TIDMASC
RNS Number : 7583M
ASOS PLC
18 October 2016
18 October 2016
ASOS plc
Global Online Fashion Destination
Final Results for the year to 31 August 2016
Summary financial results
Year to 31 Year to 31
GBPm(1) August 2016 August 2015 Change(2)
-------------------------------------------- ------------- ------------- ------------
Group revenues(3) 1,444.9 1,143.0 26%
Retail sales 1,403.7 1,112.2 26%
UK retail sales 603.8 473.9 27%
International retail sales 799.9 638.3 25%
Gross profit 722.2 573.1 26%
Retail gross margin 48.5% 48.8% (30bps)
Gross margin 50.0% 50.1% (10bps)
Continuing profit before tax and
exceptional items(4) 63.7 46.4 37%
Profit before tax 32.7 47.5 (31%)
Diluted earnings per share from continuing
operations only(4) 61.8p 43.4p 42%
Diluted earnings per share 29.3p 44.4p (34%)
Cash and cash equivalents 173.3 119.2 45%
-------------------------------------------- ------------- ------------- ------------
(1) All numbers subject to rounding and exclude results from
discontinued operations in China unless otherwise stated
(2) Constant currency growth at a group level is the same as
reported growth
(3) Includes retail sales, delivery receipts and third party
revenues
(4) For the year to 31 August 2016, figures exclude one-off
legal settlement costs of GBP20.9m and losses from discontinued
operations of GBP10.1m. For the year to 31 August 2015, figures
have been restated to exclude one-off business interruption
reimbursements of GBP6.3m in respect of a warehouse fire in
2014
Business review summary
-- Retail sales up 26% with strong performances in major markets: UK +27%, US +50%, EU +28%
-- Strong customer engagement: active customers(5) +25%; visits
+22%; average basket value +3%; average order frequency +4%;
conversion +10bps; social media followers +54%
-- Retail gross margin down 30bps and within guidance
-- In-country China operation discontinued with investment successfully deployed elsewhere
-- Continuing profit before tax and exceptional items up 37% to GBP63.7m (2015: GBP46.4m)
-- Robust balance sheet position, with cash of GBP173.3m (31 August 2015: GBP119.2m)
-- Trademark infringement disputes settled; accounted for in FY16, paid in FY17
-- Eurohub 2 proceeding to plan and budget; site handed over in September 2016
Nick Beighton, CEO, commented:
"I'm pleased with progress in the business. The strength of
these results reflects our unwavering focus on delivering great
customer experience, supported by rigorous execution of our
investments. We continue to target our growth opportunities, so
we're accelerating investment in both logistics and technology. The
pace at ASOS is continuing in the new financial year, which we are
looking forward to with confidence."
(5) Defined as having shopped in the last twelve months as at 31
August 2016
Investor and Analyst Meeting
There will be a meeting for analysts that will take place at
9.30am today, 18 October 2016, at J.P.Morgan, 60 Victoria
Embankment, London EC4Y 0JP. A webcast of the meeting will be
available both live and following the meeting at
www.asosplc.com.
For further information:
ASOS plc
Nick Beighton, Chief Executive Officer Tel: 020 7756 1000
Helen Ashton, Chief Financial Officer
Greg Feehely, Director of Investor Relations
Website: www.asosplc.com/investors
Instinctif Partners
Matthew Smallwood / Justine Warren / Guy Scarborough Tel: 020 7457 2020
JPMorgan Cazenove
Michael Wentworth-Stanley / Caroline Thomlinson Tel: 020 7742 4000
Numis Securities
Alex Ham / Luke Bordewich Tel: 020 7260 1000
Background note
ASOS is a global fashion destination for 20-somethings. We sell
cutting-edge fashion and offer a wide variety of fashion-related
content, making ASOS.com the hub of a thriving fashion community.
We sell over 85,000 branded and own-label products through
localised mobile and web experiences, delivering from our
fulfilment centres in the UK, US and Europe to almost every country
in the world.
We tailor the mix of own-label, global and local brands sold
through each of our eight local language websites: UK, US, France,
Germany, Spain, Italy, Australia and Russia.
ASOS's websites attracted 117.5m visits during August 2016
(August 2015: 90.5m) and as at 31 August 2016 had 12.4m active
customers(1) (31 August 2015: 9.9m), of which 4.7m were located in
the UK and 7.7m were located in our international territories (31
August 2015: 3.9m in the UK and 6.0m internationally).
(1) Defined as having shopped in the last twelve months
www.asos.com
www.us.asos.com
www.asos.fr
www.asos.de
www.asos.es
www.asos.it
www.asos.com/au
www.asos.com/ru
m.asos.com
marketplace.asos.com
www.likes.asos.com
ASOS plc ("the Group")
Global Online Fashion Destination
Final Results for the year to 31 August 2016
Business Review
The Group has delivered a strong set of results for the year to
31 August 2016 with retail sales growth of 26% to GBP1,403.7m
(2015: GBP1,112.2m) driven by strong product, delivery improvements
and further price investments across our major markets. Our sales
momentum strengthened across all regions as the year progressed,
most notably in the US following our decision to fully invest in
our US customers through both price and proposition
improvements.
In line with guidance, the Group gross retail margin decreased
by 30bps to 48.5% (2015: 48.8%) as price investments in the US,
Europe and RoW were offset by a higher full price mix. Delivery
receipts grew 35% aided by higher next-day delivery usage and the
expansion of Premier globally. We also saw an increase of 29% in
third-party revenues which had a positive impact on gross margin,
which at 50.0% (2015: 50.1%) was only 10bps down compared to last
year.
Continuing profit before tax and exceptional items grew by 37%
to GBP63.7m (2015: GBP46.4m), as investments in delivery
proposition, marketing and depreciation were offset by warehouse
automation efficiencies and the non-recurrence of last year's
GBP4.9m fixed asset write-offs.
The Group discontinued its in-country China operation which
incurred an operating loss before tax of GBP3.6m up to the point of
closure in May 2016 (2015: GBP5.2m) and one-off exceptional closure
costs before tax of GBP6.5m, of which GBP4.4m was non-cash.
Previously planned investment in China was re-deployed
elsewhere.
In September 2016, the Group settled its trademark infringement
disputes. This resulted in a one-off exceptional legal settlement
of GBP20.9m (including associated legal fees) representing full,
final and global settlement of all outstanding litigation.
Importantly this settlement now allows us to more actively target
the significant and growing sportswear market. The settlement will
be paid in the new financial year. Within the comparative results
for the year to 31 August 2015, one-off business interruption
reimbursements of GBP6.3m in respect of a warehouse fire in 2014
are also reported as an exceptional item.
Our Eurohub 2 site was handed over to us on 29 September 2016,
and we remain on track to commence live operations in March 2017
with costs in line with expectations.
After taking into account exceptional items and discontinued
operations, the Group generated profit before tax of GBP32.7m
(2015: GBP47.5m).
