Interim Results

Released : 30/04/2013

RNS Number : 5302D
ASOS PLC
30 April 2013
 



                                                                                                                                           

30 April 2013

ASOS plc

Global Online Fashion Destination

Interim Results for the six months ended 28 February 2013

 

Summary results table

£'000s

H1

2012/13

H1

2011/12

Change

Group revenues1

359,731

269,926

33%

Retail sales

352,263

262,921

34%

  UK retail sales

137,579

108,967

26%

  International retail sales

214,684

153,954

39%

Gross profit

179,604

137,190

31%

  Retail gross margin

48.9%

49.5%

(60bps)

  Gross margin

49.9%

50.8%

(90bps)

Profit before tax and exceptional items

25,694

23,134

11%

Profit before tax

25,694

21,626

19%

Diluted underlying earnings per share2

23.3

20.5

14%

Diluted earnings per share3

23.3

19.1

22%

Net funds4

45,224

12,718

256%

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 including exceptional items of £nil (2012: £1.5m)

4Cash and cash equivalents less bank borrowings

 

Highlights:

·      Retail sales up 34% (UK retail sales up 26%, International retail sales up 39%)

·      Retail gross margin down by 60bps and gross margin down by 90bps

·      International retail sales accounted for 61% of total retail sales (2012: 59%)

·      Profit before tax and exceptional items up 11% to £25.7m (2012: £23.1m)

·      Profit before tax and exceptional items up 18% to £27.2m excluding £1.5m Long Term Incentive Plan charge

·      Net funds of £45.2m (2012: £12.7m)

·      6.0 million active customers5 at 28 February 2013 (2012: 4.3 million)

 

Nick Robertson, CEO, commented:

 

"I am pleased to report another strong performance for ASOS for the six months ended 28 February 2013, with retail sales up 34% to £352.3m (2012: £262.9m) and profit before tax and exceptional items up 11% to £25.7m (2012: £23.1m).

 

We have continued to invest in all aspects of the customer offer to maximisethe growth opportunity; investing in product price and quality, enhanced delivery options, a broad range of marketing initiatives, focused local teams in international territories and continual improvement to our technology platforms, most notably mobile and international sites. Progress on our dedicated sites for both Russia and China remains on track.  We are already seeing the benefits of this investment across all territories with increased customer awareness, increased shopper frequency, higher conversion rates, more items per basket and strong sales growth. At the same time we have reached the milestone of six million active customers worldwide.

Momentum is strong, and we remain positive in our outlook for 2012/13 as we continue our journey to becoming the number one online fashion destination for twenty-somethings, globally. Our International roll out continues and our £1 billion sales ambition for the Group is firmly in our sights."

 

5Defined as having shopped in the last 12 months

 

 

Investor and Analyst Meeting

A meeting for investors and analysts will take place at 9.30am today, 30 April 2013, at Etc. Venues, 200 Aldersgate, EC1A 4HD. A webcast of the meeting will be available at www.asosplc.com/investors.

 

For further information:

 

ASOS plc    

Nick Robertson, Chief Executive

Tel: 020 7756 1017

Nick Beighton, Finance Director

Greg Feehely, Head of Investor Relations

Website: www.asosplc.com 

 




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 online fashion and beauty retailer selling over 60,000 branded and own-label products to fashion forward twenty-somethings through our website, asos.com. We ship, for free, to 241 countries and territories from our 1.1 million square foot global distribution centre in the UK.

We tailor the mix of own label, global and local brands sold through each of our seven local language websites: UK, USA, France, Germany, Spain, Italy and Australia.

ASOS's websites attract 19.8 million unique visitors a month (February 2012: 15.6 million), and as at 28 February 2013 had 11.1 million registered users (29 February 2012: 7.8 million) and 6.0 million active customers* (29 February 2012: 4.3 million) from 241 countries and territories.

*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

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 2013

Business Review

 

The Group has performed strongly in the period, with revenues up 33% to £359.7m (2012: £269.9m) and profit before tax and exceptional items up 11% on the comparative period at £25.7m (2012: £23.1m).

Our Fashion

 

Our product offer remains focused on our global twenty-something customer and we have continued to invest in improving the value of our own-brand offer. This "first price right price" approach resulted in a higher mix of full price sales and a reduction in markdown spend. We continually review our branded and own-label ranges and add c2,000 new lines per week to ensure we lead fashion trends and keep product ranges relevant for our customers, and to drive engagement and frequency of traffic.

 

Although we have commenced rationalisation of our supplier base, we are looking to put greater emphasis on this in future through establishing a dedicated sourcing team. This will enable us to drive retail gross margin efficiency and reduce lead times, whilst not compromising on either fashionability or quality.

 

ASOS own-label continues to be highly sought after in both the UK and internationally and accounted for 52.4% of total sales during the period (2012: 52.5%). During the last six months we have launched several exclusive designer collaborations including Markus Lupfer for ASOS Black, Marios Schwab Lingerie, Antipodium Shoes, Elliot Atkinson Nightwear and Puma for ASOS Black Menswear. We also continued to support local communities in Kenya through our ASOS Africa range.

 

Despite a highly competitive market our womenswear offer has performed strongly during the period. Our efforts to add more diversity into the range through an enhanced offer of separates and casualwear has been well received by customers and has driven strong growth. We have also expanded our range in our specialist sizing areas; Petites, Curve and Maternity. These areas have performed exceptionally well during the period and continue to gain momentum. We will continue to review and expand the range of sizes we offer in response to customer demand.

