders. In Germany, we reduced our free delivery lead-time by one day and will introduce a next-day delivery service during the second half of the financial year. In Russia, we reduced our express delivery lead-times by two days, and will introduce a mid-tier solution here and in the US later in the financial year. In Australia, we reduced our standard delivery lead-time to metro areas by two days. Finally, in the UK, we introduced nationwide coverage of our evening-next-day service, which allows our customers to order up to midnight and receive their order the following evening, and launched our next-day Collect+ service. We also launched our 'early warning' service for certain shipments. This service sends an email or text notification to the customer the night before their delivery and they can then plan receipt of their parcel by selecting one of five options including changing the delivery date or upgrading to a pre-10am or Saturday option.
We have also worked on a significant expansion to our Pick-Up-Drop-Off ('PUDO') offering, which offers our customers the flexibility to choose to collect and return their order from a variety of convenient locations. We currently only offer such a service in the UK, via our Collect+ option which operates from c.5,000 locations. During the second half of the year we will introduce PUDO delivery services to our customers in France, Spain and Germany as well as adding additional UK options, creating a network of over 35,000 collection locations across these countries including c.10,000 in the UK.
Warehousing
Our warehousing activities continue to increase rapidly, with total unit volume processing up 39% year on year, and we took the decision during the period to bring forward the expansion of our global logistics network. This led to increased investment, both in the UK and internationally, as we develop the required infrastructure to support our global growth ambitions beyond our GBP1 billion sales target. This investment will create a global warehousing footprint with capacity for sales of GBP2.5 billion per annum across warehouses in the UK, China, the US and Europe during the next financial year.
Our planned capital expenditure for the financial year to 31 August 2014 is GBP68m and for the year to 31 August 2015 is GBP45m. Additionally, due to associated disruption in our Barnsley hub, we have opened a returns facility in Selby, North Yorkshire and a temporary bulk storage facility in Lister Hills, near Bradford. As a result of these actions, labour cost per unit for the period has increased by 23% to 76p (2013: 62p). These additional costs will be incurred until the first half of next financial year, and our medium-term LCPU target remains at 50p.
The first extension to our Barnsley hub has added an additional 25% floorspace which, when fully fitted out early in calendar year 2015, will provide the unit storage capacity to accommodate sales of GBP1.5 billion. In addition, following the launch of our mechanised despatch sorter in October 2013, we are now building our mechanised picking solution which is expected to launch in the first half of the financial year ended 31 August 2015. Both of these will deliver significant operational cost savings.
Internationally, we currently fulfil from warehouses in the US and China as well as operating a returns centre in Australia, and we are establishing a new European warehouse. We expect phase one of this facility to be operational before the end of this financial year, providing a six million unit storage capacity and allowing faster refund processing and improved delivery lead-times for our customers in Germany and other parts of Europe, with associated delivery cost savings. Our US warehousing activities in particular have increased over the last year; over 20% of US orders are now despatched from our warehouse in Ohio, with associated customer experience and distribution cost benefits, and we plan to increase this over the next twelve months.
People
We continue to focus on hiring, retaining and developing the right talent to deliver our goal of being the no.1 fashion destination for 20-somethings globally. Over the last six months we have focused on our Retail, Marketing and Technology departments, adding a total of 189 employees during the period. This included strengthening of our senior team with the appointments of a new People Director, Customer Care Director, Director of Brand and Campaigns, and Head of Talent and Development. The Group's total headcount now stands at 1,541.
As previously announced, Mary Turner stepped down from the Board of ASOS Plc in January 2014 and we are very grateful for her contribution to the ASOS journey over the last four years.
Hilary Riva and Rita Clifton were appointed non-executive directors of ASOS Plc with effect from 1 April 2014, further boosting the Board's experience in fashion and brand. Hilary was previously a member of the management board at Arcadia and is a former chief executive of the British Fashion Council. Rita's background is in the advertising industry and she has held senior management roles at Saatchi & Saatchi and at the global brand consultancy Interbrand, of which she is now Chairman. Both Hilary and Rita also hold several other non-executive directorship posts.