Great fashion, great price
At ASOS, our product offer is truly unique, combining our
in-house designed ASOS own-label with the best curated edit of
third party brands. We do not proactively manage our own label and
branded mix: we let our customers choose, ensuring we offer the
best quality at the right price. We launch approximately 4,000 new
styles each week, now stocking over 85,000 product lines. In order
to provide this level of newness, the way we plan and trade is
constantly evolving and our growing UK and European supply base
allows us to turn new stock buys in weeks, rather than months,
giving our customers what they want earlier and improving full
price sell-through.
Our ASOS own-label offers an unparalleled width of product for
20-somethings, catering for all customer segments and sizes, across
all categories and price points. Alongside the core own-label
offer, we also work on collaborations and sub-brands such as the
ASOS Bridal collection, ASOS White and ASOS Africa, which augment
the range by adding a point of difference with a new aesthetic and
a different story.
Our third party branded edit spans from some of the largest
global retailers to small, new and emerging brands. This year we
added 233 new brands, including upcoming ones such as Young
Bohemians, Nocozo and Sixth June, as well as more famous names like
Kendall and Kylie. Each selection forms an integral part of the
whole ASOS offer, bringing something new, different and relevant to
each season. To satisfy the appetite for something different, we
also work with brands to develop exclusive ranges, including unique
colours and styles as well as exclusive collections. This year we
have launched The Noak and Heart & Dagger labels on Menswear
and a globally exclusive swimwear range with Monki on Womenswear.
As a result, nearly 60% of our product offer is totally exclusive
and unique to ASOS.
We enter the new financial year with exciting plans for the
continued growth of specialist departments in Womenswear and we
will be launching 'Big' and 'Tall' specialist ranges in Menswear.
We can also now fully realise the sportswear opportunities in the
market following global settlement of the trademark infringement
disputes, with new categories and brands becoming available in our
branded edit alongside a new own-label sportswear range. Alongside
this we will be expanding gifting, beauty and grooming, lifestyle
and loungewear ranges. We remain customer obsessed, continuously
developing our retail offer to deliver the greatest possible choice
of relevant fashion at the best price, whatever their shape or
size.
Awesome on mobile
Mobile continues to be critical to our success and the vision is
to fundamentally change the way customers live and shop for fashion
on mobile. We now have more than 10m active installs of our app,
with 7.5m new downloads during the financial year. On average, ASOS
customers shop on the app eight times a month, spending more than
70 minutes online during that time. As a result, 66% of traffic now
comes from mobile devices and 51% of orders are now being placed on
our mobile platforms.
During the year, we launched the brand new iOS ASOS mobile app
which was built completely from scratch using the latest
technologies and incorporated a new homepage and design, easier
navigation and innovative features such as spotlight search and 3D
touch for iPhone 6S users. We have also improved the quality of
product imagery and the performance of our Video Catwalk function.
Customer feedback and engagement has been very positive, with the
new app earning a 5-star rating in App Stores worldwide.
As part of our mobile checkout programme, we have rolled out a
brand new localised checkout experience on our Android apps,
powered by the new digital platform. This has allowed us to remove
third party proxy solutions for language, thereby making the
customer experience far more responsive. This feature was
introduced to our Russian customers in June 2016, and post year-end
deployment is now largely complete across both Android and iOS in
all markets.
We constantly look to improve our mobile offering and during the
new financial year, we plan to double investment in this area,
delivering a number of initiatives to further improve customer
engagement.
Engaging content and experience
We understand our customers, what inspires them and what
interests them. We reach out to them by producing great content,
which makes us much more than just a place to shop. By becoming a
fashion destination offering a unique customer experience, we turn
a sale into a loyal customer, who returns to us frequently. This is
evidenced in our increasing customer engagement metrics, with
visits growth of 22%, order growth of 30%, average basket value up
3% and average order frequency up 4%. We exited the year with
active customers of 12.4m, an increase of 25% in comparison to last
year.
In the UK, we launched 'ASOS A-List', our loyalty programme,
giving customers the opportunity to build up points from purchases
which are then exchanged for vouchers for use on our platforms.
Customer engagement with 'ASOS A-List' has been strong and we are
starting to see increases in key metrics such as basket size and
order frequency from participating customers.
We continue to encourage participation across all our social
platforms and now have over 19m followers, up 54% compared to last
year. We always focus on being on the platforms where our customers
are and moving nimbly as these platforms evolve. This year we have
been testing new formats like Instagram Stories, Facebook Live
Video and Snapchat filters and our customers have responded
positively. We publish over 60,000 pieces of inspirational fashion
and lifestyle content every month to build awareness and brand
engagement. Other key highlights this year include launching the
first French and German editions of the ASOS magazine, which we
sent out to over 60,000 loyal customers in both countries, with a
US version soon to follow in November 2016. We have local Snapchat
channels going live in Australia, France and Germany and new
Instagram accounts tailored to Menswear for France and the US.
Best-in-class service
Our customers have high expectations. We aim to offer a
friction-free online shopping experience, every time.
Delivery and returns
Continually enhancing the range of delivery and returns options
enables us to move towards our goal of providing a best-in-class
customer proposition. We have stepped up the pace of change in this
area during the financial year.
In the UK, we introduced a 4-hour estimated delivery window for
standard delivery and returns collections as well as a mobile
label-less returns solution in 3,000 locations. We have extended
Click & Collect cut-offs from 5pm to 6pm, next day delivery
cut-offs on Saturday and Sunday from 5pm to 7pm, and also launched
'Precise Delivery' where customers can select a one-hour delivery
window.
Internationally, we introduced unlimited free next-day delivery
to both home and store for French Premier customers and free
next-day delivery for German and Northern Irish Premier customers.
We launched next-day delivery in 14 additional EU countries,
including Austria, Cyprus, Finland, Greece, Luxembourg, Portugal
and several Eastern European countries, making next day delivery
available to all 29 EU member states. Free returns are a key part
of our customer proposition and during the year we extended this to
the whole of the EU, and to Australia in August 2016.
We introduced Express services to 66 new countries and also
reduced the cost of this service in several territories. We
improved standard delivery in the US, Estonia, Latvia, Lithuania,
Russia, Canada and Israel, with all orders now being sent via a
tracked solution. A mid-tier delivery service was launched in Hong
Kong and in Singapore and South Korea our delivery lead time was
also improved.
We are always looking at ways to develop our Pick-Up-Drop-Off
('PUDO') network and in the UK, customers have nearly 6,000
deliver-to-store locations to choose from. We have extended our
Click & Collect service with Boots and now deliver to 61 stores
across several major cities nationwide. We have also introduced
Doddle Click & Collect into 24 London stores and in January
2016 launched a returns solution where customers can drop their
returns into any Asda store.
Customers in Italy, the Netherlands and Poland now benefit from
a next-day deliver-to-store option at over 4,300 locations.
Internationally we now have over 16,500 deliver-to-store locations.
We expect to offer this service in the US, Germany, Austria,
Denmark, Sweden and Finland during the next 12 months and continue
to seek further PUDO solutions in all our key territories.
Customer Care
Providing help to customers whenever and wherever they need it
is essential to delivering a best-in-class service and we continue
to provide support across social media, live chat, email and
telephony. We are delivering this service 24/7, 365 days a year
across key local languages to our English, French, German, Spanish,
Italian and Russian customers, with local language speaking support
also available in Dutch and Korean. We have upheld service levels
during the year, responding to all emails within one hour, all
social media communications from customers within 15 minutes and
all live chat or telephony within 30 seconds.