 

Menswear continued to grow strongly and accounted for 26% of total sales (2012: 24%). Our own-label menswear offer is becoming more established and is growing as a proportion of menswear sales.

 

Third-party brands remain very important to ASOS and we have continued to refine our third-party brand offer to ensure that it remains relevant to our twenty-something customer. As we expand globally, we are also introducing more brands with particular relevance to our international territories. During the period we have added new brands including New Look, Only, Boy London, House Of Hackney, B+AB and White Chocolate to our brand portfolio.

 

 

Operations

 

Technology

 

We continue to enhance the engaging customer experience of our websites, ensuring the ASOS platform permeates our customers' fashion lives and positions ASOS as a global online community of fashion lovers. A key part of this is creating technology that can be accessed by customers across the globe 24/7 from whichever device they chose. Mobile and tablets combined now account for almost 30% of ASOS traffic and this continues to grow rapidly. To ensure we are able to take full advantage of this, our enhanced English-language mobile site was launched during April 2013 and we will shortly be refreshing our iPad and iPhone apps and introducing an Android app, whilst concurrently launching local language sites in our strategic markets.

 

During the period, we added new functionality to our main site including 'buy-the-look', which allows customers to easily purchase an entire outfit when viewing a particular product, 'recently-viewed' which provides for quick access to the most recently viewed products, we improved our search results capability and launched a trial of 'Live Style Advice' where our team of stylists help our customers find items, deliver a more engaging experience, and build brand engagement. In April 2013, we launched a trial of our ASOS fit prediction tool. This increases engagement and satisfaction by allowing our customers to upload the dimensions of a garment they own or simply indicate a previously purchased product and then compare it to a product onsite to ensure correct fit. We have also significantly expanded our ability to continually test small optimisations to our website that lead to incremental improvements in conversion and sales.

We also continue to work on our underlying infrastructure including enabling our platforms to handle all language character sets and making structural changes to our checkout process to allow us to add new payment methods and functionalities as we expand globally. As part of this process, we added new payment methods for our customers based in Germany and The Netherlands, and are already seeing improved sales growth in these countries as a result.

 

Delivery and Returns

 

Delivery and returns solutions continue to be a cornerstone of our engaging customer experience and profitable international growth strategy. We have delivered further improvements to our UK proposition over the last six months including extending the next day delivery cut-off from 18:00 to 20:00, introducing an improved text messaging service providing delivery information, and reducing the price of our Premier service. We also continue to make improvements to our global customer proposition.

 

Warehousing

 

The strong performance of the Barnsley warehouse continues with an improvement in average labour cost per unit over the period of 12% compared to last year, despite making no significant changes to the operating model during the past twelve months. Average labour cost per unit during February 2013 was £0.58 (2012: £0.71). During the period we obtained HMRC approval to operate a bonded (customs) warehouse and this was launched successfully within the Barnsley site at the end of January 2013. Customs warehousing will provide ASOS with a cash flow benefit in the current financial year and will also speed up receipt of our inbound stock. The programme to optimise the Barnsley hub continues and we commenced the first stage of our mechanisation plans, which will deliver an automated despatch sorting process. Following the recent reductions in average selling price per unit, approval has been gained to extend our Barnsley site by 25% by 2014 which will provide capacity to accommodate the required unit volumes to meet our £1bn sales target by 2015 and beyond.

 

Global expansion

 

In-country teams now operate in our five key 'strategic' country targets, being the UK, US, Australia, France and Germany, and we are seeing strong growth in these territories as a result. Our next focus is on 'tactical' countries, and we already have dedicated websites in Italy and Spain and are now focussing on our expansion into the People's Republic of China and the Russian Federation.

 

Expansion into the Chinese market is an integral part of our strategy to be a truly global retailer. We have completed an in-depth review of the Chinese market, including the customer base, use of internet and social media, logistics and delivery options as well as product sourcing and storage. As a result, the operating model for ASOS China will differ from our other international activities and will include a standalone technology platform, local third-party distribution centre, local delivery solutions and payment methods, and a larger multi-disciplinary in-country team. This will give us the right platform to provide a proposition tailored to our Chinese customers and to maximise the long-term potential from this exciting market. Our third-party logistics and customer care partners have now been chosen, a general manager has been appointed and we are confident of a successful launch early in the new financial year. The initial ASOS China website will contain a relevant edit of c10% of our full product range, which will expand as our Chinese business grows. We expect the net operating cost of setting up our Chinese operation to be c£4-6m during each of the years to 31 August 2014 and 31 August 2015, as we build the business to create the platform for future sales growth. This will be recognised within underlying operating profit. All capital expenditure associated with our expansion into China is included in guidance already given.

 

Developments to serve our Russian customers are on track and we will launch next month. This will follow the same model as our other tactical international operations, including a dedicated Cyrillic website and focused marketing team, and with all fulfilment taking place from our UK hub.

 

We also continue to build our market share in the strategic US market and have an established in-country team focussed on driving continued strong sales growth through targeted local marketing and social media activities. We already have a local returns solution to serve our US customers and continue to progress towards our ambition to implement fulfilment from returns in the US.