Trading operations
The Group achieved another strong trading performance during the six months ended 28 February 2014, with growth in sales and gross profit across all territories.
Revenue
Six months to 28 February 2014 Group International GBP'000 total UK US EU RoW total --------------------------- -------- -------- ------- -------- -------- -------------- Retail sales 472,319 182,040 46,749 127,626 115,904 290,279 Growth 34% 32% 31% 65% 14% 35% Growth at constant exchange rate 35% 32% 33% 58% 23% 37% Delivery receipts 7,544 3,410 835 1,582 1,717 4,134 Growth 40% 38% 26% 72% 29% 42% Third party revenues 1,863 1,863 - - - - Growth (10%) (10%) - - - - Total revenues 481,726 187,313 47,584 129,208 117,621 294,413 Growth 34% 32% 31% 65% 14% 35% --------------------------- -------- -------- ------- -------- -------- --------------
Total Group revenue increased by 34% and total retail sales grew by 34%, driven by 32% growth in the UK and 35% growth in our International territories. International retail sales now account for 61% of total retail sales, in line with 61% last year.
The UK continued to perform strongly, with retail sales increasing by 32% on last year, driven by 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, February 2014).
Our fastest growing segment was the EU, with retail sales up 65% on last year, including particularly strong growth in France and Germany. This is the result of significant improvements to our proposition during the last year, including additional locally-relevant payment methods, improved delivery options, and the introduction of our Premier service in these markets.
We grew our market share in the US, with retail sales growth of 31%. We launched our Premier membership scheme in this territory during the period, introduced more locally-relevant brands, and grew our domestic fulfilment capability; over 20% of US orders are now shipped from our domestic US warehouse and we plan to increase this over the next twelve months. We also launched a student awareness programme at selected universities to increase our brand profile and drive future sales.
Reported retail sales growth in our Rest of World segment in GBP was 14%, although on a constant currency basis, excluding adverse movements in foreign currency exchange rates compared with last year, retail sales growth in this segment was 23%, reflecting strong demand. Russia performed strongly following improvements to our delivery proposition and targeted digital marketing activities, despite adverse currency fluctuations towards the end of the period which impact the competitiveness of our pricing in the local market. Australia was impacted by adverse currency fluctuations throughout the period but despite this we comfortably maintained our first place Comscore position in this territory. Our China start-up operation attracts increasing traffic, customers and orders each week as we develop our proposition in this market.
Delivery receipts increased by 40% since last year driven by an increase in total orders of 36% and increased uptake of our Premier membership scheme.
Third party revenues, which mainly comprise advertising revenues from the website and the ASOS magazine, decreased by 10% due to the phasing of execution of campaigns.
Customer engagement
We have continued to attract new customers from across the globe and now have 8.2m active customers(1) , an increase of 36% on prior year. Growth in our active customer base was particularly strong internationally and over 60% of active customers are now located in our international territories.
Average basket value increased by 4% during the period, driven by an 8% increase in average units per basket as our customers responded well to our ongoing proposition improvements, including our free international express delivery offers above a minimum spend threshold. This was partly offset by a 3% decrease in average selling price per unit as a result of a shift in our branded mix towards lower-priced brands.
Conversion(2) increased by 10bps and average order frequency increased by 3%, reflecting the compelling nature of our proposition.