We have continued to invest in our technical capabilities,
enabling a reduction in the overall cost per contact whilst
enhancing the service we offer. During the year, we have upgraded
the self-serve functionality for customers with the launch of an
updated help section, making more advice and information available
on both desktop and mobile sites. It is now easier to contact
customer advisers with the continued development of our live chat
offering and social capabilities.
Logistics
UK
During the year, we added a further packing module to the
mechanised picking solution at our Barnsley warehouse which allowed
us to achieve record levels of despatch during the summer sale
period. The building of a second despatch sorter is underway which
will further automate processes and increase capacity.
Planning permission has been granted for an extension to the
Barnsley building in order to add extra office space as well as to
further enhance facilities for our people who work there. This
includes a gym, training rooms, a wellbeing suite and further
offices. We will be investing a further c.GBP20m in this warehouse
in the new financial year.
There has been comment recently in the media and elsewhere on
working conditions in our warehouse which are inaccurate and
misleading. For example, contrary to what has been alleged, we do
currently pay above the National Living Wage for all employees and
are committed to migrating towards the living wage foundation level
over the next 18 months. We do not use, and have never used,
zero-hours contracts. There is a full statement on these and other
issues on our Plc website
http://www.asosplc.com//media/Files/A/ASOS/global-news/asos-and-our-people-04-10-2016.pdf.
International
Our existing German Eurohub operation continues to expand in
line with our strategy of fulfilling more EU orders from Berlin and
we exited the year holding over 3.5m units of stock and despatching
just over 50% of total EU orders from this site. During the year,
Belgium, the Netherlands, Spain, Denmark and Luxembourg were added
to the local despatch list and we are looking to add further
countries in the new financial year as we integrate with more
carriers. Our returns processing facility in Poland processes
nearly all returns from the EU and continued to increase throughput
during the year.
Ground works at Eurohub 2 were completed in February 2016 with
the foundations and columns for all halls finished in April 2016.
The site was handed over to us on 29 September 2016 and we remain
on track to commence live operations in March 2017 with costs in
line with expectations.
Our US warehouse consistently fulfils over 25% of US orders.
During the year, we commenced a review of the US market with the
purpose of designing a supply chain that will underpin our growth
plans in this country. We will communicate the conclusion of this
review at the appropriate time.
Technology
Our technology continues to evolve at pace. Over the course of
the year we completed the development of a completely new
microservice-based digital platform which is deployed in the Cloud.
The new platform delivers globally consistent high performance,
resilience, business flexibility and supports complete freedom to
innovate in the way we interact with customers. Every aspect of our
customer experience - identity, content, product, search, price,
stock, checkout, payment and order processing - is now supported by
independently deployable and enhanceable platform services. Through
the global reach of the Cloud, we can roll-out new services
worldwide so they are hosted as close as possible to our customers,
in the configuration needed to deliver high performance.
This new platform has been designed in anticipation of our
future global ambitions. This agility will allow us to continue to
invest at pace, delivering new customer experiences and innovations
to delight our customers. We have extensive plans to invest further
in our mobile app and web experiences, personalisation, community
and content technologies, many of which are underpinned by our rich
data insights.
We have recently mobilised our global fulfilment programme which
will optimise global stock management and warehouse fulfilment
plans. The programme will deliver the fulfilment logic which sits
between country websites and warehouses and will underpin the
fulfilment from our Barnsley and Eurohub distribution centres.
We have also explored new ways of bringing technology-led
innovation to customers and have partnered with a global tech
start-up accelerator to co-invest and co-accelerate three fashion
tech start-ups. Development work with each will take place during
the new financial year. We have also tested visual search and size
prediction technologies on our platform and plan to extend these
further.
We will be increasing investment in core operational systems.
These include new end-to-end merchandising and planning systems for
our retail teams (Truly Global Retail), plus a new finance system
which will support the ability to buy, sell and account for stock
in multiple locations and in local currencies. These new retail and
finance systems are multi-year investments and will enable our
teams to operate at an even greater scale across all global
fulfilment centres.
In order to support the increased investment in technology we
have continued to develop and grow our technology team. This year
the team grew by c.45% giving us the strongest bench strength we
have ever had. We plan to continue to grow this capability in a
similar way next year.
Investment
ASOS headcount increased to 2,664 direct employees as at 31
August 2016 (2015: 2,038) primarily as a result of additions in the
Retail, Technology and Customer Care teams.
We will commence a 36-month refit at our head office at Greater
London House (GLH) during the new financial year. We have recently
extended our lease there for a further 15 years and over this time,
we will invest up to GBP40m to support the growth of the business
and provide the very best environment for our people. The total
space will increase from 180,000 ft(2) to 232,000 ft(2) which
combined with the very latest technology, will provide us with
sufficient flexibility to accommodate future headcount growth. The
plans for GLH include an ASOS training academy, showroom facility,
event spaces that will accommodate up to 1,000 people and new
catering and meeting facilities.
Given the increasing momentum within the business, we have
decided to accelerate investment in both logistics and technology
capabilities to ensure we capture the growth opportunities
available to us. We now anticipate capital expenditure in the range
of GBP120m to GBP140m in the new financial year compared to the
GBP87m invested during the year just ended. Within technology we
are progressing at speed with both Truly Global Retail and global
fulfilment programmes. This is in addition to continuing with our
fundamental replatforming work and upgrading our finance systems.
Within supply chain we will add a fifth sorter at Barnsley, further
extending the facility and enhancing its inbound capacity. At
Eurohub 2 we will complete the fit out of Phase 1 of this
development and commence Phase 2.
Outlook
The pace at ASOS is continuing into the new financial year,
which we are looking forward to with confidence: we expect growth
in sales to remain in the previously guided range of 20% to 25%.
Our margins will remain broadly stable as we continue to reinvest
in customers through product, price and proposition, moving quickly
to leverage opportunities in our markets. We will accelerate
capital expenditure to between GBP120m and GBP140m, supporting our
unwavering focus on delivering the great customer experience that
defines and differentiates ASOS, whilst ensuring our infrastructure
provides the resilience required as we continue to scale at
pace.
Nick Beighton Helen Ashton
Chief Executive Officer Chief Financial Officer
Financial review
Revenue
Year to 31 August 2016 Group International
GBPm(1) total UK US EU RoW total
------------------------------ -------- ------ ------ ------ ------ --------------
Retail sales 1,403.7 603.8 179.2 374.9 245.8 799.9
Growth 26% 27% 50% 28% 9% 25%
Growth at constant exchange
rate 26% 27% 40% 28% 14% 25%
Delivery receipts 34.5 15.3 5.5 7.3 6.4 19.2
Growth 35% 33% 49% 43% 21% 36%
Third party revenues 6.7 6.4 0.1 0.1 0.1 0.3
Growth 29% 46% (88%) 100% 100% (63%)
Total revenues 1,444.9 625.5 184.8 382.3 252.3 819.4
Growth 26% 28% 49% 28% 10% 25%
Growth at constant exchange
rate 26% 28% 40% 28% 14% 26%
------------------------------ -------- ------ ------ ------ ------ --------------
(1) All numbers subject to rounding and exclude results from the
discontinued operations in China unless otherwise stated
The Group generated retail sales growth of 26% during the year,
with growth of 27% in the UK and 25% in our international markets,
where we continue to see the benefits of price and proposition
investments. International retail sales accounted for 57% (2015:
57%) of total retail sales.
