TIDMASC
RNS Number : 7448C
ASOS PLC
20 October 2015
20 October 2015
ASOS plc
Global Online Fashion Destination
Final Results for the year to 31 August 2015
Summary results
Year to 31 Year to 31 Change
GBP'000 August 2015 August 2014
----------------------------- ------------- ------------- --------
Group revenues(1) 1,150,788 975,470 18%
Retail sales 1,119,946 955,295 17%
UK retail sales 473,884 372,241 27%
International retail sales 646,062 583,054 11%
Gross profit 574,799 485,007 19%
Retail gross margin 48.6% 48.7% (10bps)
Gross margin 49.9% 49.7% 20bps
Profit before tax(2) 47,532 46,901 1%
Diluted earnings per share 44.4p 44.5p -
Cash and cash equivalents 119,191 74,340 60%
----------------------------- ------------- ------------- --------
(1) Includes retail sales, delivery receipts and third party
revenues
(2) For the twelve months to 31 August 2015, profit before tax
includes net insurance reimbursements of GBP6.3m (2014: GBP3.1m) in
respect of a warehouse fire in the prior financial year
Highlights
-- Group revenue up 18%
-- UK retail sales up 27%; International retail sales up 11% (at constant currency 17%)
-- 9.9 million active customers(3) at 31 August 2015, up 13% on prior year
-- Gross margin up 20bps
-- Profit before tax(2) of GBP47.5m (2014: GBP46.9m)
-- Cash and cash equivalents of GBP119.2m (2014: GBP74.3m)
-- Continued strengthening of management team
Nick Beighton, CEO, commented:
"I'm pleased with these results, which show encouraging
progress. We have delivered profit before tax(2) of GBP47.5m, on
track with our plans. Group revenue increased 18% to GBP1.15bn,
with UK retail sales performing well up 27%, and international
retail sales improving as the year progressed. We ended the year
with a cash position of GBP119.2m.
We are attracting more customers with a continued expansion of
our delivery proposition and mobile offerings. Customer engagement
has been exceptionally strong, with increases in average order
frequency, basket size and value. We now have 9.9m active
customers, up 13%.
During the year we invested GBP50m in our warehouse capability
and our technology, and we are investing a further GBP80m in the
new financial year.
Trading year to date has started well and preparations are at an
advanced stage for peak season. We currently anticipate sales
growth for the new financial year of c.20%, gross margin investment
of up to 50bps and a similar EBIT margin to the financial year just
ended. We remain focussed on achieving our next staging post of
GBP2.5bn sales. "
(3) Defined as having shopped in the last twelve months
Investor and Analyst Meeting
There will be a meeting for analysts that will take place at
9.30am today, 20 October 2015, at Greater London House, Hampstead
Road, London, NW1 7FB. A webcast of the meeting will be available
both live and following the meeting at www.asosplc.com. Please
register your attendance in advance with Instinctif Partners using
the details below.
For further information:
ASOS plc Tel: 020 7756 1000
Nick Beighton, Chief Executive
Officer
Helen Ashton, Chief Financial Officer
Greg Feehely, Director of Investor
Relations
Website: www.asosplc.com/investors
Instinctif Partners Tel: 020 7457 2020
Matthew Smallwood / Justine Warren
/ Guy Scarborough
JPMorgan Cazenove Tel: 020 7742 4000
Michael Wentworth-Stanley / Caroline
Thomlinson
Numis Securities Tel: 020 7260 1000
Alex Ham / Luke Bordewich
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 80,000 branded and own-brand products through
localised mobile and web experiences, delivering from our
fulfilment centres in the UK, US, Europe and China to almost every
country in the world.
We tailor the mix of own-label, global and local brands sold
through each of our nine local language websites: UK, US, France,
Germany, Spain, Italy, Australia, Russia and China.