Six months Six months Change
to 28 February to 28 February
2014 2013
------------------------------------------- ---------------- ----------------- -------
Active customers(1) ('000) 8,173 6,007 36%
Average basket value (including VAT) GBP62.67 GBP60.30 4%
Average units per basket 2.52 2.34 8%
Average selling price per unit (including
VAT) GBP24.85 GBP25.73 (3%)
Total orders ('000) 12,321 9,044 36%
Total visits ('000) 469,107 361,382 30%
------------------------------------------- ---------------- ----------------- -------
(1) As at 28 February, defined as having shopped with ASOS during the last 12 months
(2) Calculated as total orders divided by total visits
Gross profitability
Six months to 28
February 2014 Group International
total UK US EU RoW total
------------------------ -------- ------- ------- ------- -------- --------------
Gross profit (GBP'000) 243,087 87,131 27,453 65,883 62,620 155,956
Growth 35% 32% 33% 73% 14% 37%
Retail gross margin 49.5% 45.0% 56.9% 50.4% 52.5% 52.3%
Growth 60bps 40bps 70bps 260bps (40bps) 70bps
Gross margin 50.5% 46.5% 57.7% 51.0% 53.2% 53.0%
Growth 60bps 20bps 70bps 250bps (30bps) 70bps
------------------------ -------- ------- ------- ------- -------- --------------
Retail gross margin increased by 60bps compared with last year, to 49.5% (2013: 48.9%), driven by better stock management including a 240bps improvement in our full-price sales mix. We also generated gains through focus on our sourcing strategy. Gross margin (including third party revenues and delivery receipts) increased by 60bps to 50.5% (2013: 49.9%).
Investment in our operating resources
The last six months have been a period of significant investment in our infrastructure and customer proposition ahead of future sales growth beyond our near-term GBP1 billion sales target. As a result, operating expenses increased by 45% to GBP223.1m, and the total operating costs to sales ratio increased by 350 bps.
Six months Six months
to 28 February to 28 February
GBP'000 2014 2013 Change
----------------------------------- ---------------- ----------------- ---------
Distribution costs (72,944) (53,038) (38%)
Payroll and staff costs (44,194) (30,164) (47%)
Warehousing (34,724) (20,631) (68%)
Marketing (31,505) (20,455) (54%)
Production (2,383) (2,128) (12%)
Technology costs (7,315) (4,621) (58%)
Other operating costs (22,547) (16,377) (38%)
Depreciation and amortisation (7,494) (6,522) (15%)
----------------------------------- ---------------- ----------------- ---------
Total operating costs (223,106) (153,936) (45%)
Operating cost ratio (% of sales) 46.3% 42.8% (350bps)
----------------------------------- ---------------- ----------------- ---------
Warehousing costs increased by 150bps to 7.2% of sales due to disruption associated with relieving pressure in our Barnsley warehouse whilst we carry out infrastructural investments to increase its capacity, as well as investment in our warehouses in China and the US.
Marketing costs increased by 80bps to 6.5% of sales, driven by increased spend on digital marketing activities as we have continued to focus on driving awareness and growing our market share in our strategic territories where our customer proposition is well developed.
The Group's total headcount increased by 38% between 28 February 2013 and 28 February 2014, including a number of new recruits to our senior management team to ensure we have the talent, experience and expertise to deliver our future growth plans. As a result of this investment in our people, payroll and staff costs increased by 80bps to 9.2% of sales.
Distribution costs increased by 38% driven by investment in our global delivery proposition as well as the increase in total orders during the period.
Our ASOS China operation commenced trading in October 2013 and we have incurred net expenditure across the Group of GBP3.7m during the period in launching these activities and developing a platform for future growth in this market. The related operating costs are included above and largely relate to warehousing and staff costs. We expect our net investment in our China operation for the year to 31 August 2014 to be c.GBP9m.
Income statement
The Group generated profit before tax of GBP20.1m, down 22% on last year (2013: GBP25.7m) following significant investment in our operating capability.
Six months Six months
to 28 February to 28 February
GBP'000 2014 2013 Change
------------------------- ---------------- ----------------- -------
Revenue 481,726 359,731 34%
Cost of sales (238,639) (180,127)
------------------------- ---------------- ----------------- -------
Gross profit 243,087 179,604 35%
Distribution expenses (72,944) (53,038) (38%)
Administrative expenses (150,162) (100,898) (49%)
------------------------- ---------------- ----------------- -------
Operating profit 19,981 25,668 (22%)
Net finance income 116 26
Profit before tax 20,097 25,694 (22%)
Income tax expense (4,796) (6,324)
------------------------- ---------------- ----------------- -------
Profit after tax 15,301 19,370 (21%)
------------------------- ---------------- ----------------- -------
Taxation
The effective tax rate was 23.9%, 70bps lower than the prior year (2013: 24.6%) due to a reduction in the prevailing rate of UK corporation tax. Going forward, we would expect the effective rate of tax to be around 150bps 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 earnings per share decreased by 22% to 18.6p per share (2013: 23.7p) and diluted earnings per share decreased by 21% to 18.5p per share (2013: 23.3p), both driven by the decline in profit after tax during the period.