Retail sales in the UK increased by 27%, following the continual
improvement to our market-leading proposition in this territory
including the launch of ASOS A-List. We retained our first place
position for unique visitors to apparel retailers in the 15-34 age
range (Comscore, August 2016).
US retail sales grew by 50% (40% in constant currency) as a
result of duty savings being reinvested into improving our price
proposition, further expansion of our range of locally relevant
brands and reduction of standard delivery days from 6 days to 4
days in April 2016. We expect to see the full benefit of the
delivery improvements during the new financial year.
EU retail sales grew by 28% (28% in constant currency) driven by
substantial price investments, introduction of next day delivery in
all member states as well as free returns going live across the EU
during the second half of the financial year.
We also saw retail sales growth of 9% (14% in constant currency)
in the Rest of World segment, driven by Russia and Australia. We
made many proposition improvements and invested in prices across
several countries within this segment during the year and this,
together with currency benefit particularly in Russia, has
underpinned a reacceleration in the sales trajectory.
Delivery receipts increased by 35% as we continued to expand our
range of paid delivery options and uptake in our premier delivery
scheme grew by 50%. Third party revenues, which mainly comprise
advertising revenues, increased by 29% as we undertook more
campaigns.
Customer engagement
We have seen a significant increase in active customers(1) ,
exiting the financial year with 12.4m; up 25% compared to last
year. Our engaging content and investments in technology platforms
have helped drive this growth as well as increases in visits of
22%, orders of 30% and average basket value of 3%. Conversion(2)
increased by 10bps and average order frequency increased by 4%,
both reflecting the compelling nature of our proposition.
Year to 31 Year to 31 Change
August 2016 August 2015
--------------------------------- ------------- ------------- -------
Active customers(1) (m(3) ) 12.4 9.9 25%
Average basket value (including
VAT) GBP70.84 GBP68.74 3%
Average units per basket 2.82 2.79 1%
Average selling price per unit
(including VAT) GBP25.09 GBP24.63 2%
Total orders (m(3) ) 38.3 29.5 30%
Total visits (m(3) ) 1,348.7 1,102.1 22%
--------------------------------- ------------- ------------- -------
(1) Defined as having shopped during the last twelve months
(2) Calculated as total orders divided by total visits
(3) All numbers subject to rounding and exclude results from the
discontinued operations in China unless otherwise stated
Gross profitability
Year to 31 August 2016(1) Group International
total UK US EU RoW Total
--------------------------- -------- ------ --------- ------ --------------
Gross profit (GBPm) 722.2 294.5 111.9 179.8 136.0 427.7
Growth 26% 29% 50% 22% 12% 24%
Retail gross margin 48.5% 45.2% 59.3% 46.0% 52.7% 51.0%
Growth (30bps) 20bps 50bps (240bps) 80bps (60bps)
Gross margin 50.0% 47.1% 60.6% 47.0% 53.9% 52.2%
Growth (10bps) 30bps 40bps (230bps) 90bps (50bps)
--------------------------- -------- ------ ------ --------- ------ --------------
(1) All numbers subject to rounding and exclude results from the
discontinued operations in China unless otherwise stated
Group retail gross margin decreased by 30bps to 48.5% compared
with last year (2015: 48.8%) driven by price investments and
increased returns rates, particularly within the EU, offset by a
higher full price mix. Gross margin (including delivery receipts
and third-party revenues) decreased by 10bps to 50.0% (2015:
50.1%).
Operating expenses
The Group increased its investment in operating resources by 25%
to GBP659.2m, while the total operating costs to revenue ratio
improved by 50bps.
Year to 31 August Year to 31
GBPm(1) 2016 August 2015 Change
Distribution costs (216.0) (168.2) (28%)
Payroll and staff costs(2) (132.6) (104.7) (27%)
Warehousing (114.3) (96.9) (18%)
Marketing (76.6) (55.7) (38%)
Production (6.3) (4.9) (29%)
Technology costs (24.5) (19.2) (28%)
Other operating costs (57.3) (54.5) (5%)
Depreciation and amortisation (31.6) (22.9) (38%)
------------------------------- ------------------ ------------- -------
Total operating costs (659.2) (527.0) (25%)
Operating cost ratio (% of
sales) 45.6% 46.1% 50bps
------------------------------- ------------------ ------------- -------
(1) All numbers subject to rounding and exclude results from the
discontinued operations in China and exceptional items unless
otherwise stated
(2) Inclusive of non-cash share-based payment charges
Distribution costs increased by 30bps to 14.9% of revenue,
driven by the expansion of the delivery proposition globally,
particularly in relation to EU free returns and US standard
delivery days.
Staff costs remained in line with last year at 9.2% of revenue
as average headcount increased by 26% in line with business growth.
Share-based payment charges included within this cost line amounted
to GBP4.5m (2015: GBP2.2m) as our second Long-Term Incentive Scheme
was granted to senior management during the year.
Warehousing costs decreased by 60bps to 7.9% of revenue due to
increased efficiency at Barnsley as our automation technology
operated effectively for the full financial year.
Marketing costs have increased by 40bps to 5.3% of sales. This
is based off a low comparative figure as last year we reduced spend
on campaigns whilst we focused on price reinvestments. This year we
increased the digital marketing mix and shifted towards more mobile
channels. This spend was partly offset by savings generated from
changes to our magazine distribution strategy, which reduced the
number of editions from ten to four.
Other operating costs decreased by 80bps to 4.0% of revenue due
principally to the non-recurrence of the one-off GBP4.9m fixed
asset write-offs in the prior year. Removing the impact of this
from the comparatives, other operating costs would have improved by
30bps compared to last year driven by savings from the inclusion of
legal costs associated with the settlement of the trademark
disputes within exceptional items.
Depreciation increased by 20bps to 2.2% of revenue following
recent acceleration of investments in our logistics and technology
infrastructure.
Exceptional Items
In September 2016 the Group settled its trademark infringement
disputes with high-performance cycle wear manufacturer Assos of
Switzerland GmbH, and German menswear retailer Anson's Herrenhaus
KG. This resulted in a one-off exceptional legal settlement cost of
GBP20.9m (including associated legal fees) representing full, final
and global settlement of all outstanding litigation.
In the comparative period to 31 August 2015, we received final
business interruption insurance reimbursements of GBP6.3m as a
result of a fire in our Barnsley warehouse in June 2014.
Discontinued Operations
In May 2016 the Group discontinued its in-country China
operation which incurred an operating loss before tax of GBP3.6m up
to the point of closure (2015: GBP5.2m) and one-off exceptional
closure costs before tax of GBP6.5m, of which GBP4.4m was non-cash
relating principally to the impairment of fixed assets.
