TIDMASC
RNS Number : 7507T
ASOS PLC
17 October 2017
17 October 2017
ASOS plc
Global Online Fashion Destination
Final Results for the year to 31 August 2017
Summary financial results
Year to Year to CCY(3)
GBPm(1) 31 August 31 August Change Change
2017 2016(2)
---------------------------------- ----------- ----------- --------- --------
Group revenues(4) 1,923.6 1,444.9 33% 27%
Retail sales 1,876.5 1,403.7 34% 27%
UK retail sales 698.2 603.8 16% 16%
International retail sales 1,178.3 799.9 47% 36%
Gross profit 958.3 722.2 33%
Retail gross margin 48.6% 48.5% 10bps
Gross margin 49.8% 50.0% (20bps)
Continuing profit before tax and
exceptional items(5) 80.0 63.7 26%
Profit before tax 80.0 32.7 145%
Diluted earnings per share from
continuing operations only(5) 76.6p 61.8p 24%
Diluted earnings per share 76.6p 29.3p 161%
Cash and cash equivalents 160.3 173.3 (8%)
---------------------------------- ----------- ----------- --------- --------
(1) All numbers subject to rounding throughout this document,
(2) Restated to remove the results of the discontinued operation in
China, (3) Constant currency is calculated to take account of
hedged rate movements on hedged sales and spot rate movements on
unhedged sales, (4) Includes retail sales, delivery receipts and
third party revenues, (5) 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.
Results summary
-- Retail sales grew strongly at +34% on a reported basis and +27% on a constant currency basis
-- Solid UK growth of +16% and a strong international
performance at +47% (constant currency +36%) aided by the
reinvestment of the FX tailwind
-- Retail gross margin up 10bps on prior year despite material price investment
-- Continued strong customer engagement with active customers(6)
+24%, average basket value +2% and average order frequency(7)
+5%
-- Total orders shipped 49.6m, +30% year on year
-- Transition to Eurohub 2 phase one is complete, US warehouse plans progressing well
-- Strong cash position of GBP160.3m supporting growth and enabling business investment
Guidance and medium term outlook
-- Increased FY18 reported sales guidance of c.25-30%
-- FY18 EBIT margin stable at c.4%, in line with market consensus
-- Accelerated capex expected to be GBP200-GBP220m in FY18 given strong business momentum
-- Medium term reported sales growth guidance remains unchanged
at c.20-25% p.a. with a c.4% EBIT margin
Nick Beighton, CEO, commented:
"It's been a great year for ASOS, with continued growth in sales
and profits. Our international performance was excellent, as we
reinvested FX tailwinds and benefitted from our continually
improving customer proposition. In a competitive UK market, we
achieved strong full price performance whilst further increasing
market share.
At the same time, we ramped up our investment in building the
increasingly strong and differentiated ASOS proposition. Our new
agile technology platform is allowing us to accelerate our pace of
innovation with great benefits for our customers, including new
payment methods and additional language sites to come. The
investments we are making will see us add 1,000 new heads and will
lay the foundations for a c.60% increase in unit capacity and
c.GBP4 billion of net sales.
The new financial year shows continuing momentum in the
business. The potential for our company remains huge. We are
confident we are positioning ASOS to be the world's number one
destination for fashion loving twentysomethings"
(6) Defined as having shopped in the last twelve months as at 31
August 2017, (7) Calculated as last twelve months' total orders
divided by active customers
Investor and analyst meeting:
There will be a meeting for analysts that will take place at
9.30am today, 17 October 2017, at Numis Securities, 10 Paternoster
Row, London EC4M 7LT. Photo ID and security checks will be required
so please ensure prompt arrival. A webcast of the meeting will be
available both live and following the meeting at www.asosplc.com.
Please register your attendance in advance with Guy Scarborough at
Instinctif Partners on either 020 7457 2047 or
guy.scarborough@instinctif.com.
For further information:
ASOS plc Tel: 020
Nick Beighton, Chief Executive 7756 1000
Officer
Helen Ashton, Chief Financial
Officer
Greg Feehely, Director of
Investor Relations
Website: www.asosplc.com/investors
Instinctif Partners Tel: 020
Matthew Smallwood / Guy Scarborough 7457 2020
JPMorgan Cazenove Tel: 020
Michael Wentworth-Stanley 7742 4000
/ Caroline Thomlinson/ Bill
Hutchings
Numis Securities Tel: 020
Alex Ham / Luke Bordewich 7260 1000
Forward looking statements:
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements" (including words such as
"believe", "expect", "estimate", "intend", "anticipate" and words
of similar meaning). By their nature, forward-looking statements
involve risk and uncertainty since they relate to future events and
circumstances, and actual results may, and often do, differ
materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with
respect to future events as at the date of this announcement. Save
as required by applicable law, the Company undertakes no obligation
to publicly revise any forward-looking statements in this
announcement, whether following any change in its expectations or
to reflect events or circumstances after the date of this
announcement.
Background note
ASOS is a global fashion destination for 20-somethings, selling
cutting-edge fashion and offering a wide variety of fashion-related
content, making ASOS.com the hub of a thriving fashion community.
ASOS sells over 85,000 branded and own-label products through
localised mobile and web experiences, delivering from fulfilment
centres in the UK, US and Europe to almost every country in the
world.
ASOS tailors the mix of own-label, global and local brands sold
through each of eight local language websites: UK, US, France,
Germany, Spain, Italy, Australia and Russia.
ASOS's websites attracted 135.7m visits during August 2017
(August 2016: 117.5m) and as at 31 August 2017 had 15.4m active
customers(1) (31 August 2016: 12.4m), of which 5.2m were located in
the UK and 10.2m were located in international territories (31
August 2016: 4.7m in the UK and 7.7m internationally).
(1) Defined as having shopped in the last twelve months as at 31
August 2017
ASOS plc ("the Group")
Global Online Fashion Destination
Final Results for the year to 31 August 2017
Business review
ASOS is delighted to report record sales and profit for the year
to 31 August 2017 in line to marginally ahead of expectations. The
Group retail sales growth of 34% to GBP1,876.5m (2016: GBP1,403.7m)
was once again driven by strong product, proposition improvements
and further price investments across major markets. As previously
noted, the continuing FX tailwind enabled reinvestment at a faster
rate than initially planned.
Retail gross margin increased by 10bps to 48.6% (2016: 48.5%) as
price investments in the US, Europe and some RoW territories were
offset by a higher full price mix. Delivery receipts grew 18% aided
by higher next-day delivery usage and the expansion of Premier
globally.