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 drive further growth and to exploit investment opportunities both in the UK and internationally. Accordingly, it has decided not to pay a dividend for the six months ended 28 February 2014. This policy remains under regular review.
Statement of financial position
The Group enjoys a robust financial position including a strong cash balance and a clean stock position. Net assets increased by GBP13.6m to GBP173.4m during the period (31 August 2013: GBP159.8m) as the Group's profit after tax was partially offset by a reduction in the deferred tax asset due to exercise of share options. The Group's cash position decreased by GBP34.2m to GBP36.9m (31 August 2013: GBP71.1m), reflecting our accelerated capital expenditure on our warehousing and IT infrastructure as well as a working capital outflow due to timing of new-season inventory intake and of supplier payments.
The summary statement of financial position is shown below.
At At
28 February 31 August
GBP'000 2014 2013
-------------------------------------- ------------- -----------
Goodwill and other intangible assets 51,605 39,686
Property, plant and equipment 46,141 30,031
Deferred tax asset 1,127 8,902
-------------------------------------- ------------- -----------
Non-current assets 98,873 78,619
-------------------------------------- ------------- -----------
Working capital 38,549 12,257
Net funds(1) 36,914 71,139
Derivative financial assets 1,418 225
Current tax liability (1,806) (2,441)
Non-current liability (535) -
-------------------------------------- ------------- -----------
Net assets 173,413 159,799
-------------------------------------- ------------- -----------
(1) Cash and cash equivalents less bank borrowings
Statement of cash flows
As a result of increased capital and operational investment during the period, the Group's cash balance decreased by GBP34.2m to GBP36.9m (31 August 2013: GBP71.1m), driven by a cash outflow of GBP33.9m (2013: inflow of GBP17.3m). The Group had no bank borrowings at either reporting date. The summary statement of cash flows is shown below.
Six months to
28 February
GBP'000 2014 Six months to 28 February 2013
------------------------------------------------------- -------------- --------------------------------
Operating profit 19,981 25,668
Depreciation and amortisation 7,494 6,522
Losses on disposal of assets 93 -
Working capital (27,492) (6,623)
Share-based payments charges 2,527 1,779
Other non-cash items (75) (60)
Tax paid (2,346) (17)
Cash inflow from operating profit 182 27,269
Capital expenditure (34,259) (10,051)
Proceeds from issue of ordinary shares 563 129
Net cash outflow relating to Employee Benefit Trust (632) (22)
Acquisition of subsidiary 182 -
Net finance income received 82 15
Total cash (outflow)/inflow (33,882) 17,340
------------------------------------------------------- -------------- --------------------------------
Opening cash and cash equivalents 71,139 27,884
Effect of exchange rates on cash and cash equivalents (343) -
------------------------------------------------------- -------------- --------------------------------
Closing cash and cash equivalents 36,914 45,224
------------------------------------------------------- -------------- --------------------------------
Cash generated from operating profit decreased by GBP27.1m, driven by a reduction in EBITDA of GBP4.7m and an increase in the working capital outflow of GBP20.9m. The working capital outflow increased due to the timing of supplier payments, accelerated new-season inventory intake to support our sales growth targets during the upcoming SS14 season, and a GBP2.0m benefit in the prior year as we obtained bonded warehouse status. Capital expenditure increased by GBP24.2m on the prior year due to our investments in our warehousing and IT infrastructure.