Income statement
The Group generated continuing profit before tax and exceptional
items of GBP63.7m, up 37% compared to last year, due to investment
in gross margin being offset by operating expense leverage.
Year to 31 August Year to 31 August
2016 2015
GBPm(1) Before Exceptional After Before Exceptional After
exceptional items exceptional exceptional items exceptional
items items items items
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
CONTINUING OPERATIONS
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Revenue 1,444.9 - 1,444.9 1,143.0 - 1,143.0
Cost of sales (722.7) - (722.7) (569.9) - (569.9)
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Gross profit 722.2 - 722.2 573.1 - 573.1
Distribution expenses (216.0) - (216.0) (168.2) - (168.2)
Administrative expenses (443.2) (20.9) (464.1) (358.8) 6.3 (352.5)
Operating profit 63.0 (20.9) 42.1 46.1 6.3 52.4
Net finance income 0.7 - 0.7 0.3 - 0.3
Profit before tax 63.7 (20.9) 42.8 46.4 6.3 52.7
Income tax expense (12.3) 4.2 (8.1) (10.4) (1.3) (11.7)
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Profit after tax from
continuing operations 51.4 (16.7) 34.7 36.0 5.0 41.0
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Effective tax rate 19.3% (20.1%) 18.9% 22.4% 20.6% 22.2%
DISCONTINUED OPERATIONS
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Loss before tax from
discontinued operations (3.6) (6.5) (10.1) (5.2) - (5.2)
Tax from discontinued
operations 0.3 (0.5) (0.2) 1.0 - 1.0
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Loss after tax from
discontinued
operations (3.3) (7.0) (10.3) (4.2) - (4.2)
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
GROUP RESULTS
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Group profit before tax 60.1 (27.4) 32.7 41.2 6.3 47.5
Income tax expense (12.0) 3.7 (8.3) (9.4) (1.3) (10.7)
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Group profit after tax 48.1 (23.7) 24.4 31.8 5.0 36.8
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Effective tax rate 20.0% (13.5%) 25.2% 22.8% 20.6% 22.5%
(1) All numbers subject to rounding
Taxation
The effective tax rate from continuing operations before
exceptional items decreased by 310bps to 19.3% (2015: 22.4%). This
is principally due to prior year adjustments relating to amendments
to capital allowance claims and R&D reliefs finalised for the
years ending 31 August 2014 and 2015. The effective tax rate from
continuing operations after exceptional items decreased by 330bps
to 18.9% (2015: 22.2%). The Group effective tax rate (including
discontinued operations) for the year is 25.2% (2015: 22.5%).
Going forward, we expect the effective tax rate for continuing
operations to be approximately 100bps higher than the prevailing
rate of UK corporation tax due to permanently disallowable
items.
Earnings per share
Basic and diluted earnings per share from continuing operations
before exceptional items increased by 43% and 42% to 61.9p and
61.8p respectively (2015: 43.4p and 43.4p). This was driven by the
increase in continuing profit before tax and exceptional items of
37% combined with the reduced effective tax rate. Basic and diluted
earnings per share from continuing operations after exceptional
items decreased by 15% to 41.8p and 41.7p respectively (2015: 49.4p
and 49.4p).
Basic and diluted loss per share from discontinued operations
were 12.4p and 12.4p respectively (2015: 5.0p and 5.0p). Basic and
diluted earnings per share for the Group after exceptional items
and discontinued operations decreased by 34% to 29.4p and 29.3p
(2015: 44.4p and 44.4p).
Statement of financial position
The Group continues to enjoy a robust financial position
including a closing cash balance of GBP173.3m (2015: 119.2m).
Net assets decreased by GBP36.9m to GBP200.4m during the year
(2015: GBP237.3m) due to the Group's profit after tax of GBP24.4m
being more than offset by a fair value decline of GBP82.3m in our
outstanding forward contracts as at 31 August 2016 following
adverse exchange rate movements, particularly in the US dollar and
Euro. The summary statement of financial position is shown
below.
At At
GBPm(1) 31 August 2016 31 August 2015
------------------------------------------- ---------------- ----------------
Goodwill and other intangible assets 113.5 76.2
Property, plant and equipment 77.2 64.4
Derivative financial assets - 0.2
Deferred tax asset 13.3 -
------------------------------------------- ---------------- ----------------
Non-current assets 204.0 140.8
------------------------------------------- ---------------- ----------------
Inventories 257.7 193.8
Net current payables (355.7) (214.5)
Cash and cash equivalents 173.3 119.2
Derivative financial (liabilities)/assets (76.0) 6.1
Current tax liability (2.9) (3.6)
Deferred tax liability - (4.5)
------------------------------------------- ---------------- ----------------
Net assets 200.4 237.3
------------------------------------------- ---------------- ----------------
(1) All numbers subject to rounding
Statement of cash flows
The Group's cash balance increased by GBP54.1m to GBP173.3m
during the year (2015: GBP119.2m) as capital expenditure of
GBP79.2m was offset by a cash inflow from operating activities of
GBP130.7m. Our working capital inflow is driven by trade and other
payable increases, particularly as our trade payable days increased
following the extension of our supplier terms towards the end of
last financial year. In addition, our accrual balances have
increased due to inclusion of the trademark infringement legal
settlement as this was not paid before the year end, increases in
various trade-related accruals due to business growth and following
the introduction of free returns in the EU and Australia, as well
as timing of payments at the year end. These increases are offset
by an outflow from stock due to earlier intake of our new season
compared to last year end. The summary statement of cash flows is
shown below.
GBPm(1) Year to 31 August 2016 Year to 31 August 2015
------------------------------------------------------- ----------------------- -----------------------
Operating profit from continuing operations 42.1 52.4
Loss before tax from discontinued operations (10.1) (5.2)
------------------------------------------------------- ----------------------- -----------------------
Operating profit 32.0 47.2
Depreciation and amortisation 31.7 23.1
Losses on disposal of assets - continuing 0.8 4.9
Losses on disposal of assets - discontinuing 4.3 -
Working capital 69.1 17.8
Share-based payments charge 4.5 2.3
Other non-cash items (1.7) 0.7
Tax paid (10.0) (2.8)
Cash inflow from operating activities 130.7 93.2
Capital expenditure (79.2) (50.4)
Net finance income received 0.7 0.2
Net cash inflow relating to Employee Benefit Trust 0.7 0.9
Total cash inflow 52.9 43.9
Opening cash and cash equivalents 119.2 74.3
Effect of exchange rates on cash and cash equivalents 1.2 1.0
------------------------------------------------------- ----------------------- -----------------------
Closing cash and cash equivalents 173.3 119.2
------------------------------------------------------- ----------------------- -----------------------
(1) All numbers subject to rounding
Fixed asset additions
Year to 31 Year to 31
GBPm(1) August 2016 August 2015
----------------------------- ------------- -------------
Technology 60.1 33.7
Office fixtures and fit-out 2.5 1.1
Warehouse 24.4 14.6
Total 87.0 49.4
----------------------------- ------------- -------------
(1) All numbers subject to rounding and exclude results from the
discontinued operations in China unless otherwise stated
We continue to invest in our technology and logistics
infrastructure to support our future growth ambitions. The majority
of technology spend related to the replatforming programme and the
new global fulfilment and Truly Global Retail programmes, whilst
our warehousing spend related to the Eurohub 2 fit-out and
improvements to our Barnsley automation technology.