ASOS's websites attract 89.8 million visits per month (August
2014: 71.2 million) and as at 31 August 2015 had 9.9 million active
customers(1) (31 August 2014: 8.8 million), of which 3.9 million
were located in the UK and 6.0 million were located in our
international territories (31 August 2014: 3.4 million in the UK
and 5.4 million 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
www.asos.com/cn
m.asos.com
marketplace.asos.com
www.likes.asos.com
ASOS plc ("the Company")
Global Online Fashion Destination
Final Results for the year to 31 August 2015
Business Review
During the year to 31 August 2015 the Group delivered total
revenue growth of 18%, comprising retail sales, delivery receipts
and third party revenue. Retail sales grew to GBP1,119.9m (2014:
GBP955.3m), accelerating as the year progressed, driven by strong
product, delivery proposition enhancements, the successful launch
of our zonal pricing capability and implementation of planned price
investments to increase our price competitiveness outside the
UK.
Despite these investments, the retail gross profit margin only
declined by 10bps driven by a much stronger full price sales mix
reflecting improved customer confidence in our product and prices.
This resulted in reduced reliance on promotional activity. The
Group gross margin increased by 20bps following strong growth in
delivery receipts of 61% and third party revenues of 23%.
Profit before tax of GBP47.5m (2014: GBP46.9m) remained in line
with last year, as we invested further in our customer proposition,
warehousing and people capabilities, offset by the net insurance
proceeds of GBP6.3m (2014: GBP3.1m) from the fire at our Barnsley
warehouse last year, and a reduced loss in our China operation. The
2015 profit before tax is also stated after providing for a staff
bonus. We enter the new financial year with a cash position of
GBP119.2m (2014: GBP74.3m) and an inventory balance of GBP193.8m
(2014: GBP161.5m).
Our mission remains unchanged: to be the world's no. 1 fashion
destination for 20-somethings. We strive towards this mission under
four strategic pillars: Great fashion, great price - Awesome on
mobile - Engaging content and experience - Best-in-class service,
all delivered across the globe.
Great fashion, great price
Our approach to fashion remains consistent: an extensive offer
of appropriate product at great value for money for our global
fashion-conscious 20-something customer.
The size of our range continues to grow; we now stock over
80,000 lines at any point in time offering customers a choice that
remains second to none. During the year we have rebalanced our
product and buy plan, focussing on tighter inventory control and
improving full price sales.
Where we have grown our range it has been concentrated into new
or under-potentialised product categories, as well as new brands
that offer true additional choice to our customers. We carry over
800 brands and during the year have added some important names to
our portfolio, including Abercrombie & Fitch, Hollister,
Boohoo, Missguided, Adidas and Reebok. A key aspect of ASOS is to
differentiate ourselves from other market players. We do this by
supporting new or little known brands into the market, such as Rat
& Boa, Jen's Pirate Booty and Hiptico, as well as collaborating
on exclusive lines with those brands that are more widely
distributed.
In terms of category expansion, we have continued to extend our
offer of ASOS own-brand specialist ranges; Petite, Tall, Plus and
Maternity. As well as broadening our own-brand range, we have added
to our third party brands in this area; many of which are exclusive
to ASOS.
Within our own-brand, we aim to cater for all occasions and have
added a wider range of smart going out and workwear in menswear, as
well as the successful launch of exclusive ASOS Red Carpet and ASOS
Bridesmaid dress ranges in womenswear. We have offered specific
own-brand ranges for increasingly important seasonal events such as
Halloween and Valentine's, and broadened our selection in beauty,
men's grooming, novelty gifts and loungewear during the year.
Offering great value for money is a critical aspect of our
proposition. The launch of our zonal pricing capability early in
the financial year enabled us to price brands in line with local
markets. To date we have implemented this on 113 brands across
Australia, the US, France, Germany, Italy and Spain, and have seen
an encouraging response from customers and volume uplifts as a
result. We will continue to release more brands using this
functionality to further enhance our global price positioning
during the new financial year.
Awesome on mobile
Mobile is now a huge part of our business; we have seen 5.4m
downloads of our mobile apps in the last twelve months. In August
2015, nearly 60% of our traffic came from mobile devices and 44% of
orders were placed on our mobile platforms.