 

 

People

 

The Chairman of the ASOS Audit Committee and Senior Independent Director, Peter Williams, announced on 16 April 2013 that he will be stepping down from the Board of ASOS Plc with effect from the Company's Annual General Meeting on 4 December 2013. Peter has been with the Company for nearly eight years, during which time he has played an important role and we are very grateful to him for his contribution. The search for Peter's successor is currently underway.

On 24 April, ASOS's International Director, Jon Kamaluddin, announced his intention to step down from the Board of ASOS Plc in October 2013. We would like to thank Jon for his outstanding contribution to the success of ASOS during his nine years with the Company. The process of identifying a successor is currently underway and Jon will effect a smooth handover before his departure.

We have continued to strengthen our management capabilities to ensure our senior team has the diversity of skills, experience, and capabilities to deliver our growth ambitions. During the period we were joined by our new Executive Director: Product and Trading, a new Supply Chain Director, a new Chief Information Officer, and a new Director of Finance: Reporting and Control. We also appointed in-country managers in Germany and France, a new Head of Customer Relationship Management and Insight, and a new Womenswear Design Director.

 

To ensure we have the talent and capacity to continue to deliver enhancements to our websites and progress towards our goal of creating an online fashion community, we strengthened our technology resource by opening a new development office in Birmingham. This location provides access to a highly skilled talent pool whilst driving operating leverage.

The Group's total headcount increased by 82 employees during the last six months, principally in our Retail and Marketing departments and also in our International offices. We have secured a small team for our Russia office and have commenced recruitment of a team in the People's Republic of China.

 

As announced today, to incentivise the senior management team to deliver the planned growth of the Group, the Company is implementing a new Long Term Incentive Plan which will be open to Executive Directors and certain members of our senior management team. The plan has a three-year performance period beginning on 1 September 2012 and ending on 31 August 2015 and is subject to challenging earnings per share and total shareholder return performance targets. These performance targets are aligned to the business plans of the group and ensure that our growth is delivered in a profitable way. The plan includes a 'target' performance threshold which results in maximum vesting of 70% and equates to fully-diluted earnings per share for the year to 31 August 2015 of 73.7p and our current sales goal of £1 billion. There is also a 'stretch' performance threshold which would result in 100% vesting but which requires performance significantly beyond current goals, with fully-diluted earnings per share of 91.1p and sales of £1.3 billion. A non-cash charge of £1.5m has been recognised during the period in relation to this scheme. Further detail on the scheme has been disclosed in a separate announcement today.

 

As well as introducing the Long Term Incentive Plan, further grants were made to other members of our management team under our existing Performance Share Plan and we implemented our new Share Incentive Plan which offers every employee a number of free shares in the company to share in the continuing success of ASOS.



 

 

Trading operations

 

The Group has achieved another strong performance during the six months to 28 February 2013, with growth in customers, visits, orders, sales and profit across all territories. International sales growth continues to drive performance and now accounts for 61% of total retail sales compared to 59% in the comparative period. 

 

Revenue

Six months to 28 February 2013

UK

International

Group

Total

£'000s

US

EU

RoW

Total

Retail sales

137,579

35,551

77,457

101,676

214,684

352,263

Growth 

26%

54%

36%

37%

39%

34%

Delivery receipts

2,477

663

920

1,330

2,913

5,390

Growth

(36%)

47%

15%

66%

42%

(9%)

Third party revenues

2,078

-

-

-

-

2,078

Growth

95%

(100%)

(100%)

(100%)

(100%)

90%

Group revenues

142,134

36,214

78,377

103,006

217,597

359,731

Growth

25%

53%

36%

38%

39%

33%

 

Total Group revenue increased 33%, with total retail sales up 34%, driven by 39% growth in our International retail sales and 26% growth in our UK retail sales.

 

The UK performed ahead of expectations during the period with growth of 26%. This was driven by a particularly strong performance during the peak December trading period and a positive response to our investment in the pricing architecture of our own-brand ranges. We remain at first place in the UK for unique visitors in the 15-34 age range (Comscore, February 2013).

 

Within our International markets, the US was the fastest growing segment with retail sales up 54%, driven by investment in digital marketing and social media and improvements to our service proposition. Rest of World sales continue to perform strongly, up 37%, with continued strong performances from Australia (where we have maintained our first place Comscore position) and Russia. Our EU growth of 36% was driven by strong performances in the countries where we have dedicated websites, particularly in France and Germany where we introduced in-country teams during the period. In the last six months we have moved to second place for 15-34 year old unique visitors globally (Comscore February 2013), up from fourth in August 2012.

 

Delivery receipts decreased 9% on the comparative period. This is a planned result of our continued investment in our delivery proposition, including trials in those countries where we have dedicated websites to waive the express delivery fee above a threshold basket value. In the UK, delivery receipts were down 36% on the comparative period as we improved the speed of our standard offer from six days in the prior year to four days this year, reducing customers' need to pay for express delivery. We also lowered the cost of the annual subscription to our 'ASOS Premier' service.

Third party revenues, which mainly comprise advertising revenues from the website and the ASOS magazine, increased by 90% on the comparative period. This was due to increased integrated advertising campaigns across multiple platforms.