Consolidated Statement of Total Comprehensive Income
For the year to 31 August 2016
Year to 31 August 2016 Year to 31 August 2015
Before Exceptional After Before Exceptional After
exceptional items exceptional exceptional items exceptional
items (Note items items (Note items
3) 3)
GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1)
CONTINUING OPERATIONS
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Revenue 1,444.9 - 1,444.9 1,143.0 - 1,143.0
Cost of sales (722.7) - (722.7) (569.9) - (569.9)
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Gross profit 722.2 - 722.2 573.1 - 573.1
Distribution expenses (216.0) - (216.0) (168.2) - (168.2)
Administrative expenses (443.2) (20.9) (464.1) (358.8) 6.3 (352.5)
Operating profit 63.0 (20.9) 42.1 46.1 6.3 52.4
Finance income 0.7 - 0.7 0.3 - 0.3
Profit before tax from
continuing operations 63.7 (20.9) 42.8 46.4 6.3 52.7
Income tax expense (12.3) 4.2 (8.1) (10.4) (1.3) (11.7)
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Profit after tax from
continuing
operations 51.4 (16.7) 34.7 36.0 5.0 41.0
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
DISCONTINUED OPERATIONS (Note 4)
Loss before tax from
discontinued
operations (3.6) (6.5) (10.1) (5.2) - (5.2)
Tax from discontinued
operations 0.3 (0.5) (0.2) 1.0 - 1.0
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Loss after tax from
discontinued
operations (3.3) (7.0) (10.3) (4.2) - (4.2)
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Profit for the year
attributable
to owners of the parent
company 48.1 (23.7) 24.4 31.8 5.0 36.8
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Net translation movements
offset in reserves (1.4) - (1.4) (0.1) - (0.1)
Net fair value gains on
derivative financial assets (82.3) - (82.3) 4.1 - 4.1
Income tax relating to
these items 16.2 - 16.2 - - -
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Other comprehensive
(loss)/income
for the year(2) (67.5) - (67.5) 4.0 - 4.0
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Total comprehensive
(loss)/income
for the year attributable
to owners of the parent
company (19.4) (23.7) (43.1) 35.8 5.0 40.8
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Basic earnings per share
(Note 5)
From continuing operations 61.9p (20.1p) 41.8p 43.4p 6.0p 49.4p
From discontinued operations (3.9p) (8.5p) (12.4p) (5.0p) - (5.0p)
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Total 58.0p (28.6p) 29.4p 38.4p 6.0p 44.4p
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Diluted earnings per share
(Note 5)
From continuing operations 61.8p (20.1p) 41.7p 43.4p 6.0p 49.4p
From discontinued operations (4.0p) (8.4p) (12.4p) (5.0p) - (5.0p)
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
Total 57.8p (28.5p) 29.3p 38.4p 6.0p 44.4p
------------------------------ ------------- ------------ ------------- ------------- ------------ -------------
(1) All numbers subject to rounding and exclude results from the
discontinued operations in China unless otherwise stated
(2) All items of other comprehensive income may be reclassified
to profit or loss
Consolidated Statement of Changes in EquitY
For the year to 31 August 2016
Equity
Called Employee attributable
up Benefit to owners
share Share Retained Trust Hedging Translation of the Non-controlling Total
capital premium earnings(2) reserve(3) reserve reserve parent interest equity
GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1)
At 1 September
2015 2.9 6.9 225.1 (3.6) 6.3 (0.3) 237.3 - 237.3
Profit for the
year - - 24.4 - - - 24.4 - 24.4
Other
comprehensive
loss for the
year - - - - (66.3) (1.2) (67.5) - (67.5)
-------- ---------- ------------ ----------- ------------------- ------------ ------------- ---------------- --------
Total
comprehensive
income/(loss)
for the year - - 24.4 - (66.3) (1.2) (43.1) - (43.1)
Net cash
received
on exercise
of shares
from
EBT(3) - - - 0.7 - - 0.7 - 0.7
Transfer of
shares from
EBT on
exercise(3) - - (0.3) 0.3 - - - - -
Share-based
payments
charge - - 5.0 - - - 5.0 - 5.0
Deferred tax
on share
options - - 0.5 - - - 0.5 - 0.5
Balance as at
31 August
2016 2.9 6.9 254.7 (2.6) (60.0) (1.5) 200.4 - 200.4
======== ========== ============ =========== =================== ============ ============= ================ ========
(1) All numbers subject to rounding
(2) Retained earnings includes the share-based payments
reserve
(3) Employee Benefit Trust and Capita Trust
Equity
Called Employee attributable
up Benefit to owners
share Share Retained Trust Hedging Translation of the Non-controlling Total
capital premium earnings(2) reserve(3) reserve reserve parent interest equity
GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1)
At 1 September
2014 2.9 6.9 186.9 (5.3) 2.2 (0.2) 193.4 (0.4) 193.0
Profit for the
year - - 36.8 - - - 36.8 - 36.8
Other
comprehensive
income/(loss)
for the year - - - - 4.1 (0.1) 4.0 - 4.0
-------- ---------- ------------ ----------- -------- ------------ ------------- ---------------- --------
Total
comprehensive
income/(loss)
for the year - - 36.8 - 4.1 (0.1) 40.8 - 40.8
Net cash
received
on exercise
of shares from
EBT(3) - - - 0.9 - - 0.9 - 0.9
Transfer of
shares from
EBT on
exercise(3) - - (0.8) 0.8 - - - - -
Share-based
payments charge - - 3.5 - - - 3.5 - 3.5
Acquisition
of
non-controlling
interest in
Covetique Ltd - - (0.4) - - - (0.4) 0.4 -
Deferred tax
on share
options - - (1.3) - - - (1.3) - (1.3)
Current tax
on items taken
directly to
equity - - 0.4 - - - 0.4 - 0.4
-------- ---------- ------------ ----------- -------- ------------ ------------- ---------------- --------
Balance as at
31 August 2015 2.9 6.9 225.1 (3.6) 6.3 (0.3) 237.3 - 237.3
======== ========== ============ =========== ======== ============ ============= ================ ========
(1) All numbers subject to rounding
(2) Retained earnings includes the share-based payments
reserve
(3) Employee Benefit Trust and Capita Trust
Consolidated Statement of Financial PositioN
At 31 August 2016
At At
31 August 31 August
2016 2015
GBPm(1) GBPm(1)
Non-current assets
Goodwill 1.1 1.1
Other intangible assets 112.4 75.1
Property, plant and equipment 77.2 64.4
Derivative financial assets - 0.2
Deferred tax asset 13.3 -
------------------------- ------------------------
204.0 140.8
------------------------- ------------------------
Current assets
Inventories 257.7 193.8
Trade and other receivables 15.0 18.0
Derivative financial assets - 6.1
Cash and cash equivalents 173.3 119.2
446.0 337.1
------------------------- ------------------------
Current liabilities
Trade and other payables (370.7) (232.5)
Derivative financial liabilities (55.0) -
Current tax liability (2.9) (3.6)
Deferred tax liability - (1.2)