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October 20, 2015 02:00 ET (06:00 GMT)
We launched localised versions of our Android and iOS apps in
France, Germany, Italy, Spain and Russia early in the year, and in
September 2015 launched a localised app in China to support our
current website offer in this territory. We also launched a 'New
In' app in the UK and Denmark, an Apple Watch app and a new mobile
news website, 'ASOS Likes', which provides customers with daily
inspiration, pop culture and lifestyle news. In addition, we ran
our first ever mobile-only promotions with encouraging customer
take-up.
We undertook a review of our new checkout function during the
second half of the year, refocusing this project on key mobile
requirements and expect to roll out this functionality on mobile
apps during the next six months. We also expect to launch updated
versions of our iOS apps during the new financial year.
All of these combined keep us at the forefront of where our
customers are, how they consume media and how they shop.
Engaging content and experience
Our customer engagement remains strong, with growth in average
order frequency and average basket size. We finished the year with
9.9m active customers, an increase of 13% over last year.
We now have over 12m followers across all our social channels
and we publish over 2,000 pieces of inspiring fashion and
entertaining lifestyle content every month to maintain awareness
and build brand engagement. In the last six months we have launched
local language French and German YouTube and Instagram accounts. We
have also introduced 'ASOS stylists' in these markets to inspire
and help our customers via individual social accounts. The
collective following of our stylists globally now exceeds 850,000
of our customers.
During the year we also introduced our 'social sign-in'
functionality; simplifying our customer's journey from browsing to
buying product, as well as personalised product recommendations on
apps and extended our upgraded search facility to all our
international websites.
Following a successful trial, we will launch our new ASOS
Rewards loyalty scheme during the next six months, initially for
our UK customers. This rewards programme allows customers to build
up points on purchases, which become convertible into vouchers for
use on our platforms. In addition to this, customers will unlock a
wide variety of other rewards such as birthday discounts, free next
day deliveries and exclusive content.
Uptake of our Premier Delivery membership in the UK, US, France,
Germany and Australia continues to grow, with total members up 63%
compared to last year.
Best-in-class service
Delivery and returns
Improving and expanding our delivery and returns solutions
remain central to our business and we continue working towards our
goal of providing a best-in-class customer proposition.
In the UK we extended next-day delivery and Saturday evening
next-day delivery cut-offs to midnight and our Sunday next-day
delivery cut-off from 2pm to 5pm. Our standard delivery also now
operates seven days a week. Internationally, we now operate
next-day delivery services in France, Germany, Spain, Italy,
Denmark, Sweden, the Netherlands, Belgium, Ireland and Northern
Ireland. We have also introduced express delivery options in more
than 20 smaller territories and offer mid-tier services in Korea,
Singapore and Hong Kong, with further territories to follow.
We have also further extended customer return options during the
year. In the UK we launched returns via Doddle stores and Hermes
Parcel shops, home collection returns and InPost LockerBoxes, as
well as introducing one-hour next-day collection slots in large
cities. Internationally, we introduced labelless returns in France,
the Netherlands, Belgium and Luxembourg and launched free returns
trials in both the Netherlands and Italy.
We continue to focus on developing our Pick-Up-Drop-Off ('PUDO')
network, which allows customers to collect and return orders from a
variety of convenient locations. In the UK, customers have over
5,500 deliver-to-store locations and we recently extended our
click-and-collect trial with Boots into more than 30 stores, with
plans to enter an additional 70 stores over the next year.
Customers in France, Spain, Belgium and Luxembourg now benefit from
a delivery-to-store option at over 12,500 locations and we will
launch this service in Germany during the new financial year. We
continue to seek further PUDO solutions in all our key strategic
territories, and expect to offer this service in Italy and the US
during the next 12-18 months.
Customer Care
We believe offering the most personal experience possible to
customers is paramount for building brand loyalty, and with this in
mind, we extended our local language customer care capabilities to
provide 24/7 operations to our French, German, Spanish, Italian and
Russian customers. We now have customer care sites in the UK (Hemel
Hempstead, Gateshead, Glasgow and Camden), Lisbon and Vladimir. In
addition to our existing channels of email, social and telephony,
we added live chat to all our websites. We also improved our email
response times to one hour, as well as responding to all social
media communications made by our customers within 15 minutes, and
all live chat or telephony within 30 seconds. We will continue
working to improve these going forward.