Continuing profit before tax and exceptional items grew by 26%
to GBP80.0m (2016: GBP63.7m).
The successful rollout of ASOS's new technology platform
delivers micro-service architecture with fully native mobile
experience in android and iOS apps and a vastly improved all new
checkout. The platform allows for significantly greater transaction
volume at enhanced levels of stability. A critical benefit of the
new platform is the increased ability to deliver technical change
and innovation at pace; the number of technology releases this year
surpassed expectations at 1,300 vs. 490 in the prior year. The
coming year will see a further acceleration in velocity, delivering
many more customer enhancements, new payment methods, new language
sites and stronger customer engagement.
ASOS continued to increase capacity and efficiency at Barnsley,
successfully transitioned to phase 1 of the new Eurohub 2
fulfilment centre with ongoing work to further double its capacity
and automate its operations. In August, ASOS signed a lease for a
new fulfilment centre in the US, which is expected to be
operational by Autumn 2018. The investments ASOS is making across
logistics will lay the foundations for a c.60% increase in unit
capacity and c.GBP4 billion of net sales per annum.
Our global potential
ASOS continues to see considerable opportunity across key
markets. The global apparel market continues to undergo significant
channel shift, with growth online outstripping the overall market.
Online penetration will continue to increase and ASOS is well
placed to capitalise on this shift in customer behaviour.
In the UK, the online apparel market has grown at more than
twice the rate of the overall apparel market across the last five
years. ASOS's consistent double-digit sales growth has continued to
surpass growth in the online apparel market in all of our key
territories.
ASOS's market share of online sales remains modest particularly
in international markets. ASOS will continue to invest to grow the
business at pace to take advantage of the global opportunity.
Our unique product
Creating and curating the most relevant product for fashion
loving 20-somethings
ASOS offers customers the greatest, most relevant choice of
fashion at the right price whatever their shape, size or style. The
ASOS Brand is positioned alongside a curated edit of the best third
party brands, sourced from across the globe. Sales of ASOS Brand
account for c.41% of sales. Newness is important to our customers
and is a key differentiator of the ASOS offering. Each week c.5,000
new styles are launched with c.85,000 products in stock at any one
point in time.
The brand portfolio continues to evolve. Almost 200 new brands
were introduced during the year whilst a similar number were edited
out. The combination of ASOS Brand and exclusive collaborations
with brands leads to c.60% of ASOS product only being available to
customers through the ASOS sites, an additional point of
differentiation.
Building on last year's launch, ASOS is accelerating its
activewear offering, with football and golf ranges now accompanying
a greater choice of true sports performance wear including gym, run
and yoga. The ASOS 4505 activewear range will launch in 2018 along
with range extensions into snow and surf.
Last month ASOS relaunched 'Face + Body', which establishes ASOS
as a destination for all things face, body, skin and hair. Initial
reaction has been very positive in a market that is predicted to be
worth GBP450bn p.a. globally by 2020.
ASOS's longstanding 'Fashion with Integrity' initiative
encompasses nine principal aspects of ethical trading. This
initiative is ambitious and is driving behaviour across the
business. This covers fundamental human rights and ASOS has
published a statement on modern slavery, become a signatory to the
UN's Women's empowerment Principles and recently signed a global
framework agreement with IndustriALL, the world's largest trade
union organisation representing 50 million workers in the retail
sector. Publication of ASOS's full factory list for the first time
also improved transparency of the supply chain.
'Fashion with Integrity' ultimately aims to ensure that the
production of our products causes no negative impact on the
environment. ASOS joined the Sustainable Apparel Coalition, giving
ASOS insights into environmental management systems across water
and chemical management. The Group reached 70% full traceability
across the viscose supply chain, allowing ASOS to identify risk
hotspots associated with certain viscose producers. ASOS signed the
Cotton Communique with the Clarence House International
Sustainability Unit, committing to 100% sustainably sourced cotton
by 2025 and are on track to hit a sustainable cotton target of 70%
for 2017. ASOS also signed the Commitment to a Circular Fashion
System (Global Fashion Agenda, Copenhagen) to support the
transition to a 'circular business'.
ASOS views its commitment to 'Fashion with Integrity' as a
critical investment in the future of the business. Our twenty
something customers care deeply about ethical and environmental
issues as does ASOS.
Our best in class proposition
Offering a friction-free experience at every stage of the
journey
Brand experience
Significant investments during the year have driven strong
engagement levels across ASOS's customer base. Site visits
increased by 24% year-on-year; average order frequency improved by
5%; average basket value increased by 2% alongside a 20bps
improvement in conversion. Active customers are now at 15.4m,
representing a 24% increase since last year. ASOS continues to
invest in and evolve its UK loyalty programme which is successfully
driving increased purchase frequency and reduced rates of
churn.
ASOS is continually striving for new ways to engage with its
customer demographic, such as a focus on students with a calendar
of acquisition and engagement activity aimed at growing penetration
of this global population. ASOS's 'hero' campaign successfully
reached students on campus and online in the UK, USA, France,
Germany, Australia and Italy. The student discount proposition was
extended into eight new markets with plans to further develop this
programme during the current year.
ASOS maintained investment in relevant, emerging content formats
like cross-channel video. Our videos were viewed more than 66
million times, a doubling on the prior year. ASOS continues to
experiment with pioneering advertising trials across key
international markets, on the platforms that matter most to fashion
loving 20-somethings. This activity is already driving heightened
engagement across multiple territories.
ASOS is continually finding fresh ways to engage with both new
and existing audiences, including two initiatives, "Fashion
Discovery" and "ASOS Supports Talent". "Fashion Discovery" is an
annual competition to discover and nurture the freshest UK fashion
talent. "ASOS Supports Talent" helps up-and-coming creatives to
realise an important, culturally significant project by giving them
funding, mentoring and a platform to showcase their skills.
Delivery & returns
ASOS continually enhances delivery and returns options,
maintaining a best-in-class customer proposition with over 200
improvements implemented over the last twelve months.
ASOS's Click & Collect delivery proposition has now been
expanded globally. UK total coverage increased to 9,000 locations
with an improved Next Day order cut-off of 7pm, whilst Click &
Collect launched into Italy and the United States in September,
giving an additional 11,000 collection points across those two
territories.