------------------------- ------------------------
(428.6) (237.3)
------------------------- ------------------------
Net current assets 17.4 99.8
Non-current liabilities
Derivative financial liabilities (21.0) -
Deferred tax liability - (3.3)
------------------------- ------------------------
(21.0) (3.3)
------------------------- ------------------------
Net assets 200.4 237.3
========================= ========================
Equity attributable to owners
of the parent
Called up share capital 2.9 2.9
Share premium 6.9 6.9
Employee Benefit Trust reserve (2.6) (3.6)
Hedging reserve (60.0) 6.3
Translation reserve (1.5) (0.3)
Retained earnings 254.7 225.1
------------------------- ------------------------
Total equity 200.4 237.3
========================= ========================
(1) All numbers subject to rounding
Consolidated Statement of Cash Flows
For the year to 31 August 2016
Year to Year to 31
31 August 2015
August 2016
GBPm(1) GBPm(1)
Operating profit from continuing operations 42.1 52.4
Loss before tax from discontinued operations (10.1) (5.2)
------------------- -------------------
Operating profit 32.0 47.2
Adjusted for:
Depreciation of property, plant and equipment 10.5 8.3
Amortisation of other intangible assets 21.2 14.8
Loss on disposal of non-current assets
from continuing operations 0.8 4.9
Loss on disposal of non-current assets 4.3 -
from discontinued operations
Increase in inventories (63.8) (32.1)
Decrease in trade and other receivables 4.2 2.3
Increase in trade and other payables 128.7 47.6
Share-based payments charge 4.5 2.2
Other non-cash items (1.7) 0.8
Income tax paid (10.0) (2.8)
------------------- -------------------
Net cash generated from operating activities 130.7 93.2
Investing activities
Payments to acquire other intangible assets (55.7) (32.5)
Payments to acquire property, plant and
equipment (23.5) (17.9)
Finance income 0.8 0.3
Net cash used in investing activities (78.4) (50.1)
Financing activities
Net cash inflow relating to EBT(2) 0.7 0.9
Finance expense (0.1) (0.1)
------------------- -------------------
Net cash generated in financing activities 0.6 0.8
Net increase in cash and cash equivalents 52.9 43.9
=================== ===================
Opening cash and cash equivalents 119.2 74.3
Effect of exchange rates on cash and cash
equivalents 1.2 1.0
------------------- -------------------
Closing cash and cash equivalents 173.3 119.2
=================== ===================
(1) All numbers subject to rounding
(2) Employee Benefit Trust and Capita Trust
Notes to the financial information
For the year to 31 August 2016
1. Preparation of the consolidated financial information
a) General information
ASOS Plc ('the Company') and its subsidiaries (together, 'the
Group') is a global fashion retailer. The Group sells products
across the world and has websites targeting the UK, US, Australia,
France, Germany, Spain, Italy and Russia. The Company is a public
limited company which is listed on the Alternative Investment
Market (AIM) and is incorporated and domiciled in the UK. The
address of its registered office is Greater London House, Hampstead
Road, London NW1 7FB.
b) Basis of preparation
The condensed consolidated financial information for the year to
31 August 2016 has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards ("IFRS") as adopted for use in the European Union and
with those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The accounting policies applied are
consistent with those set out in the ASOS Plc Annual Report and
Accounts for the year to 31 August 2015.
The financial information contained within this preliminary
announcement for the years to 31 August 2016 and 31 August 2015
does not comprise statutory financial statements within the meaning
of section 434 of the Companies Act 2006. Statutory accounts for
the year to 31 August 2015 have been filed with the Registrar of
Companies and those for the year to 31 August 2016 will be filed
following the Company's annual general meeting. The auditors'
report on the statutory accounts for each of the years to 31 August
2016 and 31 August 2015 is unqualified, does not draw attention to
any matters by way of emphasis, and does not contain any statement
under section 498 of the Companies Act 2006.
Going concern and viability
The Directors have reviewed current performance and cash flow
forecasts, and are satisfied that the Group's forecasts and
projections, taking account of potential changes in trading
performance, show that the Group will be able to operate within the
level of its current facilities for the foreseeable future. The
Directors have therefore continued to adopt the going concern basis
in preparing the Group's financial statements.
The Directors have also assessed the Group's prospects and
viability over a three-year period to 31 August 2019. This
three-year assessment period was selected as it corresponds with
the Board's strategic planning horizon as well as the time period
over which senior management are remunerated via long-term
incentive plans.
In making this assessment, the Directors took account of the
Group's current financial position, annual budget, three-year plan
forecasts and sensitivity testing. The Board also considered a
number of other factors, including the Group business model, its
strategy, risks and uncertainties and internal control
effectiveness. Whilst the principal risks and uncertainties could
impact future performance, none of them are considered likely,
individually or collectively, to affect the viability of the
business during the three-year assessment period. The Group is
operationally strong with a robust balance sheet and cash position,
and has a track record of delivering profitable and sustainable
growth, which is expected to continue.
Based on this assessment, the Directors have a reasonable
expectation that the Group will continue in operation and meet all
its liabilities as they fall due during the period up to 31 August
2019.
Changes to accounting standards
Various new accounting standards and amendments were issued
during the year, none of which have had an impact in the current
year. The impact of new standards which are not yet effective are
currently under review by the Group.
2. Segmental analysis
IFRS 8 'Operating Segments' requires operating segments to be
determined based on the Group's internal reporting to the Chief
Operating Decision Maker. The Chief Operating Decision Maker has
been determined to be the Executive Board who receive information
on the basis of the Group's operations in key geographical
territories, 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.