 

Trading Key Performance Indicators

 

During February 2013, ASOS achieved 6.0m active customers3, growth of 41% over last year and a significant milestone as we aim to be the number one fashion destination globally. 58% of these customers are located in international territories which demonstrates the success of our international expansion, although there is still significant opportunity within the global twenty-something market. The 6% decline in average basket value was mainly driven by a 9% reduction in average selling price as a direct consequence of the restructuring and investment in our pricing architecture. Pleasingly, average units per basket showed an overall increase compared to the comparative period of 3%, reflecting quality, price and range improvements as well as new functionality such as our 'buy-the-look' feature.

 

Six months to 28 February 2013


International


 

 

KPIs

UK

US

EU

RoW

Total

Group Total

Average basket value1

£63.45

£57.72

£58.72

£56.46

£57.62

£60.30

Growth

(4%)

(4%)

(8%)

(9%)

(8%)

(6%)








Average units per basket

2.27

2.31

2.36

2.50

2.41

2.34

Growth

4%

5%

2%

-

1%

3%

 

Average selling price per unit1

£27.98

£24.98

£24.87

£22.59

£23.93

£25.73

Growth

(8%)

(9%)

(9%)

(8%)

(9%)

(9%)

 

Number of orders ('000)

4,152

877

2,027

1,988

4,892

9,044

Growth

29%

68%

46%

50%

51%

40%








Unique visitors ('000)2






19,800

Growth






27%








Total visits ('000)2

16,705

7,295

16,995

14,598

38,888

55,593

Growth

20%

32%

39%

35%

36%

31%








Active customers ('000)3

2,537

746

1,549

1,175

3,470

6,007

Growth

18%

73%

57%

65%

63%

41%

1Including VAT         2During February

3As at 28 February, defined as having shopped with ASOS during the last 12 months

 

Gross profit

 

The Group generated gross profit of £179.6m during the period (2012: £137.2m), up 31% on the comparative period.

 

Six months to 28 February 2013


International

Group Total

£'000s

UK

US

EU

RoW

Total

Gross profit

65,874

20,630

37,980

55,120

113,730

179,604

Growth 

22%

40%

33%

38%

37%

31%

Retail gross margin

44.6%

56.2%

47.8%

52.9%

51.6%

48.9%

Growth

(30bps)

(550bps)

(120bps)

-

(120bps)

(60bps)

Gross margin

46.3%

57.0%

48.5%

53.5%

52.3%

49.9%

Growth

(100bps)

(540bps)

(120bps)

10bps

(110bps)

(90bps)

 

During the six months, Group retail gross margin decreased by 60bps to 48.9% (2012: 49.5%). This is in line with expectations and is the net result of significant investment in our own-brand product price points offset by savings in clearance and promotional markdown. This is most marked in the US as this segment buys the highest proportion of own-brand products. In the Rest of World segment, retail margin was unchanged despite this investment due to improved markdown management as this segment has historically consumed the highest proportion of markdown stock, as well as benefits from the receipt of inward processing relief. Group gross margin (including delivery revenues) also decreased by 90bps to 49.9% (2012: 50.8%).

 

ASOS maintains a strong focus on areas such as sourcing and markdown management as well as continually augmenting our retail disciplines, which includes the commencement of a rationalisation of our supplier base to deliver gross margin efficiency that subsequently can be reinvested in customer proposition and/or pricing, as appropriate.

 

Investment in our operating resources

 

ASOS has maintained tight control of costs and has delivered operating leverage and benefitted from economies of scale across its fixed cost base, whilst at the same time investing in the overall customer offer to continue to drive maximum growth levels.

 

The Group increased its investment in its operating resources and capability by 36% to £153.9m, excluding exceptional items (2012: £113.4m), whilst benefitting from economies of scale. Total operating costs ratio improved by 50bps excluding investment in our customer delivery proposition.

 

£'000s

H1 

2012/13 

H1 

2011/12 

Change

Distribution costs

(53,038)

(36,548)

45%

Payroll and staff costs

(30,164)

(25,340)

19%

Warehousing*

(20,631)

(16,135)

28%

Marketing

(20,455)

(10,872)

88%

Production

(2,128)

(1,832)

16%

Technology costs

(4,621)

(3,685)

25%

Other operating costs*

(16,377)

(14,480)

13%

Depreciation and amortisation

(6,522)

(4,499)

45%

Operating costs excluding exceptional items

(153,936)

(113,391)

36%

Operating costs excluding distribution costs and exceptional items

(100,898)

(76,843)

31%

% of sales excluding distribution costs

28.0%

28.5%

50bps

*H1 2011/12 comparatives reclassified. Reclassified costs for the 12 months to 31 August 2013 are Warehousing; £33,773,000 and Other Operating Costs; £31,096,000.

 

Despite investing in resource to maximise sales growth in our Retail and Marketing departments and in International offices, payroll costs have improved by 100bps to 8.4% of revenue. We have recognised a non-cash charge during the period of £1.5m in relation to our new Long Term Incentive Plan.

 

The impressive performance of our warehouse has continued to drive operating cost leverage, with a decline in average labour cost per unit for the period of 12% on prior year, resulting in an increase of only 28% in total warehouse costs compared to a 40% increase in the number of orders.

We continually invest in our customer proposition and since last year have reduced delivery times and improved distribution service levels. Distribution costs have, as a result, increased by 45% on the comparative period due to sales growth, faster delivery times and an increased proportion of tracked parcels, all on the back of increased customer demand.