During the year, improvements were also made to Next Day and
Standard Delivery propositions. Internationally, ASOS now offers
tracked Standard Delivery services to a total of 61 countries
across the world, and within the UK, Saturday was added as a
Standard Delivery promise. Next Day Delivery weekend ordering
cut-off has been extended to 8pm in the UK and a Saturday order cut
off for Monday delivery has been introduced into a number of key
European territories, giving the customer an extra 24 hours for
Monday delivery.
For the year ahead, an Evening Next Day Delivery service will be
launched into Germany's major cities whilst ASOS Instant, ASOS's
same day delivery service, has just launched in London, with
further UK cities to follow. Nominated Day Delivery will also be
launched throughout the EU, allowing customers to select their
preferred delivery date. There will be continued expansion of Click
& Collect points globally, targeting the UK, France, Germany,
Netherlands, Sweden and Australia.
Customer care
A key differentiator for ASOS is providing best in class service
for customers throughout their entire ASOS experience. ASOS offers
customer support 24/7 365 days a year across email, live chat,
social media and telephony in nine languages. ASOS continues to
maintain strong service levels, responding to all emails within one
hour, all social media communications from customers within 15
minutes and all live chats or telephony calls within 30
seconds.
ASOS recently moved to a new 80,000 square feet Customer Care
site in Leavesden, North Watford and are on track to complete the
site during the first half of the new financial year. This
investment in infrastructure and technical capability cost GBP11m
and supports the ever growing customer base and allows in-sourcing
of all Customer Care operations, improving the quality of the
service and also reducing cost.
Warehousing
Investment in our site in Barnsley continues, with a fifth
packing module currently being commissioned. Live testing is now
underway and it will be fully operational for the start of the peak
trading period. This will provide additional capacity for Black
Friday volumes as well as supporting future growth. Planning
permission for a small office extension has been granted and
building works will commence in the next few weeks.
Eurohub 2, our warehouse in Berlin, was opened at the beginning
of March and has quickly grown its volumes, now fulfilling c.95% of
all EU orders. The local stockholding is now over 7.5m units and
will grow to around 9m units in readiness for peak trading this
year. The Phase 2 extension of Eurohub 2, which will double the
square footage of the fulfilment centre, is on track with first
deliveries of automation equipment expected shortly. The first
phase of Automation is expected to go live by the end of 2018.
In addition to the existing US operation in Ohio, ASOS signed a
lease for an existing 1 million square foot building located near
Atlanta, Georgia. Fit out commences shortly and the facility is
expected to be operational by Autumn 2018.
Technology
During the year, ASOS significantly ramped up the pace of both
technology investment and implementation. At the start of the year
ASOS completed the roll out of a new digital platform across all
territories. This new platform is the backbone of the ASOS customer
experience on both sites and apps. The new platform delivers
micro-service architecture with fully native mobile experience in
android and iOS apps and a vastly improved, all new checkout. The
new platform handled record volumes of transactions during peak
trading period, which at one point reached 33 orders per
second.
A critical benefit of this new platform is the enhanced ability
to deliver technological change and innovation at pace. During the
year, ASOS developed and rolled out over 1,300 individual releases
across the platform compared to 490 in the previous year. The pace
of change has exceeded expectations, demonstrating the flexibility
of the new platform and the power of ASOS's growing engineering
teams. During the year, ASOS added 120 engineers and technologists
and plans to add a further c.200 over the next 12 months as
velocity and momentum continue to accelerate.
During the first half of the year, ASOS completed the
development of the global fulfilment software changes and
technology required to open the Eurohub 2 fulfilment centre. This
new fulfilment software was a major change, controlling which
country sites have access to which stock pools, enabling further
improvement of the delivery proposition for each of these
countries. During the second half of the year this fulfilment logic
was used to point the German, French, Spanish and Italian sites at
the Eurohub stock pool. Improved conversion aided by better local
inventory availability was achieved as a result.
Throughout the year ASOS delivered new capabilities for
customers. Within the last six months these have included rolling
out ApplePay globally; a fully rebuilt and refreshed My Account
section on sites and apps; extension of product recommendation
algorithms to international sites; a size and fit recommendation
tool, and a new image search capability (Style Match) within the
iOS app. The migration of content management to a cloud based
solution has also delivered a richer and more efficient editorial
experience as well as delivering content to customers quicker.
ASOS has just developed and rolled out fully refreshed site
navigation and search as well as category and brand list pages.
These will improve how customers search, browse and explore
products to support conversion and will further improve page
download speeds globally. Looking forward, ASOS is continuing to
leverage machine learning and experiment with augmented reality, in
addition to progressing with a 'Customer Privacy Programme',
focussed on delivering an open and transparent way for customers to
manage their privacy needs, ahead of regulation that comes into
effect in 2018.
Good progress has been made with major transformation programmes
including the new end-to-end merchandising and planning system,
Truly Global Retail (TGR) and a new finance system, both of which
will support the ability to buy, sell and account for stock in
multiple locations and currencies. The first output from these
programmes has already been seen, with a new clearance optimisation
tool deployed to the first wave of categories, in readiness for
summer sale period. The new people and finance systems are expected
to go live in the first half of 2018.
ASOS will continue to evolve and innovate. Currently ASOS has 7
country specific websites. For the first time in 4 years, ASOS will
add new local foreign sites, up to 13 by the end of FY18,
ultimately giving the potential to cover all of ASOS's 200+
markets. Additionally ASOS will extend its premier proposition to
new countries, further personalising customers' experience across
sites and apps, improving the returns and refund experience,
extending the student proposition to new countries and offering
online gift vouchers to international customers.
Finally, to further drive global growth, ASOS will also launch
additional payment methods, new language sites and delivery
propositions.
Power of our people
Supporting our customers, our team and our partners to realise
their potential
ASOS works hard to protect its special culture where colleagues
feel valued, respected, enjoy their work, understand that they make
a real difference each day and also have some fun along the way.
ASOS aims to lead the way as a diverse, inclusive and inspiring
place to work which attracts the very best talent. Being true to
the ASOS values of being Authentic, Brave and Creative is at the
heart of how the business works.
Everyone who works for ASOS is central to the Group's success.
As at 31 August 2017, ASOS employed 3,579 people with the majority
based at our headquarters in Camden, North London and the Customer
Care site in Leavesden, with smaller teams in Paris, Birmingham,
Berlin, New York and Sydney. In FY18 ASOS plans to add a further
1,000 people to its team to support its accelerating pace of
growth.