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 28 February 2014, the Group had in place an undrawn GBP20.0m revolving loan credit facility which includes an ancillary GBP10.0m guaranteed overdraft facility and which is available until July 2015.
Fixed asset additions
Six months Six months
to to
28 February 28 February
GBP'000 2014 2013
----------------------------- ------------- --------------
IT 16,101 8,379
Office fixtures and fit-out 2,753 792
Warehouse 16,497 1,797
Total 35,351 10,968
----------------------------- ------------- --------------
We accelerated our investments in our warehousing and IT infrastructure during the period to support our long-term future growth beyond sales of GBP1 billion. The majority of our warehousing spend related to increasing capacity and capability in our Barnsley warehouse, including extending this facility and building our mechanised picking solution. We also made significant behind-the-scenes investment in our IT infrastructure to create a truly global and scalable platform.
Outlook
We have delivered another strong trading performance during the last six months, attracting more customers, increasing engagement across our platforms and driving strong sales growth. Alongside this, we have accelerated our long-term infrastructural investments and as a result of associated short-term disruption, which we expect to continue into the first half of the next financial year, as well as accelerated investment in our China start-up operation, we expect EBIT margin for the financial year to 31 August 2014 to be c.6.5%. The global opportunity for our business is bigger than ever and these investments will accommodate future annual sales of at least GBP2.5 billion, the next staging post in our journey to becoming the world's no.1 fashion destination for 20-somethings.
Nick Robertson Nick Beighton Chief Executive Officer Chief Financial Officer
Unaudited Consolidated Statement of Comprehensive Income
For the six months ended 28 February 2014
Six months Six months Year to 31
to 28 February to 28 February August 2013
2014 2013
GBP'000 GBP'000 GBP'000
Revenue 481,726 359,731 769,396
Cost of sales (238,639) (180,127) (370,816)
---------------- ---------------- -------------
Gross profit 243,087 179,604 398,580
Distribution expenses (72,944) (53,038) (115,172)
Administrative expenses (150,162) (100,898) (228,953)
---------------- ---------------- -------------
Operating profit 19,981 25,668 54,455
Finance income 168 87 283
Finance expense (52) (61) (68)
---------------- ---------------- -------------
Profit before tax 20,097 25,694 54,670
Income tax expense (4,796) (6,324) (13,744)
---------------- ---------------- -------------
Profit for the period 15,301 19,370 40,926
================ ================ =============
Net exchange adjustments offset
in reserves (120) (38) (45)
Fair value gain on derivative
financial assets 1,193 - 225
---------------- ---------------- -------------
Other comprehensive income/(loss)
for the period 1,073 (38) 180
---------------- ---------------- -------------
Total comprehensive income 16,374 19,332 41,106
================ ================ =============
Profit/(loss) attributable
to:
Owners of the parent 15,407 19,370 40,928
Non-controlling interest (106) - (2)
---------------- ---------------- -------------
15,301 19,370 40,926
================ ================ =============
Total comprehensive income/(loss)
attributable to:
Owners of the parent 16,480 19,332 41,108
Non-controlling interest (106) - (2)
---------------- ---------------- -------------
16,374 19,332 41,106
================ ================ =============
Earnings per share
Basic 18.6p 23.7p 50.1p
Diluted 18.5p 23.3p 49.2p
================ ================ =============
Unaudited Consolidated Statement of Changes in Equity
For the six months ended 28 February 2014
Called Employee Equity
up Benefit attributable
share Share Retained Trust Hedging Translation to owners of Non-controlling Total
capital premium earnings(1) reserve reserve reserve the parent interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 September
2013 2,890 6,368 152,133 (1,770) 225 (45) 159,801 (2) 159,799
Shares
allotted in
the period 30 533 - - - - 563 - 563
Purchase of
shares by
EBT(2) - - - (632) - - (632) - (632)
Transfer of
shares from
EBT(2) on
exercise - - (59) 59 - - - - -
Share based
payments