Logistics
Investment in our international warehouse infrastructure has
continued during the year as we build capacity ahead of our next
staging post of GBP2.5bn sales.
UK
Our Barnsley warehouse efficiency improved as the year
progressed following the successful launch of our mechanised
picking solution at the start of the year. We also exited our
off-site storage facility at Lister Hills in February following
completion of our two high bay mini-loads. These now store all our
bulk stock at Barnsley and, with our new warehouse control system,
automatically retrieve and maintain stock levels in the main
pick-face area of the warehouse, increasing our stock management
capabilities. We also increased capacity at our returns processing
centre in Selby during the year.
During the second half of the year we commenced work on building
an additional mezzanine level in our Barnsley warehouse to extend
storage capacity by a further 1m units. In addition, we are adding
another sorter to our mechanised picking solution as well as
extending our despatch sorter chutes; both of which will further
increase our warehouse throughput. These projects, along with
installing air cooling throughout the warehouse, are expected to be
completed by the end of the new financial year.
International
We have also continued the ramp up of our German Eurohub
operation and exited the year holding over 2m units of stock and
despatching 38% of total EU orders, ahead of where we expected to
be at this stage. This has allowed us to make improvements to our
Eurozone delivery proposition and we will seek further
opportunities to improve this during the next twelve months. Our
returns processing centre in Swiebodzin now processes nearly all
returns from the Eurozone, improving refund processing times and
costs to return.
We will now commence work on building our new Eurohub warehouse,
close to our existing site. This new warehouse, along with
automation technology, will eventually provide us with total
capacity of 20m units and represents an extensive project for us
over the next four years, with expected total capital expenditure
of c.GBP60m over this period. Over the next twelve months we intend
to invest GBP20m fitting out the warehouse infrastructure for a
manual picking operation, and by early 2017 expect to accommodate
10m units. We will then be able to move out of our existing Eurohub
operation into this new warehouse. Over subsequent years we will
further extend, in a modular fashion, to accommodate automated
picking and despatch, as well as automated mini-loads.
Our warehouse in the US consistently fulfils over 25% of US
orders and we will turn focus back to US fulfilment once we have
unlocked the potential of our Eurohub warehouse, in order to
further drive local fulfilment in this territory.
Where we operate
We are investing in our UK customer, continuously offering new,
relevant product and working to ensure shopping with ASOS is an
easy, seamless process. Following a period of adverse exchange rate
movements, our principal international objective during the year
has been to restore our price competitiveness.
Early on in the financial year, we implemented planned price
investments for our Australian and Eurozone customers to begin to
restore the competitiveness of our international offer and we
remain committed to further investments as necessary during the new
financial year. We are focussing our efforts on key European
countries, particularly France and Germany, as these represent
substantial opportunities to us as we unlock the full potential of
our Eurohub warehouse.
We rolled out our zonal pricing capability across all our local
platforms, except Russia. This allows us to sell brands which were
previously restricted in certain territories and enabled us to
start offering more competitive local pricing and country-specific
promotions. We used this tool to reduce the price of our own-label
products in Spain late in the financial year to align more closely
to local competition and we will continue to improve and enhance
our international product offering using this tool over the coming
years.
We have also extended the duration and depth of our foreign
currency hedging activities. In addition to this, we commenced the
process of increasing our direct sourcing settled in Euros and US
Dollars this financial year with an ultimate long term aim of
maximising the natural foreign exchange hedge available to us. As
part of our global fulfilment programme, we are working to
restructure our supply chain to allow for direct sourcing into our
international warehouses.
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We incurred a loss of GBP5.2m (2014: GBP8.6m) in our China
operation. During the year we invested in our local website to
extend its capabilities with upgraded search functionality and
added the ability to run complex promotions. Over the next twelve
months we will double the number of product lines available on our
website and mobile app in this territory.
People
During the year, Group headcount increased by 12% to 2,038
employees at 31 August 2015 (2014: 1,813) following planned
investments, predominantly within our IT and Retail teams. In
addition, the Board has made a number of appointments,
strengthening the senior management team of the Group.