Attracting talent and investing in our people
Attracting, developing and retaining the best talent that will
thrive in ASOS's fast-paced environment remains a number one
priority. Over the past twelve months, ASOS has strengthened the
senior team in critical areas with key appointments and promotions
in Technology, Finance, People Experience Team, Supply Chain,
Content and Engagement, Brand Experience and Legal. More widely
across the business, apprenticeships and internships remain
important ways of attracting and developing talent and ASOS
continues to build partnerships with a variety of universities and
colleges.
Once the best talent has been brought on board, the focus is on
developing and retaining people by offering opportunities that
match both their professional and personal aspirations. ASOS has a
robust learning offer to support its people through their journey
at ASOS, offering them support to achieve professional
qualifications, as well as role and departmental-specific training
in a variety of coaching, classroom, psychometric, informal and
social learning opportunities specific to the ASOS culture.
Investment
ASOS's investment in technology and logistics is delivering
great results and is key to sustaining the strong growth momentum
within the business. ASOS anticipates capital expenditure in FY18
to be between GBP200-GBP220m compared to the GBP168m invested
during the year just ended, the second year of accelerated capex.
As always, this investment will be funded from internally generated
cash alongside existing robust cash balances. Whilst the group is
likely to be free cash flow negative post capex in FY18, we expect
the group to return to positive free cash flow post capex from FY19
onwards.
This accelerated spend will include substantial investments into
the warehouse portfolio including further optimisation of Barnsley,
automating and extending Eurohub 2 and fitting out the US site.
These investments will lay the foundation for c.60% more unit
capacity and c.GBP4 billion of net sales per annum.
Additionally ASOS will complete the implementation of a number
of transformational technology programmes including the new retail
and planning system, TGR along with the finance and people systems.
The extension and refit of the head office in Camden will continue,
increasing space from 180,000 ft(2) to 243,000 ft(2) which, when
combined with the very latest technology, will provide sufficient
flexibility to accommodate future headcount growth.
The rollout of ASOS's new technology platform has enabled
deployment of enhancements to the customer experience at ever
greater velocity. The number of technology releases this year and
the positive customer impact it has generated has surpassed
expectations and ASOS will continue to accelerate investment in
this area over the coming year, delivering many more customer
enhancements, new payment methods, new language sites and stronger
customer engagement.
Outlook
The new financial year has started well. Our increased sales
guidance is 25-30% for FY18 inclusive of a modest FX tailwind, with
EBIT margins stable at c.4% in line with market consensus. Medium
term reported sales guidance of c.20%-25% is unchanged. ASOS
expects EBIT margins to remain at a similar level into the medium
term, with operating leverage in payroll and distribution offset by
ongoing investment in technology and warehousing infrastructure to
support continued growth. We are confident we are positioning ASOS
to be the world's number one destination for fashion loving
twenty-somethings.
Nick Beighton Helen Ashton
Chief Executive Officer Chief Financial Officer
Financial review
Revenue
Year to 31 August
2017 Group International
GBPm total UK US EU RoW total
---------------------- -------- ------ ------ ------ ------- --------------
Retail sales 1,876.5 698.2 261.6 544.1 372.6 1,178.3
Growth 34% 16% 46% 45% 52% 47%
Growth at constant
exchange rate 27% 16% 31% 34% 42% 36%
Delivery receipts 40.8 16.1 6.3 10.8 7.6 24.7
Growth 18% 5% 15% 48% 19% 29%
Third party revenues 6.3 6.0 0.2 0.1 - 0.3
Growth (6%) (6%) 100% - (100%) -
Total revenues 1,923.6 720.3 268.1 555.0 380.2 1,203.3
Growth 33% 15% 45% 45% 51% 47%
Growth at constant
exchange rate 27% 15% 30% 34% 41% 36%
---------------------- -------- ------ ------ ------ ------- --------------
The Group generated retail sales growth of 34% during the year,
with UK growth of 16% and strong international growth of 47% (36%
constant currency). This result was driven by investments in price
and proposition. International retail sales accounted for 63%
(2016: 57%) of total retail sales.
UK retail sales grew by 16% a solid performance in a more
promotional market. The A-List loyalty scheme which annualised
during the year, continued to aid increases in conversion and
average order frequency. ASOS retained its first place position for
unique visitors to apparel retailers in the 15-34 age range
(Comscore, August 2017).
US retail sales grew by 46% (31% in constant currency) driven by
price investments and the annualisation of improved delivery
propositions coupled with key promotional events, which increased
conversion and average basket value metrics.
EU retail sales grew by 45% (34% in constant currency) aided by
the introduction of free returns across the whole of the EU,
alongside prior year price investments annualising.
RoW retail sales grew significantly at 52% (42% constant
currency), augmented by further price and proposition investments.
Russia and Israel were the stand out performers, achieving triple
digit sales growth of over 200% and 150% respectively.
Delivery receipts increased by 18% which lagged retail sales
growth as customers increasingly took advantage of more extensive
free shipping options. The number of premier customers increased by
55%.
Customer engagement
ASOS has seen a significant increase in active customers(1) ,
finishing the financial year with 15.4m, up 24% compared to last
year. Engaging content and investments in the technology platform
have helped drive this growth as well as a 24% increase in the
number of visits. The compelling nature of the ASOS proposition
drove increases in average basket value of 2%, conversion(2)
increased by 20bps and average order frequency(3) increased by
5%.
Year to Year to Change
31 August 31 August
2017 2016
--------------------------------- ----------- ----------- --------
Active customers(1) (m) 15.4 12.4 24%
Average basket value (including
VAT) GBP72.24 GBP70.84 2%
Average units per basket 2.87 2.82 2%
Average selling price
per unit (including VAT) GBP25.16 GBP25.09 -
Average order frequency(3) 3.22 3.08 5%
Total orders (m) 49.6 38.3 30%
Total visits (m) 1,669.0 1,348.7 24%
Conversion(2) 3.0% 2.8% +20bps
Mobile device visits 70.3% 65.5% +480bps
Net Promoter Score as
at 31 August 2017(4) 66 63 5%
--------------------------------- ----------- ----------- --------
(1) Defined as having shopped during the last twelve months as
at 31 August 2017
(2) Calculated as total orders divided by total visits
(3) Calculated as last twelve months' total orders divided by
active customers
(4) Net Promoter Score is based on a customer pulse survey
Gross profitability
Year to 31 August
2017 Group International
total UK US EU RoW Total
--------------------- -------- ------- ------ --------- --------------
Gross profit (GBPm) 958.3 330.6 164.6 262.6 200.5 627.7
Growth 33% 12% 47% 46% 47% 47%
Retail gross margin 48.6% 44.2% 60.4% 46.3% 51.8% 51.1%
Growth 10bps (100bps) 110bps 30bps (90bps) 10bps
Gross margin 49.8% 45.9% 61.4% 47.3% 52.7% 52.2%
Growth (20bps) (120bps) 80bps 30bps (120bps) -
--------------------- -------- --------- ------- ------ --------- --------------
Group retail gross margin increased by 10bps to 48.6% compared
to last year (2016: 48.5%) due to an improved markdown position
through both increased full price mix and shallower depths on
clearance activity. This benefit, coupled with the net FX tailwind,
offset price investments and a continued shift into branded sales.