Year to 31 August 2016
UK US EU RoW Total
GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1)
Retail sales 603.8 179.2 374.9 245.8 1,403.7
Delivery receipts 15.3 5.5 7.3 6.4 34.5
Third party revenues 6.4 0.1 0.1 0.1 6.7
Internal revenues - - - 3.0 3.0
Total segmental revenue 625.5 184.8 382.3 255.3 1,447.9
Eliminations - - - (3.0) (3.0)
-------- -------- -------- -------- ------------
Total revenues 625.5 184.8 382.3 252.3 1,444.9
Cost of sales (331.0) (72.9) (202.5) (116.3) (722.7)
-------- -------- -------- -------- ------------
Gross profit 294.5 111.9 179.8 136.0 722.2
Distribution expenses (72.8) (46.8) (54.2) (42.2) (216.0)
-------- -------- -------- -------- ------------
Segment result 221.7 65.1 125.6 93.8 506.2
Administrative expenses (443.2)
Exceptional items (Note 3) (20.9)
------------
Operating profit from continuing
operations 42.1
Finance income 0.7
------------
Profit before tax from continuing
operations 42.8
Loss before tax from discontinued
operations (10.1)
Profit before tax 32.7
============
Year to 31 August 2015
UK US EU RoW Total
GBPm(1) GBPm(1) GBPm(1) GBPm(1) GBPm(1)
Retail sales 473.9 119.5 294.0 224.8 1,112.2
Delivery receipts 11.5 3.7 5.1 5.3 25.6
Third party revenues 4.4 0.8 - - 5.2
Internal revenues - - 0.3 3.1 3.4
-------- -------- -------- -------- ------------
Total segment revenue 489.8 124.0 299.4 233.2 1,146.4
Eliminations - - (0.3) (3.1) (3.4)
-------- -------- -------- -------- ------------
Total revenue 489.8 124.0 299.1 230.1 1,143.0
Cost of sales (260.7) (49.3) (151.8) (108.1) (569.9)
-------- -------- -------- -------- ------------
Gross profit 229.1 74.7 147.3 122.0 573.1
Distribution expenses (52.8) (38.4) (40.8) (36.2) (168.2)
-------- -------- -------- -------- ------------
Segment result 176.3 36.3 106.5 85.8 404.9
Administrative expenses (358.8)
Exceptional items (Note 3) 6.3
Operating profit from continuing
operations 52.4
Finance income 0.3
------------
Profit before tax from continuing
operations 52.7
Loss before tax from discontinued
operations (5.2)
------------
Profit before tax 47.5
============
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.
(1) All numbers subject to rounding and exclude results from the
discontinued operations in China unless otherwise stated
3. Exceptional items
Year to 31 Year to
August 2016 31
August
2015
GBPm(1) GBPm(1)
Legal settlement 20.9 -
Business interruption reimbursements - 6.3
------------- --------
Exceptional items 20.9 6.3
============= ========
(1) All numbers subject to rounding
In September 2016, the Group settled its trademark infringement
disputes with high-performance cycle wear manufacturer Assos of
Switzerland GmbH, and German menswear retailer Anson's Herrenhaus
KG. This resulted in a one-off exceptional legal settlement cost of
GBP20.9m (including associated legal fees) representing full, final
and global settlement of all outstanding litigation.
In the comparative period to 31 August 2015, we received final
business interruption insurance reimbursements of GBP6.3m as a
result of a fire in our Barnsley warehouse in June 2014.
Exceptional items in respect of discontinued operations are
detailed in Note 4.
4. Discontinued operations
The Group discontinued its in-country China operation which
incurred an operating loss before tax of GBP3.6m up to the point of
closure in May 2016 (2015: GBP5.2m) and one-off exceptional closure
costs before tax of GBP6.5m, of which GBP4.4m was non-
cash.
Year to 31 Year to
August 2016 31
August 2015
GBPm(1) GBPm(1)
Revenue 6.3 7.8
Expenses (9.9) (13.0)
------------- -------------
Operating loss before exceptional
items (3.6) (5.2)
Exceptional items (6.5) -
------------- -------------
Loss before tax from discontinued
operations (10.1) (5.2)
Taxation from discontinued operations (0.2) 1.0
------------- -------------
Loss for the year from discontinued
operations (10.3) (4.2)
============= =============
Basic loss per share from discontinued
operations (12.4p) (5.0p)
Diluted loss per share from discontinued
operations (12.4p) (5.0p)
============= =============
Cash flows from discontinued operations
Operating cash flows (4.0) (5.2)
Investing cash flows (0.3) (0.3)
Financing cash flows - 3.5
------ ------
Total cash flows (4.3) (2.0)
====== ======
(1) All numbers subject to rounding
5. 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 Employee Benefit Trust and Capita 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 period,
adjusted for the effects of potentially dilutive share options.
Year to Year to
31 August 31
2016 August 2015
No. of shares No. of shares
Weighted average share capital
Weighted average shares in issue for
basic earnings per share 82,972,285 82,963,517
Weighted average effect of dilutive
options 224,372 70,742
-------------- --------------
Weighted average shares in issue for
diluted earnings per share 83,196,657 83,034,259
============== ==============
Year to Year to
31 August 31
2016 August
2015
GBPm(1) GBPm(1)
Earnings
Earnings attributable to owners of the parent 24.4 36.8
Year to Year to
31 August 31 August
2016 2015
Pence(1) Pence(1)
Earnings per share from continuing operations
before exceptional items
Basic earnings per share 61.9 43.4
Diluted earnings per share 61.8 43.4
================ =================
(Loss)/Earnings per share from exceptional items
Basic adjusted (loss)/earnings per share (20.1) 6.0
Diluted adjusted (loss)/earnings per share (20.1) 6.0
================ =================
Loss per share from discontinued
operations
Basic loss per share (12.4) (5.0)
Diluted loss per share (12.4) (5.0)
=============== ==============
Earnings per share
Basic earnings per share 29.4 44.4
Diluted earnings per share 29.3 44.4
============= =============
(1) All numbers subject to rounding
6. Reconciliation of cash and cash equivalents
Year to 31 Year to
August 2016 31 August
2015
GBPm(1) GBPm(1)
Net movement in cash and cash equivalents 52.9 43.9
Opening cash and cash equivalents 119.2 74.3
Effect of exchange rates on cash
and cash equivalents 1.2 1.0
------------- -----------
Closing cash and cash equivalents 173.3 119.2
============= ===========
(1) All numbers subject to rounding
The Group has in place a GBP20.0m revolving loan credit facility
including an ancillary GBP10.0m guaranteed overdraft facility
available until October 2018, none of which has been drawn down at
the year end.
7. Contingent Liabilities
From time to time, the Group is subject to various legal
proceedings and claims that arise in the ordinary course of
business which, due to the fast-growing nature of the Group and its
ecommerce base, may concern the Group's brand and trading name or
its product designs. All such cases brought against the Group are
robustly defended and a liability is recorded only when it is
probable that the case will result in a future economic outflow
which can be reliably measured.
On 2 September 2016, ASOS reached a full and final global
settlement of GBP20.2m for the trademark infringement disputes
brought against it by Assos of Switzerland (a high-performance
cycle-wear brand), and Anson's Herrenhaus (a German menswear
retailer) which has been presented, along with associated legal
fees of GBP0.7m, as an exceptional item in the financial
statements. At 31 August 2016, there were no other pending claims
or proceedings against the Group which were expected to have a
material adverse effect on its liquidity or operations.
At 31 August 2016, the Group had contingent liabilities of
GBP7.3m (2015: GBP3.6m) in relation to supplier standby letters of
credit, rent deposit deeds and other bank guarantees. The
likelihood of cash outflow in relation to these contingent
liabilities is considered to be low.
8. Subsequent Events
In September 2016, the Group settled its trademark infringement
disputes with high-performance cycle wear manufacturer Assos of
Switzerland GmbH, and German menswear retailer Anson's Herrenhaus
KG. This resulted in a one-off exceptional legal settlement cost of
GBP20.9m (including associated legal fees) representing full, final
and global settlement of all outstanding litigation being
recognised during the year to 31 August 2016. This will be paid in
the new financial year.
FR UBABRNOARAAA
(END) Dow Jones Newswires
October 18, 2016 02:00 ET (06:00 GMT)
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