charge - - 2,527 - - - 2,527 - 2,527
Profit/(loss)
for the
period - - 15,407 - - - 15,407 (106) 15,301
Other
comprehensive
income/(loss)
for the
period - - - - 1,193 (120) 1,073 - 1,073
Acquisition of
subsidiary - - (535) - - - (535) (42) (577)
Deferred tax
on share
options - - (7,284) - - - (7,284) - (7,284)
Current tax on
items taken
directly to
equity - - 2,643 - - - 2,643 - 2,643
At 28 February
2014 2,920 6,901 164,832 (2,343) 1,418 (165) 173,563 (150) 173,413
======== ========== ============ ========= ======== ============ ============= ================ ========
Called Employee Equity
up Benefit attributable
share Share Retained Trust Hedging Translation to owners of Non-controlling Total
capital premium earnings(1) reserve reserve reserve the parent interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 September
2012 2,854 6,105 99,492 (2,464) - - 105,987 - 105,987
Shares
allotted in
the period 29 99 - - - - 128 - 128
Purchase of
shares by
EBT(2) - - - (22) - - (22) - (22)
Transfer of
shares from
EBT(2) on
exercise - - (123) 123 - - - - -
Share based
payments
charge - - 1,779 - - - 1,779 - 1,779
Profit for the
period - - 19,370 - - - 19,370 - 19,370
Other
comprehensive
loss for the
period - - - - - (38) (38) - (38)
Deferred tax
on share
options - - (257) - - - (257) - (257)
Current tax on
items taken
directly to
equity - - 2,020 - - - 2,020 - 2,020
At 28 February
2013 2,883 6,204 122,281 (2,363) - (38) 128,967 - 128,967
======== ========== ============ ========= ======== ============ ============= ================ ========
Called Employee Equity
up Benefit attributable
share Share Retained Trust Hedging Translation to owners of Non-controlling Total
capital premium earnings(1) reserve reserve reserve the parent interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 September
2012 2,854 6,105 99,492 (2,464) - - 105,987 - 105,987
Shares
allotted in
the period 36 263 - - - - 299 - 299
Net cash
received on
exercise of
shares from
EBT(2) - - - 160 - - 160 - 160
Transfer of
shares from
EBT(2) on
exercise - - (534) 534 - - - - -
Share based
payments
charge - - 4,005 - - - 4,005 - 4,005
Profit/(loss)
for the
period - - 40,928 - - - 40,928 (2) 40,926
Other
comprehensive
income/(loss)
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
======== ========== ============ ========= ======== ============ ============= ================ ========
(1) Retained earnings includes the share-based payments reserve
(2) Employee Benefit Trust
Unaudited Consolidated Statement of Financial Position
At 28 February 2014
At At At
28 February 28 February 31 August
2014 2013 2013
GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill 1,325 1,060 1,060
Other intangible assets 50,280 26,499 38,626
Property, plant and equipment 46,141 27,416 30,031
Deferred tax asset 1,127 8,254 8,902
------------- ------------- -----------
98,873 63,229 78,619
------------- ------------- -----------
Current assets
Inventories 154,640 99,861 143,348
Trade and other receivables 19,110 15,091 18,420
Derivative financial asset 1,418 - 225
Cash and cash equivalents 36,914 45,224 71,139
212,082 160,176 233,132
------------- ------------- -----------
Current liabilities
Trade and other payables (135,201) (90,196) (149,511)
Current tax liability (1,806) (4,242) (2,441)
------------- ------------- -----------
(137,007) (94,438) (151,952)
------------- ------------- -----------
Non-current liabilities (535) - -
------------- ------------- -----------
Net current assets 75,075 65,738 81,180
------------- ------------- -----------
Net assets 173,413 128,967 159,799
============= ============= ===========
Equity attributable to owners of
the parent
Called up share capital 2,920 2,883 2,890
Share premium 6,901 6,204 6,368
Employee Benefit Trust reserve (2,343) (2,363) (1,770)
Hedging reserve 1,418 - 225
Translation reserve (165) (38) (45)
Retained earnings 164,832 122,281 152,133
------------- ------------- -----------
173,563 128,967 159,801
------------- ------------- -----------
Non-controlling interests (150) - (2)
Total equity 173,413 128,967 159,799
============= ============= ===========
Unaudited Consolidated Statement of Cash Flows
For the six months ended 28 February 2014
Six months Six months Year to
to 28 February to 28 February 31 August
2014 2013 2013
GBP'000 GBP'000 GBP'000
Operating profit 19,981 25,668 54,455
Adjusted for:
Depreciation of property, plant
and equipment 3,044 3,205 7,005
Amortisation of other intangible
assets 4,450 3,317 6,479
Loss on disposal of non-current
assets 93 - 298
(Increase)/decrease in inventories (11,499) 402 (42,882)
(Increase)/decrease in trade and
other receivables (821) 3,975 787
(Decrease)/increase in trade and
other payables (15,172) (11,000) 47,486
Share-based payments charges 2,527 1,779 4,005
Other non-cash items (75) (60) (104)
Income tax paid (2,346) (17) (3,353)
---------------- ---------------- -----------
Net cash generated from operating
activities 182 27,269 74,176
Investing activities
Payments to acquire other intangible
assets (16,636) (7,718) (21,770)
Payments to acquire property, plant
and equipment (17,623) (2,333) (9,558)
Finance income 146 87 240
Acquisition of subsidiary 182 - 36
----------------
Net cash used in investing activities (33,931) (9,964) (31,052)
Financing activities
Proceeds from issue of ordinary
shares 563 129 299
Net cash (outflow)/inflow relating
to Employee Benefit Trust (632) (22) 160
Finance expense (64) (72) (328)
---------------- ---------------- -----------
Net cash (used in)/generated from
financing activities (133) 35 131
Net (decrease)/increase in cash
and cash equivalents (33,882) 17,340 43,255
================ ================ ===========
Opening cash and cash equivalents 71,139 27,884 27,884
Effect of exchange rates on cash (343) - -
and cash equivalents
---------------- ---------------- -----------
Closing cash and cash equivalents 36,914 45,224 71,139
---------------- ---------------- -----------
Unaudited reconciliation of net cash flow to movement in net funds
For the six months ended 28 February 2014
Six months Six months Year to
to 28 February to 28 February 31 August
2014 2013 2013
GBP'000 GBP'000 GBP'000
Net funds at beginning of the period 71,139 27,884 27,884
(Decrease)/increase in cash and
cash equivalents (33,882) 17,340 43,255
Effect of exchange rates on cash (343) - -
and cash equivalents
Net funds at end of the period 36,914 45,224 71,139
================ ================ ===========
Notes to the unaudited financial information
For the six months ended 28 February 2014
1. Basis of preparation
The interim financial statements for the six months ended 28 February 2014 have been prepared in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union. The interim financial information should be read in conjunction with the Group's Annual Report and Accounts for the year ended 31 August 2013, which has been prepared in accordance with IFRSs as adopted by the European Union.
The interim financial information contained in this report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The Annual Report and Accounts for the year ended 31 August 2013 has been filed with the Registrar of Companies. 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.
The interim financial statements are unaudited and were approved by the Board of Directors on 1 April 2014.
Going concern
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. For this reason, they have continued to adopt the going concern basis in preparing the interim financial statements.
Accounting policies
The interim financial statements have been prepared in accordance with the accounting policies set out in the Annual Report and Accounts for the year ended 31 August 2013.
2. Principal risks and uncertainties
The Board considers the principal risks and uncertainties which could impact the Group over the remaining six months of the financial year to 31 August 2014 to be unchanged from those set out in the Annual Report and Accounts for the year ended 31 August 2013, summarised as follows:
- Economic and market risk, including the UK and global economic outlook
- Technological risk, including failure or interruption of business critical systems and failure to adopt technological innovations
- Supply chain risks, including interruption to supply of core category products and disruption to delivery services or warehousing activities
- Brand and reputational risks - Reliance on key personnel - Regulatory compliance
These are set out in detail on pages 32 to 35 of the Group's Annual Report and Accounts for the year ended 31 August 2013, a copy of which is available on the Group's website, www.asosplc.com. Information on financial risk management is also detailed on pages 69 to 70 of the Annual Report.