Gross margin (including delivery receipts and third-party revenues)
decreased by 20bps to 49.8% (2016: 50.0%) as faster free delivery
options became more appealing to customers.
Operating expenses
The Group increased its investment in operating resources by 33%
to GBP878.7m, with the total operating costs to revenue ratio
increasing by 10bps to 45.7% (2016: 45.6%).
Year to Year to
31 August % of 31 August % of
GBPm 2017 sales 2016(1) sales Change
Distribution costs (299.2) 15.6% (216.0) 14.9% (39%)
Payroll and staff
costs(2) (162.8) 8.5% (132.6) 9.2% (23%)
Warehousing (168.5) 8.8% (114.3) 7.9% (47%)
Marketing (86.8) 4.5% (76.6) 5.3% (13%)
Production (6.8) 0.3% (6.3) 0.4% (8%)
Technology costs (35.1) 1.8% (24.5) 1.7% (43%)
Other operating
costs (77.2) 4.0% (57.3) 4.0% (35%)
Depreciation and
amortisation (42.3) 2.2% (31.6) 2.2% (34%)
-------------------- ----------- ------- ----------- ------- -------
Total operating
costs (878.7) 45.7% (659.2) 45.6% (33%)
-------------------- ----------- ------- ----------- ------- -------
(1) All numbers have been restated to remove the results of the
discontinued operation in China
(2) Inclusive of non-cash share-based payment charges
Distribution costs increased by 70bps to 15.6% of revenue,
driven by investment into free return propositions, particularly in
the RoW and EU, along with an improved standard delivery service
and premier launches.
Payroll and staff costs decreased by 70bps to 8.5% of sales as a
result of cost leveraging. Headcount has increased 34% (2017:
3,579; 2016(3) : 2,664). Non-cash share-based payment charges
amounted to GBP7.6m (2016: GBP4.5m) relating to a third grant to
senior management under the Long-Term Incentive Scheme during the
year and Save As You Earn scheme to all employees.
Warehousing costs increased by 90bps to 8.8% of revenue due to
ramp up and increased fulfilment mix from Eurohub 2 which is
currently a more manual operation, partly offset by efficiencies
achieved at Barnsley from automation investments.
Marketing costs decreased by 80bps to 4.5% of sales as a result
of digital marketing efficiencies and a higher return on
advertising spend, alongside a redistribution of spend towards
customer propositions such as A-List and student discounts.
Other operating costs remained flat at 4.0% of revenue.
Depreciation and amortisation remained flat at 2.2% of revenue
as a consequence of the strong sales growth versus prior year
together with a significant element of capital expenditure being in
relation to projects, which go live in the next financial year.
(3) Restated to remove the headcount relating to discontinued
operations in China
Exceptional items
No exceptional items have been identified for the year to 31
August 2017.
In the comparative period to 31 August 2016, the Group settled
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.
Discontinued operations
No discontinued operations have occurred for the year to 31
August 2017.
In the comparative period to 31 August 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 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 GBP80.0m, up 26% compared to last year, lower than sales
growth due to gross margin investment of 20bps and a 10bps
investment in operating costs.
Year to 31 August
2016
Year to Before Exceptional After
31 August exceptional items exceptional
GBPm 2017 items items
--------------------------- ----------- ------------- ------------ -------------
CONTINUING OPERATIONS
--------------------------- ----------- ------------- ------------ -------------
Revenue 1,923.6 1,444.9 - 1,444.9
Cost of sales (965.3) (722.7) - (722.7)
--------------------------- ----------- ------------- ------------ -------------
Gross profit 958.3 722.2 - 722.2
Distribution expenses (299.2) (216.0) - (216.0)
Administrative expenses (579.5) (443.2) (20.9) (464.1)
Operating profit 79.6 63.0 (20.9) 42.1
Net finance income 0.4 0.7 - 0.7
Profit before tax 80.0 63.7 (20.9) 42.8
Income tax expense (15.9) (12.3) 4.2 (8.1)
--------------------------- ----------- ------------- ------------ -------------
Profit after tax from
continuing operations 64.1 51.4 (16.7) 34.7
--------------------------- ----------- ------------- ------------ -------------
Effective tax rate 19.9% 19.3% (20.1%) 18.9%
DISCONTINUED OPERATIONS
--------------------------- ----------- ------------- ------------ -------------
Loss before tax from
discontinued operations - (3.6) (6.5) (10.1)
Tax from discontinued
operations - 0.3 (0.5) (0.2)
--------------------------- ----------- ------------- ------------ -------------
Loss after tax from
discontinued operations - (3.3) (7.0) (10.3)
--------------------------- ----------- ------------- ------------ -------------
GROUP RESULTS
--------------------------- ----------- ------------- ------------ -------------
Group profit before
tax 80.0 60.1 (27.4) 32.7
Income tax expense (15.9) (12.0) 3.7 (8.3)
--------------------------- ----------- ------------- ------------ -------------
Group profit after
tax 64.1 48.1 (23.7) 24.4
--------------------------- ----------- ------------- ------------ -------------
Effective tax rate 19.9% 20.0% (13.5%) 25.2%
Taxation
The effective tax rate from continuing operations before
exceptional items increased by 60bps to 19.9% (2016: 19.3%). This
arose mainly from the deferred tax prior year adjustment in respect
of losses in China and to an increase in expenses not deductible
for tax purposes. The effective tax rate from continuing operations
after exceptional items increased by 100bps to 19.9% (2016:
18.9%).
Going forward, ASOS expects the effective tax rate 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 25% and 24% to 77.2p and
76.6p respectively (2016: 61.9p and 61.8p). This was driven by the
increase in continuing profit before tax during the year.