At the start of September the founder of the Company, Nick
Robertson, stood down as Chief Executive Officer after 15 years in
the role and Nick Beighton was appointed as successor. Nick
Beighton joined ASOS in April of 2009 as Chief Financial Officer
and has since worked closely with Nick Robertson. In October last
year, Nick Beighton was appointed Chief Operating Officer, widening
his management responsibilities beyond finance. Nick Robertson will
remain with ASOS as a Non-Executive Director.
We also welcomed Helen Ashton to the main Board of the Company
as Chief Financial Officer in September. Helen has held a wide
variety of senior management positions at Barclaycard, Lloyds
Banking Group and most recently, debt management business Capquest.
She has also held roles at ASDA Group and at GUS, amongst other
companies, bringing strong financial experience and a proven track
record in consumer-facing and retail businesses.
To further strengthen the Executive team, we were joined by our
new People Director, Peter Collyer, in March and our new Chief
Information Officer, Clifford Cohen, in May.
Technology
During the year, we continued with our modular approach to the
re-platforming of our legacy systems, enabling us to provide the
necessary flexibility and scalability for the future. A particular
focus of our IT investment remains enhancing our customer
experience.
We have also scoped out our medium term key global fulfilment
programme requirements, focussing initially on a new end-to-end
retail merchandising system, which will optimise our global stock
management capabilities alongside our European and US warehouse
expansions over the coming years.
Financial review
Revenue
Year to 31 August
2015 Group International
GBP'000 total UK US EU RoW total
---------------------- ---------- -------- -------- -------- -------- --------------
Retail sales 1,119,946 473,884 119,530 293,983 232,549 646,062
Growth 17% 27% 29% 15% (1%) 11%
Growth at constant
exchange rate 21% 27% 22% 26% 6% 17%
Delivery receipts 25,667 11,496 3,660 5,085 5,426 14,171
Growth 61% 55% 106% 61% 51% 66%
Third party revenues 5,175 4,403 755 17 - 772
Growth 23% 4% 100% 100% - 100%
Total revenues 1,150,788 489,783 123,945 299,085 237,975 661,005
Growth 18% 28% 32% 15% - 12%
---------------------- ---------- -------- -------- -------- -------- --------------
The Group generated retail sales growth of 17% during the year,
driven by continued strong growth in the UK of 27%. Our
international sales growth of 11% (constant currency growth 17%)
accelerated as the year progressed, as our price investments
started to restore our competitiveness overseas. International
retail sales accounted for 58% of total retail sales (2014:
61%).
In the UK, retail sales growth of 27% was driven by great
product, introduction of new relevant brands, continuous
improvements to our market-leading proposition and further
engagement with customers via social media channels. We retained
our first place position for unique visitors to apparel retailers
in the 15-34 age range (Comscore, August 2015).
US retail sales have grown by 29% (constant currency growth 22%)
following further expansion of our range of locally relevant brands
and continued strong full price sales mix.
EU retail sales, despite being impacted by adverse currency
movements and economic uncertainties during the year, have grown by
15% (constant currency growth 26%). This growth was underpinned by
our price investments early on in the year, which have been further
supported by improvements to our delivery proposition in key
European countries as we have built out our Eurohub
capabilities.
Our Rest of World segment continued to be affected by adverse
currency movements with reported retail sales down 1% compared to
last year, but sales were up 6% on a constant currency basis. We
invested in prices in Australia at the start of the year and this
was initially well received but further weakening of the Australian
dollar eroded some of the progress made; we comfortably retained
our first place Comscore position in Australia. Sales in Russia
have continued to suffer due to macro-economic factors and adverse
exchange rates. In China, we continue to focus on increasing our
brand awareness and market share.
Delivery receipts increased by 61% driven by the introduction of
global minimum free-delivery spend thresholds in late 2014 and a
wider range of paid delivery options being made available to
customers.
Third party revenues, which mainly comprise advertising revenues
from the website and the ASOS magazine, increased by 23% as we
introduced campaigns on some of our international websites for the
first time.