 

We have invested in increased marketing activities during the period, both in digital marketing and country-specific campaigns, particularly in our strategic markets of the UK, France, Germany, Australia and the US. This included targeted Christmas campaigns in the UK and US, a multi-channel awareness campaign in Australia and local magazine partnerships in France and Germany. The results of these activities are already visible in the strong growth seen during the period, and we expect continued returns on this investment in each of our strategic markets over a twelve-month period.

 

Depreciation has increased to 1.8% of revenue as a result of increased investment in IT infrastructure during the last year.



 

Group Profit

 

The Group generated profit before tax and exceptional items up 11% on the comparative period at £25.7m (2012: £23.1m). Excluding the non-cash Long Term Incentive Plan charge, profit before tax and exceptional items increased by 18%.

 

£'000s

H1 

2012/13 

H1 

2011/12 

Change

Revenue

359,731 

269,926 

33% 

Cost of sales

(180,127)

(132,736)

Gross profit

179,604 

137,190 

31% 

Operating costs excluding exceptional items

(153,936)

(113,391)


Operating profit before exceptional items

25,668 

23,799 

8% 

Finance income

87 

- 


Finance costs

(61)

(665)

Profit before tax and exceptional items

25,694 

23,134 

11% 

Exceptional items

- 

(1,508)

Profit before tax

25,694 

21,626 

19% 

Income tax expense

(6,324)

(5,751)

Profit after tax

19,370 

15,875 

 

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 six month period to 28 February 2013.

 

Taxation

The effective tax rate before exceptional items for the Group was 24.6%, 180bps lower than the prior year (2012: 26.4%). Including exceptional items the effective tax rate was 24.6% (2012: 26.6%). Going forward, we would expect the effective rate of tax pre-exceptional items to be around 1% higher than the prevailing UK corporation tax rate due to permanent disallowable items.

 

Earnings per share

Basic underlying earnings per share1 increased by 6% to 23.7p per share (2012: 22.3p), and diluted underlying earnings per share1 increased by 14% to 23.3p per share (2012: 20.5p). Excluding the Long Term Incentive Plan charge, diluted underlying earnings per share1 increased by 20% to 24.7p per share.

 

Basic earnings per share2 increased by 14% to 23.7p per share (2012: 20.8p), and diluted earnings per share2 increased by 22% to 23.3p per share (2012: 19.1p).

 

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 opportunities both in the UK and Internationally. Accordingly, it has decided not to pay a dividend for the six months ended 28 February 2013. This policy remains under regular review.

 

 

  

 

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

2 Earnings per share has been calculated using profit after tax and exceptional items.

 

 

Statement of Financial Position

 

The Group enjoys a robust financial position including a strong cash balance and a clean stock position as we exit the winter season. During the six month period, net assets increased by £23.0m to £129.0m (31 August 2012: £106.0m), driven by profit after tax for the period.  The summary Statement of Financial Position is shown below.

 

£'000s

At 28 February 

2013 

At 31 August 

2012 

Goodwill and other intangible assets

27,559 

23,236 

Property, plant and equipment

27,416 

27,293 

Deferred tax asset

8,254 

8,111 

Non-current assets

63,229 

58,640 

Working capital

24,756 

19,038 

Net funds*

45,224 

27,884 

Current tax (liability)/asset

(4,242)

425 

Net assets

128,967 

105,987 

* Cash and cash equivalents less bank borrowings

 

Statement of Cash Flows

 

The Group generated cash of £17.3m during the period (2012: £3.5m) and the closing cash balance was £45.2m at 28 February 2013, up from £27.9m at 31 August 2012. Net funds were £45.2m (31 August 2012: £27.9m). The summary Statement of Cash Flows is shown below.

 

£'000s

H1 

2012/13 

H1 

2011/12 

Operating profit

25,668 

22,291 

Exceptional items

- 

1,508 

Operating profit before exceptional items

25,668 

23,799 

Depreciation and amortisation

6,522 

4,499 

Working capital

(6,623)

(7,363)

Share-based payments charges

1,779 

420 

Other non-cash items

(60)

- 

Tax (paid)/received

(17)

1,622 

Cash inflow from operating profit before exceptional items

27,269 

22,977 

Operating cash outflow relating to exceptional items

- 

(458)

Cash inflow from operating profit

27,269 

22,519 

Capital expenditure

(10,051)

(12,128)

Finance income

87 

- 

Proceeds from issue of ordinary shares

129 

268 

Net purchase of shares by employee benefit trust

(22)

(1,458)

Repayment of revolving credit facility

- 

(5,000)

Finance expense

(72)

(666)

Total cash inflow

17,340 

3,535 

 

Cash generated from operating profit before exceptional items increased by £4.3m, largely due to EBITDA improvements of £3.9m. The cash outflow from working capital improved by £0.7m due to improved stock management and a £2.0m duty and VAT benefit as a result of gaining bonded warehouse status, partially offset by timing of creditor payments. Capital expenditure was lower than in the prior year due to the phasing of expenditure in the current year, with capital expenditure weighted towards the second half of the year, as well as timing of payments.

 

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 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

H1 

2012/13 

H1 

2011/12 

IT

8,379

8,896

Office fixtures and fit-out

792

1,227

Warehouse

1,797

2,005

Total

10,968

12,128

 

The majority of fixed asset additions were related to improvements in our underlying IT infrastructure to support future growth and ensure we provide a truly global offering to all our customers. We have also commenced investment in mechanisation of our warehouse despatch sorting process to drive future operating cost efficiencies.