Statement of financial position
The Group continues to enjoy a healthy financial position
including a closing cash balance of GBP160.3m (2016:
GBP173.3m).
The reduction in cash includes the payment of last year's
GBP20.2m legal settlement (excluding legal fees) in relation to
trademark infringement disputes with Assos of Switzerland GmbH and
Anson's Herrenhaus KG.
Net assets increased by GBP86.7m to GBP287.1m during the year
(2016: GBP200.4m) due to the increase in capital expenditure and
inventory. The closing stock position was up 25% versus last year
to ensure good stock availability to meet customer demand for the
new season. In addition, there was a reduction of GBP12.8m in the
fair value of the net liability position of outstanding forward
contracts since 31 August 2016. This was due to hedges which were
entered into pre-Brexit at adverse rates, settling during the
period. The summary statement of financial position is shown
below:
At At
GBPm 31 August 2017 31 August 2016
-------------------------------------- ---------------- ----------------
Goodwill and other intangible assets 178.0 113.5
Property, plant and equipment 137.4 77.2
Derivative financial assets 1.3 -
Deferred tax asset 9.2 13.3
-------------------------------------- ---------------- ----------------
Non-current assets 325.9 204.0
-------------------------------------- ---------------- ----------------
Inventories 323.3 257.7
Net current payables (452.1) (355.7)
Cash and cash equivalents 160.3 173.3
Derivative financial liabilities (64.5) (76.0)
Current tax liability (5.8) (2.9)
Net assets 287.1 200.4
-------------------------------------- ---------------- ----------------
Statement of cash flows
The Group's cash balance decreased by GBP13.0m to GBP160.3m
during the year (2016: GBP173.3m) as capital expenditure of
GBP161.5m was partly offset by a cash inflow from operating
activities of GBP145.9m. The working capital inflow is
predominately made up of higher stock, which reflects the higher
level of sales expected for the new season compared to the prior
year, offset by a movement in trade payables comprising higher
trade payables caused by the timing of payments. The prior year
balance includes the accrual for the trademark infringement legal
settlement of GBP20.2m, which was settled after the year-end. The
summary statement of cash flows is shown below.
GBPm Year to 31 August 2017 Year to 31 August 2016
------------------------------------------------------- ----------------------- -----------------------
Operating profit from continuing operations 79.6 42.1
Loss before tax from discontinued operations - (10.1)
------------------------------------------------------- ----------------------- -----------------------
Operating profit 79.6 32.0
Depreciation and amortisation 42.3 31.7
Losses on disposal of assets - continuing 0.5 0.8
Losses on disposal of assets - discontinuing - 4.3
Working capital 24.1 69.1
Share-based payments charge 7.6 4.5
Other non-cash items (0.6) (1.7)
Tax paid (7.6) (10.0)
Cash inflow from operating activities 145.9 130.7
Capital expenditure (161.5) (79.2)
Net finance income received 0.5 0.7
Net cash inflow relating to Employee Benefit Trust(1) 1.8 0.7
Total cash (outflow)/inflow (13.3) 52.9
Opening cash and cash equivalents 173.3 119.2
Effect of exchange rates on cash and cash equivalents 0.3 1.2
------------------------------------------------------- ----------------------- -----------------------
Closing cash and cash equivalents 160.3 173.3
------------------------------------------------------- ----------------------- -----------------------
(1) Employee Benefit Trust and Capita Trust
Fixed asset additions
Year to Year to
31 August 31 August
GBPm 2017 2016(2)
----------------------------- ----------- -----------
Technology 104.8 60.1
Warehouse 49.5 24.4
Office fixtures and fit out 13.2 2.5
Total 167.5 87.0
----------------------------- ----------- -----------
(2) All numbers have been restated to remove the results of the
discontinued operations in China
ASOS continues to invest in warehousing and technology
infrastructure to support future growth ambitions. The majority of
technology spend related to the replatforming programme, the new
global fulfilment programme and TGR programme including an
end-to-end retail merchandising system with supporting finance
system, whilst warehousing spend related to the build-out of
Eurohub 2 and further automation in Barnsley. The office fixtures
and fit out spend related to the new customer care site at
Leavesden and the continued extension and fit out of the Head
Office in Camden.
Consolidated Statement of Total Comprehensive Income
For the year to 31 August 2017
Year to 31 August
2016
Year Before Exceptional After
to 31 exceptional items exceptional
August items (Note items
2017 3)
GBPm GBPm GBPm GBPm
CONTINUING OPERATIONS
----------------------------------- -------- ------------- ------------ -------------
Revenue 1,923.6 1,444.9 - 1,444.9
Cost of sales (965.3) (722.7) - (722.7)
----------------------------------- -------- ------------- ------------ -------------
Gross profit 958.3 722.2 - 722.2
Distribution expenses (299.2) (216.0) - (216.0)
Administrative expenses (579.5) (443.2) (20.9) (464.1)
Operating profit 79.6 63.0 (20.9) 42.1
Net finance income 0.4 0.7 - 0.7
Profit before tax 80.0 63.7 (20.9) 42.8
Income tax expense (15.9) (12.3) 4.2 (8.1)
----------------------------------- -------- ------------- ------------ -------------
Profit from continuing
operations 64.1 51.4 (16.7) 34.7
----------------------------------- -------- ------------- ------------ -------------
Loss before tax from discontinued
operations - (3.6) (6.5) (10.1)
Tax from discontinued
operations - 0.3 (0.5) (0.2)
----------------------------------- -------- ------------- ------------ -------------
Loss after tax from discontinued
operations - (3.3) (7.0) (10.3)
----------------------------------- -------- ------------- ------------ -------------
Profit for the year attributable
to owners of the parent
company 64.1 48.1 (23.7) 24.4
----------------------------------- -------- ------------- ------------ -------------
Net translation movements
offset in reserves (0.3) (1.4) - (1.4)
Net fair value gains/(losses)
on derivative financial
assets 15.8 (82.3) - (82.3)
Income tax relating to
these items (3.3) 16.2 - 16.2
----------------------------------- -------- ------------- ------------ -------------
Other comprehensive income/(loss)
for the year(1) 12.2 (67.5) - (67.5)
----------------------------------- -------- ------------- ------------ -------------