Customer engagement
We have continued to attract new customers, exiting the year
with 9.9m active customers(1) , an increase of 13% over last year.
Average basket value increased by 9%, driven by a 5% increase in
average units per basket and a 4% increase in average selling
price; reflecting customer confidence in our price points.
Conversion(2) remained in line with prior year which is pleasing
given increased mobile traffic which historically exhibits lower
conversion rates.
Year to 31 Year to 31 Change
August 2015 August 2014
------------------------------------------- ------------- ------------- -------
Active customers(1) ('000) 9,957 8,848 13%
Average basket value (including VAT) GBP68.74 GBP62.82 9%
Average units per basket 2.79 2.66 5%
Average selling price per unit (including
VAT) GBP24.63 GBP23.64 4%
Total orders ('000) 29,460 25,327 16%
Total visits ('000) 1,102,117 924,553 19%
------------------------------------------- ------------- ------------- -------
(1) As at 31 August, defined as having shopped during the last
twelve months
(2) Calculated as total orders divided by total visits
Gross profitability
Year to August 2015 Group International
total UK US EU RoW total
------------------------ -------- -------- ------- --------- -------- --------------
Gross profit (GBP'000) 574,799 229,074 74,644 147,302 123,779 345,725
Growth 19% 30% 38% 11% 2% 12%
Retail gross margin 48.6% 45.0% 58.8% 48.4% 50.9% 51.2%
Growth (10bps) 80bps 230bps (230bps) 40bps (30bps)
Gross margin 49.9% 46.8% 60.2% 49.3% 52.0% 52.3%
Growth 20bps 90bps 290bps (200bps) 80bps 10bps
------------------------ -------- -------- ------- --------- -------- --------------
Retail gross margin decreased by 10bps to 48.6% compared with
last year (2014: 48.7%) as the impact of our price investments in
the Eurozone and Rest of World territories was largely offset by a
strong full price sales mix during the second half of the year. The
EU gross margin fell as we invested most heavily in these
territories to counter adverse movements in the Euro, as well as
reducing the price of our own-label brand in Spain. We maintained a
tight inventory position, assisted by the launch of our Barnsley
warehouse automation, which resulted in us shortening our sale
periods and reducing the number of promotions compared to last
year.
Gross margin (including delivery receipts and third-party
revenues) increased by 20bps to 49.9% (2014: 49.7%), principally
due to the increased use of paid-for delivery services.
Operating expenses
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The Group increased its investment in operating resources by 21%
to GBP533.8m during the year, with increased spend in our
distribution, warehousing and people costs. Total operating costs
to sales ratio increased by 110bps over the same period.
Year to 31 Year to
August 2015 31 August
GBP'000 2014(1) Change
----------------------------------- ------------- ------------ ---------
Distribution costs (168,681) (147,303) (15%)
Payroll and staff costs (107,351) (82,074) (31%)
Warehousing (97,820) (75,756) (29%)
Marketing (57,074) (56,007) (2%)
Production (4,935) (4,723) (4%)
Technology costs (19,708) (15,136) (30%)
Other operating costs (55,215) (45,051) (23%)
Depreciation and amortisation (23,054) (15,361) (50%)
----------------------------------- ------------- ------------ ---------
Total operating costs (533,838) (441,411) (21%)
Operating cost ratio (% of sales) 46.4% 45.3% (110bps)
----------------------------------- ------------- ------------ ---------
(1) Costs for the year to 31 August 2014 exclude incremental
costs incurred as a result of the Barnsley fire; these have been
netted against the
related insurance reimbursements in a separate line item titled
'net other income'.
Distribution costs increased by 15% during the year but
decreased as a percentage of sales by 40bps to 14.7% as proposition
improvement costs, such as free returns for both the Netherlands
and Italy, were offset by negotiation of more favourable rates with
a number of carriers.
Staff costs increased by 90bps to 9.3% of sales due to headcount
increases and achievement of the Company bonus, which was not paid
in the previous financial year.