 

Outlook

We remain confident in our outlook for the remainder of the financial year with our International operations continuing to drive growth, and encouraging performance in our UK business. Momentum is strong, our plans for expansion into Russia and China are on track, and our £1 billion sales ambition for the Group is firmly in sight. 

 

 

 

 

Nick Robertson

Nick Beighton

Chief Executive Officer

Chief Financial Officer

 



 

Unaudited Consolidated Statement of Comprehensive Income

For the six months ended 28 February 2013

 


Six months to

28 February 2013

   Six months to 29 February 2012

            Year to 31 August 2012


Total

Before

exceptional

items

Exceptional

items

Total

Before

exceptional

items

Exceptional

Items

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000









Revenue

359,731

269,926

-

269,926

552,854

-

552,854

Cost of sales

(180,127)

(132,736)

-

(132,736)

(269,997)

-

(269,997)









Gross profit

179,604

137,190

-

137,190

282,857

-

282,857









Distribution expenses

(53,038)

(36,548)

-

(36,548)

(79,076)

-

(79,076)

Administrative expenses

(100,898)

(76,843)

(1,508)

(78,351)

(158,199)

(4,463)

(162,662)









Operating profit

25,668

23,799

(1,508)

22,291

45,582

(4,463)

41,119









Finance Income

87

-

-

-

-

-

-

Finance expense

(61)

(665)

-

(665)

(1,109)

-

(1,109)









Profit before tax

25,694

23,134

(1,508)

21,626

44,473

(4,463)

40,010









Income tax (expense)/credit

(6,324)

(6,107)

356

(5,751)

(11,576)

1,103

(10,473)









Profit for the period

19,370

17,027

(1,152)

15,875

32,897

(3,360)

29,537









Net exchange adjustments offset in reserves

(38)

-

-

-

-

-

-









Other comprehensive income for the period

(38)

-

-

-

-

-

-

Total comprehensive income attributable to owners of the parent

19,332

17,027

(1,152)

15,875

32,897

(3,360)

29,537

 

 

 

Earnings per share1







Basic

23.7 



20.8 



38.1 

Diluted

23.3 



19.1 



35.6 









Underlying earnings per share2








Basic

23.7 

22.3 



42.5 



Diluted

23.3 

20.5 



39.6 



 

 

 

 

1 Earnings per share is calculated in accordance with IAS 33 'Earnings per share' and includes exceptional items

2 Underlying earnings per share excludes exceptional items

 



 

Unaudited Consolidated Statement of Changes in Equity

For the six months ended 28 February 2013

 

 

 

Called up share capital

   Share premium

   Hedging Reserve

Retained earnings1

Employee Benefit Trust reserve

 

 

Translation Reserve

Total

equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000









Balance as at 1 September 2011

2,672

5,634

 

192 

67,769 

(2,389)

 

- 

73,878 









Shares allotted in the period

33

235

- 

- 

- 

- 

268 

Net purchase of shares by 

Employee Benefit Trust

-

-

- 

- 

(1,458)

 

- 

(1,458)

Transfer of shares from Employee Benefit Trust on exercise

-

-

- 

(99)

99 

 

- 

-

Share based payments charge

-

-

- 

420 

- 

- 

420 

Derivative Financial Instruments

-

-

(192)

-

- 

- 

(192)

Profit for the year and total comprehensive income

-

-

- 

15,875 

- 

 

- 

15,875 

Deferred tax on share options

-

-

- 

(5,533)

- 

- 

(5,533)

Current tax on items taken directly

to equity

-

-

- 

5,720 

- 

 

- 

5,720 









Balance as at 29 February 2012

2,705

5,869

- 

84,152 

(3,748)

- 

88,978









Shares allotted in the period

149

236

- 

- 

- 

- 

385 

Cash received on exercise of shares from Employee Benefit Trust

-

-

- 

- 

121 

 

- 

121 

Transfer of shares from Employee Benefit Trust on exercise

-

-

- 

(1,163)

1,163 

 

- 

- 

Share based payments charge

-

-

- 

533 

- 

- 

533 

Profit for the year and total comprehensive income

-

-

- 

13,662 

- 

 

- 

13,662 

Deferred tax on share options

-

-

- 

(2,514)

- 

- 

(2,514)

Current tax on items taken directly

to equity

-

-

- 

4,822 

- 

 

- 

4,822 









Balance as at 31 August 2012

2,854

6,105

- 

99,492 

(2,464)

- 

105,987 

 

Shares allotted in the period

29

99

- 

- 

- 

- 

128 

Purchase of shares by Employee Benefit Trust

-

-

- 

 

- 

(22)

 

- 

 

(22)

Transfer of shares from Employee Benefit Trust on exercise

-

-

- 

(123)

123 

- 

- 

Share based payments charge

-

-

- 

1,779 

- 

- 

1,779 

Profit for the period

-

-

- 

19,370 

- 

- 

19,370 

Deferred tax on share options

-

-

- 

(257)

- 

- 

(257)

Current tax on items taken     directly to equity

-

-

- 

2,020 

- 

 

- 

 

2,020 

Currency translation differences for overseas operations

-

-

- 

- 

- 

(38)

(38)









Balance as at 28 February 2013

2,883

6,204

- 

122,281 

(2,363)

(38)

128,967 

 

 

 

 