Total comprehensive income/(loss)
for the year attributable
to owners of the parent
company 76.3 (19.4) (23.7) (43.1)
----------------------------------- -------- ------------- ------------ -------------
Basic earnings per share
(Note 4)
From continuing operations 77.2p 61.9p (20.1p) 41.8p
From discontinued operations - (3.9p) (8.5p) (12.4p)
----------------------------------- -------- ------------- ------------ -------------
Total 77.2p 58.0p (28.6p) 29.4p
----------------------------------- -------- ------------- ------------ -------------
Diluted earnings per share
(Note 4)
From continuing operations 76.6p 61.8p (20.1p) 41.7p
From discontinued operations - (4.0p) (8.4p) (12.4p)
----------------------------------- -------- ------------- ------------ -------------
Total 76.6p 57.8p (28.5p) 29.3p
----------------------------------- -------- ------------- ------------ -------------
(1) 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 2017
Employee
Called Benefit
up share Share Retained Trust Hedging Translation Total
capital premium earnings(1) reserve(2) reserve reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 September
2016 2.9 6.9 254.7 (2.6) (60.0) (1.5) 200.4
Profit for the
year - - 64.1 - - - 64.1
Other comprehensive
income/(loss)
for the year - - - - 12.5 (0.3) 12.2
---------- ----------- ------------- ------------ --------- ------------ --------
Total comprehensive
income/(loss)
for the year - - 64.1 - 12.5 (0.3) 76.3
Net cash received
on exercise of
shares from EBT(2) - - - 1.8 - - 1.8
Transfer of shares
from EBT(2) on
exercise - - (0.2) 0.2 - - -
Share-based payments
charge - - 7.6 - - - 7.6
Deferred tax
on share options - - 1.0 - - - 1.0
Balance as at
31 August 2017 2.9 6.9 327.2 (0.6) (47.5) (1.8) 287.1
========== =========== ============= ============ ========= ============ ========
Employee
Called Benefit
up share Share Retained Trust Hedging Translation Total
capital premium earnings(1) reserve(2) reserve reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 September
2015 2.9 6.9 225.1 (3.6) 6.3 (0.3) 237.3
Profit for the
year - - 24.4 - - - 24.4
Other comprehensive
(loss) for the
year - - - - (66.3) (1.2) (67.5)
---------- ----------- ------------- ------------ --------- ------------ --------
Total comprehensive
income/(loss)
for the year - - 24.4 - (66.3) (1.2) (43.1)
Net cash received
on exercise of
shares from EBT(2) - - - 0.7 - - 0.7
Transfer of shares
from EBT(2) on
exercise - - (0.3) 0.3 - - -
Share-based payments
charge - - 5.0 - - - 5.0
Deferred tax
on share options - - 0.5 - - - 0.5
Balance as at
31 August 2016 2.9 6.9 254.7 (2.6) (60.0) (1.5) 200.4
========== =========== ============= ============ ========= ============ ========
(1) Retained earnings includes the share-based payments
reserve
(2) Employee Benefit Trust and Capita Trust
Consolidated Statement of Financial PositioN
At 31 August 2017
At At
31 August 31 August
2017 2016
GBPm GBPm
Non-current assets
Goodwill 1.1 1.1
Other intangible assets 176.9 112.4
Property, plant and equipment 137.4 77.2
Derivative financial 1.3 -
assets
Deferred tax asset 9.2 13.3
----------- -------------------
325.9 204.0
----------- -------------------
Current assets
Inventories 323.3 257.7
Trade and other receivables 28.6 15.0
Derivative financial 2.3 -
assets
Cash and cash equivalents 160.3 173.3
514.5 446.0
----------- -------------------
Current liabilities
Trade and other payables (480.7) (370.7)
Derivative financial
liabilities (57.7) (55.0)
Current tax liability (5.8) (2.9)
(544.2) (428.6)
----------- -------------------
Net current (liabilities)/assets (29.7) 17.4
Non-current liabilities
Derivative financial
liabilities (9.1) (21.0)
(9.1) (21.0)
----------- -------------------
Net assets 287.1 200.4
=========== ===================
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 (0.6) (2.6)
Hedging reserve (47.5) (60.0)
Translation reserve (1.8) (1.5)
Retained earnings 327.2 254.7
----------- -------------------
Total equity 287.1 200.4
=========== ===================
Consolidated Statement of Cash Flows
For the year to 31 August 2017
Year to Year to
31 31
August August
2017 2016
GBPm GBPm
Operating profit from continuing
operations 79.6 42.1
Loss before tax from discontinued
operations - (10.1)
-------- -------------------
Operating profit 79.6 32.0
Adjusted for:
Depreciation of property, plant
and equipment 13.7 10.5
Amortisation of other intangible
assets 28.6 21.2
Loss on disposal of non-current
assets from continuing operations 0.5 0.8
Loss on disposal of non-current
assets from discontinued operations - 4.3
Increase in inventories (65.6) (63.8)
(Increase)/decrease in trade
and other receivables (13.6) 4.2
Increase in trade and other
payables 103.3 128.7
Share based payments charge 7.6 4.5
Other non-cash items (0.6) (1.7)
Income tax paid (7.6) (10.0)
-------- -------------------
Net cash generated from operating
activities 145.9 130.7
Investing activities
Payments to acquire other intangible
assets (89.5) (55.7)
Payments to acquire property,
plant and equipment (72.0) (23.5)
Finance income 0.5 0.8
Net cash used in investing activities (161.0) (78.4)
Financing activities
Net cash inflow relating to
EBT(1) 1.8 0.7
Finance expense - (0.1)
-------- -------------------
Net cash generated in financing
activities 1.8 0.6
Net (decrease)/increase in cash
and cash equivalents (13.3) 52.9
======== ===================
Opening cash and cash equivalents 173.3 119.2
Effect of exchange rates on
cash and cash equivalents 0.3 1.2
-------- -------------------
Closing cash and cash equivalents 160.3 173.3
======== ===================
(1) Employee Benefit Trust and Capita Trust
Notes to the financial information
For the year to 31 August 2017
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 2017 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 adopted for the year
to 31 August 2017 are consistent with those adopted and disclosed
in the Group financial statements for the year to 31 August
2016.
The financial information contained within this preliminary
announcement for the years to 31 August 2017 and 31 August 2016
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 2016 have been filed with the Registrar of
Companies and those for the year to 31 August 2017 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
2017 and 31 August 2016 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 2020. 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 Directors 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, there is 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 2020.