3. 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, which 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.
Six months to 28 February 2014
UK US EU RoW Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Retail sales 182,040 46,749 127,626 115,904 472,319
Delivery receipts 3,410 835 1,582 1,717 7,544
Third party revenues 1,863 - - - 1,863
---------- --------- --------- --------- ----------
Total revenue 187,313 47,584 129,208 117,621 481,726
Cost of sales (100,182) (20,131) (63,325) (55,001) (238,639)
---------- --------- --------- --------- ----------
Gross profit 87,131 27,453 65,883 62,620 243,087
Distribution expenses (17,896) (15,100) (17,784) (22,164) (72,944)
---------- --------- --------- --------- ----------
Segment result 69,235 12,353 48,099 40,456 170,143
Administrative expenses (150,162)
----------
Operating profit 19,981
Finance income 168
Finance expense (52)
----------
Profit before tax 20,097
==========
Six months to 28 February 2013
UK US EU RoW Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Retail sales 137,579 35,551 77,457 101,676 352,263
Delivery receipts 2,477 663 920 1,330 5,390
Third party revenues 2,078 - - - 2,078
--------- --------- --------- --------- ----------
Total revenue 142,134 36,214 78,377 103,006 359,731
Cost of sales (76,260) (15,584) (40,397) (47,886) (180,127)
--------- --------- --------- --------- ----------
Gross profit 65,874 20,630 37,980 55,120 179,604
Distribution expenses (12,282) (12,561) (10,889) (17,306) (53,038)
--------- --------- --------- --------- ----------
Segment result 53,592 8,069 27,091 37,814 126,566
Administrative expenses (100,898)
----------
Operating profit 25,668
Finance income 87
Finance expense (61)
----------
Profit before tax 25,694
==========
Year to 31 August 2013
UK US EU RoW Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 expenses (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
==========
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.
4. 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 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, adjusted for the effects of potentially dilutive share options.
Six months Six months Year to
to 28 February to 28 February 31 August
2014 2013 2013
No. of shares No. of shares No. of
shares
Weighted average share capital
Weighted average shares in issue for
basic earnings per share 82,707,823 81,567,423 81,751,253
Effect of dilutive options 442,819 1,537,270 1,374,566
---------------- ---------------- -----------
Weighted average shares in issue for
diluted earnings per share 83,150,642 83,104,693 83,125,819
================ ================ ===========
Six months Six months Year to
to 28 February to 28 February 31 August
2014 2013 2013
GBP'000 GBP'000 GBP'000
Earnings
Underlying earnings attributable to
owners of the parent 15,407 19,370 40,928
================
Six months Six months Year to
to 28 February to 28 February 31 August
2014 2013 2013
Pence Pence Pence
Earnings per share
Basic earnings per share 18.6 23.7 50.1
Diluted earnings per share 18.5 23.3 49.2
================ ================ ==============
5. Reconciliation of net funds
Six months Six months Year to
to 28 February to 28 February 31 August
2014 2013 2013
GBP'000 GBP'000 GBP'000
Net movement in net funds (33,882) 17,340 43,255
Opening net funds 71,139 27,884 27,884
Effect of exchange rates on cash and (343)
cash equivalents - -
---------------- ---------------- -----------
Closing net funds 36,914 45,224 71,139
================ ================ ===========
Closing net funds comprises:
Cash and cash equivalents 36,914 45,224 71,139
----------------
Net funds 36,914 45,224 71,139
================ ================ ===========
The Group has a GBP20.0m revolving loan credit facility which includes an ancillary GBP10.0m guaranteed overdraft facility and which is available until July 2015.
6. Related Parties
The Group's related parties are the Employee Benefit Trust and key management personnel. There have been no material changes to the Group's related party transactions during the six months to 28 February 2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SSIFWFFLSEEL
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