1Retained earnings includes the share-based payments reserve



Unaudited Consolidated Statement of Financial Position

As at 28 February 2013

 


As at

28 February 2013

As at

29 February

2012

As at

31 August

2012


     £'000

£'000

£'000

Non-current assets




Goodwill

1,060 

1,060 

1,060 

Other intangible assets

26,499 

19,378 

22,176 

Property, plant and equipment

27,416 

26,889 

27,293 

Deferred tax asset

8,254 

10,813 

8,111 


63,229 

58,140 

58,640 





Current assets




Inventories

99,861 

78,420 

100,263 

Trade and other receivables

15,091 

17,577 

19,066 

Current tax asset

2,051 

425 

Cash and cash equivalents

45,224 

17,718 

27,884 

Assets held for sale

2,800 


160,176 

118,566 

147,638 





Current liabilities




Trade and other payables

(90,196)

(81,646)

(100,291)

Current tax liability

(4,242)

- 

- 

Revolving credit facility

(5,000)

- 

Provisions

(1,082)


(94,438)

(87,728)

(100,291)





Net current assets

65,738 

30,838 

47,347 





Net assets

128,967 

88,978 

105,987 









Equity attributable to owners of the parent




Called up share capital

2,883 

2,705 

2,854 

Share premium

6,204 

5,869 

6,105 

Employee Benefit Trust reserve

(2,363)

(3,748)

(2,464)

Translation Reserve

(38)

- 

- 

Retained earnings

122,281 

84,152 

99,492 





Total equity

128,967 

88,978  

105,987  

 

Unaudited Consolidated Statement of Cash Flows

For the six months ended 28 February 2013





Six months to

28 February 2013

Six months to

29 February

2012

Year to

31 August

2012


     £'000

£'000

£'000





 Operating profit

25,668 

22,291 

41,119 

 Adjusted for:




 Operating exceptional items

1,508 

4,463 

 Depreciation of property, plant and equipment

3,205 

2,852 

5,743 

 Amortisation of other intangible assets

3,317 

1,647 

4,481 

402 

(11,859)

(33,702)

3,975 

(2,586)

(4,075)

(Decrease)/increase in trade and other payables

(11,000)

7,082 

27,901 

 Share-based payments charges

1,779 

420 

953 

(60)

- 

- 

(17)

1,622 

1,883 

 Net cash generated from operating activities before    exceptional items

27,269 

22,977 

48,766 

 Cash outflow relating to exceptional operating items

- 

(458)

(1,695)

 Net cash generated from operating activities

 27,269 

22,519 

47,071 




 Investing activities




(7,718)

(8,599)

(14,500)

 Payments to acquire property, plant and equipment

(2,333)

(3,529)

(7,154)

87 

- 

- 




 Net cash outflow from investing activities

(9,964)

(12,128)

(21,654)




 Financing activities




 Proceeds from issue of ordinary shares

129 

268 

463 

(22)

(1,458)

(1,337)

-

(5,000)

(10,000)

 Finance expense

(72)

(666)

(842)





 Net cash generated/(used) in financing activities

35 

(6,856)

(11,716)





 Net increase in cash and cash equivalents

 17,340 

3,535 

13,701 





27,884 

14,183 

14,183 

 Closing cash and cash equivalents

 45,224 

17,718 

27,884 

 

 

Reconciliation of net cash flow to movement in net funds

 


Six months to

28 February 2013

Six months to

29 February

2012

Year to

31 August

2012


     £'000

£'000

£'000





Net funds at beginning of the period

27,884 

4,183 

4,183 

Increase in cash and cash equivalents

17,340 

3,535 

13,701 

Decrease in revolving credit facility liability

5,000 

10,000 

Net funds at end of the period

45,224 

12,718 

27,884 

 

 

Notes to the Unaudited Interim Financial Information

For the six months ended 28 February 2013

 

1.   Basis of preparation, accounting policies and approval of Interim Statement

 

a)   Basis of preparation

 

The Interim Financial Statements for the six months ended 28 February 2013 have been prepared in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the Group's Annual Report and Accounts for the five months ended 31 August 2012, which have been prepared in accordance with IFRSs as adopted by the European Union.

 

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 principal risks and uncertainties facing the Group for the six months ended 28 February 2013 remain unchanged from those set out in the Annual Report and Accounts for the five months ended 31 August 2012 and are applicable to the remainder of the financial year to 31 August 2013. The Annual Report and Accounts for the five months ended 31 August 2012 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.

 

b)   Financial information

 

The financial information set out 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 five months ended 31 August 2012 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 Interim Financial Statements are unaudited and were approved by the Board of Directors on 29 April 2013.

 

c)   Accounting policies

 

The Financial Statements have been prepared in accordance with the accounting policies set out in the Annual Report and Accounts for the five months to 31 August 2012.

 

d) Exceptional items

 

The Group separately identifies and discloses significant one-off or unusual items which can have a material impact on absolute profits. These are termed 'exceptional items' and are disclosed separately in the statement of comprehensive income in order to provide an understanding of the Group's underlying financial performance. Exceptional items are judgemental in their nature and may not be comparable to similarly titled measures used by other companies. Further details of exceptional items are included in Note 3 to this release.

 

 

   

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 ("CODM").  The CODM 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.