Changes to accounting standards
The accounting policies applied are consistent with those
adopted and disclosed in the Group financial statements for the
year to 31 August 2016. Various new accounting standards and
amendments were issued during the year, none of which have an
impact on the current year.
The following accounting standards are in issue but not yet
effective and have not been adopted by the Group:
-- IFRS 9 'Financial Instruments' replaces IAS 39 'Financial
Instruments Recognition and Measurement'. The standard is effective
for accounting periods beginning on or after 1 January 2018. The
Group has completed an assessment of IFRS 9 and it is expected that
adoption will not have a material impact on the results or
financial position of the Group.
-- IFRS 15 'Revenue from Contracts with Customers' replaces IAS
18 'Revenue'. This standard is effective for accounting periods
beginning on or after 1 January 2018. The Group has completed an
assessment of IFRS 15 and it is expected that adoption will not
have a material impact on the results or financial position of the
Group.
-- IFRS 16 'Leases' is effective for periods beginning on or
after 1 January 2019. Early adoption is permitted if IFRS 15 has
also been adopted. The standard will require lease liabilities and
the right of use assets for leases to be recognised on the
Statement of Financial Position. The Group has completed an
assessment of IFRS 16. The net impact on the income statement
between the old and the new leasing standards is immaterial, and a
recognition of leased assets and liabilities will be presented on
the balance sheet.
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 2017
UK US EU RoW Total
GBPm GBPm GBPm GBPm GBPm
Retail sales 698.2 261.6 544.1 372.6 1,876.5
Delivery receipts 16.1 6.3 10.8 7.6 40.8
Third party revenues 6.0 0.2 0.1 - 6.3
Total revenue 720.3 268.1 555.0 380.2 1,923.6
Cost of sales (389.7) (103.5) (292.4) (179.7) (965.3)
-------- -------- -------- -------- ------------
Gross profit 330.6 164.6 262.6 200.5 958.3
Distribution expenses (81.9) (69.2) (89.8) (58.3) (299.2)
-------- -------- -------- -------- ------------
Segment result 248.7 95.4 172.8 142.2 659.1
Administrative expenses (579.5)
Operating profit from
continuing operations 79.6
Finance income 0.4
------------
Profit before tax 80.0
============
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 segment revenue 625.5 184.8 382.3 255.3 1,447.9
Eliminations - - - (3.0) (3.0)
-------- -------- -------- -------- ------------
Total revenue 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
============
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. The total amount of non-current assets located in the
EU is GBP46.1m (2016: GBP9.1m).
(1) All numbers have been restated to remove the results of the
discontinued operation in China
3. Exceptional items
Year to Year to
31 August 31
2017 August
2016
GBPm GBPm
Legal settlement - 20.9
Exceptional items - 20.9
=========== ========
No exceptional items have been identified for the year to 31
August 2017.
In the comparative period to 31 August 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.
4. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of the parent company by the weighted
average number of ordinary shares in issue during the year. Own
shares held by the 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
2017 August
2016
No. of No. of
shares shares
Weighted average share capital
Weighted average shares in
issue for basic earnings
per share 82,996,217 82,972,285
Weighted average effect of
dilutive options 712,861 224,372
----------- -----------
Weighted average shares in
issue for diluted earnings
per share 83,709,078 83,196,657
=========== ===========
Earnings attributable to owners of
the parent company (GBPm)
From continuing operations 64.1 34.7
From discontinued operations - (10.3)
---------------- ----------------
64.1 24.4
================ ================
Basic earnings per share:
From continued operations 77.2p 41.8p
From discontinued operations - (12.4p)
---------------- ----------------
Basic earnings per share from all
operations: 77.2p 29.4p
================ ================
Diluted earnings per share:
From continued operations 76.6p 41.7p
From discontinued operations - (12.4p)
-------------- ----------------
Diluted earnings per share
from all operations: 76.6p 29.3p
============== ================
5. Reconciliation of cash and cash equivalents
Year to Year to
31 August 31 August
2017 2016
GBPm GBPm
Net movement in cash and
cash equivalents (13.3) 52.9
Opening cash and cash equivalents 173.3 119.2
Effect of exchange rates
on cash and cash equivalents 0.3 1.2
----------- -----------
Closing cash and cash equivalents 160.3 173.3
=========== ===========
The Group has in place a GBP20.0m revolving loan credit facility
available until October 2018, none of which has been drawn down at
the year end.
6. 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.
At 31 August 2017, 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. The Group
had contingent liabilities of GBP19.1m (2016: GBP7.3m) in relation
to supplier standby letters of credit, rent deposit deeds and other
bank guarantees. The likelihood of a cash outflow in relation to
these contingent liabilities is considered to be low.
7. Financial instruments
There are no changes to the categories of financial instruments
held by the Group.
Year to Year to
31 August 31
2017 August
2016
GBPm GBPm
Financial assets
Derivative assets used for hedging 3.6
at fair value -
Loans and receivables(1) 176.3 179.0
Financial liabilities
Derivative liabilities used for
hedging at fair value (66.8) (76.0)
Amortised cost(2) (474.2) (364.9)
=========== ========
(1) Loans and receivables include trade and other receivables
and cash and cash equivalents, and excludes prepayments
(2) Included in financial liabilities at amortised cost are
trade payables, accruals and other payables
The Group operates internationally and is therefore exposed to
foreign currency transaction risk, primarily on sales denominated
in US dollars, Euros and Australian dollars. The Group's policy is
to mitigate foreign currency transaction exposures where possible
and the Group uses financial instruments in the form of forward
foreign exchange contracts to hedge future highly probable foreign
currency cash flows.
These forward foreign exchange contracts are classified above as
derivative financial liabilities and are classified as Level 2
financial instruments under IFRS 13, "Fair Value Measurement." They
have been fair valued at 31 August 2017 with reference to forward
exchange rates that are quoted in an active market, with the
resulting value discounted back to present value. All forward
foreign exchange contracts were assessed to be highly effective
during the period to 31 August 2017 and a net unrealised gain of
GBP15.8m (2016: loss of GBP82.3m) was recognised in equity. All
derivative financial liabilities at 31 August 2017 mature within
two years based on the related contractual arrangements.
8. Related parties
The Group's related party transactions are with the Employee
Benefit Trust, Capita Trust, key management personnel and other
related parties. There have been no material changes to the Group's
related party transactions during the year to 31 August 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UNAKRBAARAAA
(END) Dow Jones Newswires
October 17, 2017 02:00 ET (06:00 GMT)
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