 


Six Months to 28 February 2013


UK 

USA 

EU 

RoW 

Total 


£'000  

 

£'000  

£'000  

£'000  

£'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 costs

(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 

 

 



Six Months to 29 February 2012



UK 

USA 

EU 

RoW 

Total 


£'000  

£'000  

£'000  

£'000  

£'000  

Retail sales

108,967 

23,137 

56,846 

73,971 

262,921 

Delivery receipts

3,861 

451 

797 

803 

5,912 

Third party revenues

1,066 

5 

10 

12 

1,093 

Total revenue

113,894 

23,593 

57,653 

74,786 

269,926 

Cost of sales

(60,012)

(8,866)

(29,013)

(34,845)

(132,736)

Gross profit

53,882 

14,727 

28,640 

39,941 

137,190 

Distribution costs before exceptional items

(10,135)

(5,673)

(10,058)

(10,682)

(36,548)

Segment result before exceptional items

43,747 

9,054 

18,582 

29,259 

100,642 

Administrative expenses before exceptional items





(76,843)

Operating profit before exceptional items





23,799 

Exceptional items





(1,508)

Finance expense





(665)

Profit before tax





21,626 

 

 

 

 

 

 

2.   Segmental analysis (continued)

 


Year to 31 August 2012


UK 

USA 

EU 

RoW 

Total 


£'000 

£'000 

£'000 

£'000 

£'000 

Retail sales

205,258 

49,585 

117,748 

165,296 

537,887 

Delivery receipts

7,119 

1,047 

1,610 

1,832 

11,608 

Third party revenues

3,288 

13 

29 

29 

3,359 

Total revenue

215,665 

50,645 

119,387 

167,157 

552,854 

Cost of sales

(113,042)

(19,960)

(59,926)

(77,069)

(269,997)

Gross profit

102,623 

30,685 

59,461 

90,088 

282,857 

Distribution costs

(19,531)

(14,729)

(18,666)

(26,150)

(79,076)

Segment result

83,092 

15,956 

40,795 

63,938 

203,781 

Administrative expenses before exceptional items





(158,199)

Operating profit before exceptional items





45,582 

Exceptional items





(4,463)

Finance expense





(1,109)

Profit before tax





40,010 

 

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 CODM 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.   Exceptional items

 

During the six months to 28 February 2013, exceptional costs of £nil were charged to operating expenses. In the prior period exceptional costs of £1,508,000 were charged to operating expenses to reflect the direct costs of the completion of the reorganisation of distribution following the leasing of a new distribution centre to meet the increasing capacity needs of the business. The reorganisation was completed by 31 March 2012.

 

The main components of the exceptional charge are as follows:

 



6 months to

28 February 2013

£'000

6 months to

29 February 2012

£'000

 

Year to

31 August

2012

£'000

 

Dual site decollation costs


-

228

228

Vacant property costs


-

1,280

1,435

Impairment of assets


-

-

2,800

Total


-

1,508

4,463

 



 

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 period.  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 period, adjusted for the effects of potentially dilutive share options.

 


6 months to

28 February 2013

6 months to

29 February 2012

Year to

31 August

2012


No. of shares

No. of shares

No. of shares

Weighted average share capital




Weighted average shares in issue for basic earnings per share

81,567,423 

76,378,208 

77,488,212 

Effect of dilutive options

1,537,270 

6,663,914 

5,551,275 

Weighted average shares in issue for diluted earnings per share

83,104,693 

83,042,122 

83,039,487 

 


6 months to

28 February 2013

6 months to

29 February 2012

Year to

31 August

2012


£'000

£'000

£'000

Earnings




Underlying earnings attributable to shareholders

19,370 

17,027 

32,897 

Exceptional items net of related taxation

- 

(1,152)

(3,360)

Earnings attributable to shareholders

19,370 

15,875 

29,537 






6 months to

28 February 2013

6 months to

29 February 2012

Year to

31 August

2012


pence

pence

pence

Basic earnings per share




Underlying earnings per share1

23.7 

22.3 

42.5 

Exceptional items net of taxation

- 

(1.5)

(4.4)

Earnings per share2

23.7 

20.8 

38.1 






6 months to

28 February 2013

6 months to

29 February 2012

Year to

31 August

2012


pence

pence

pence

Diluted earnings per share




Underlying earnings per share1

23.3 

20.5 

39.6 

Exceptional items net of taxation

- 

(1.4)

(4.0)

Earnings per share2

23.3 

19.1 

35.6 

 

 

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. These shares were included within weighted average shares in issue for diluted earnings per share at 29 February 2012. 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.

 

 

 

1Underlying 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.

 

 

 

 

5.   Reconciliation of net funds

 



6 months to

28 February 2013

£'000

6 months to

29 February 2012

£'000

 

Year to

31 August

2012

£'000

 

Net movement in cash and cash equivalents


17,340 

3,535 

13,701 

Repayment of revolving credit facility


5,000 

10,000 

Net movement in net funds


17,340 

8,535 

23,701 

Opening net funds


27,884 

4,183 

4,183 

Closing net funds


45,224 

12,718 

27,884 






Closing net funds comprises:





Cash and cash equivalents


45,224 

17,718 

27,884 

Drawings under revolving credit facility


(5,000)

-

Net funds


45,224 

12,718 

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.

 

 

6.   Related parties

 

The Group's related parties are its joint venture, Employee Benefit Trust and key management personnel. There have been no material changes to the related party transactions during the interim period under review.

 

 


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IR SEUFWUFDSEEL