Warehousing costs increased by 70bps to 8.5% of sales across the
full year. During the first half of the year, warehousing costs
represented 9.1% of sales due to dual running costs from Lister
Hills and one-off short-term additional running costs at our
Barnsley warehouse following the launch of our automation
technology. However, during the second half of the year,
warehousing costs fell to 8.0% of sales, despite increased
investment in our European warehousing infrastructure. We expect to
see further leveraging of these costs during the new financial year
to 31 August 2016 as efficiencies from our Barnsley automation
annualise.
Marketing costs have decreased by 70bps to 5.0% of sales as
spend on international marketing campaigns was reduced during the
year whilst we focused on restoring the price competitiveness of
our products. We did run a local campaign in France, where our
price investments have been particularly well received and delivery
proposition improvements are driving sales.
IT costs increased by 10bps to 1.7% of sales as a result of
increased traffic across our expanded range of global platforms and
increased spend on maintenance to support these.
Other operating costs have increased by 20bps to 4.8% of sales
following a one-off GBP4.9m write-off of some IT projects following
the refocus of our checkout project towards mobile
optimisation.
Depreciation has increased by 40bps to 2.0% of sales following
last year's accelerated investment in our warehouse and IT
infrastructure, particularly in our mechanised picking
solution.
Costs incurred by our China operation, related largely to
warehousing and staff costs, are included in the above.
Net other income
We received final business interruption insurance reimbursements
during the first half of the year of GBP6.3m as a result of a fire
in our Barnsley warehouse in June 2014. This amount is included
within a separate line item titled 'net other income' in the Income
Statement.
Year to 31 Year to 31
GBP'000 August 2015 August 2014
---------------------------------- ------------------------------------ ------------
Stock loss and other incremental
costs - (8,486)
Insurance reimbursements 6,299 11,536
Total 6,299 3,050
---------------------------------- ------------------------------------ ------------
Income statement
The Group generated profit before tax of GBP47.5m, marginally
ahead of prior year (2014: GBP46.9m), due to maintaining our gross
profit margin despite international price investments, offset by
additional operating expenses related to our warehousing
infrastructure, delivery proposition and people costs.
Year to 31 Year to
August 2015 31 August
GBP'000 2014 Change
------------------------- ------------- ------------ -------
Revenue 1,150,788 975,470 18%
Cost of sales (575,989) (490,463)
------------------------- ------------- ------------ -------
Gross profit 574,799 485,007 19%
Distribution expenses (168,681) (147,303) (15%)
Administrative expenses (365,157) (294,108) (24%)
Net other income 6,299 3,050
Operating profit 47,260 46,646 1%
Net finance income 272 255
Profit before tax 47,532 46,901 1%
Income tax expense (10,680) (10,313)
------------------------- ------------- ------------ -------
Profit after tax 36,852 36,588 1%
------------------------- ------------- ------------ -------
Taxation
The effective tax rate increased by 50bps to 22.5% (2014:
22.0%). Last year's effective tax rate was reduced by the one-off
reversal of permanently disallowable charges in respect of the ASOS
Long-Term Incentive Plan which has not been repeated. The current
year increase as a result of this was offset in part by a reduction
in the prevailing rate of UK corporation tax rate in 2015. Going
forward, we expect 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 earnings per share of 44.4p (2014: 44.6p) and diluted
earnings per share of 44.4p (2014: 44.5p) remained in line with
last year.
Statement of financial position
The Group continues to enjoy a robust financial position
including a cash balance of GBP119.2m (2014: GBP74.3m). Net assets
increased by GBP44.3m to GBP237.3m during the year (2014:
GBP193.0m), driven principally by the Group's profit after tax.
The Group's inventory balance increased by GBP32.3m to GBP193.8m
(2014: GBP161.5m), partly due to the increased size of our
operations but also as a result of a number of our suppliers
changing to 'free on board' terms. This reduces our supplier costs
and allows us to manage our shipping costs and associated foreign
exchange risk internally. This resulted in GBP14.8m
inventory-in-transit over the year end being recognised within
Group inventory at 31 August 2015 (2014: nil). The summary
statement of financial position is shown below.
At At
31 August 31 August
GBP'000 2015 2014
-------------------------------------- ----------- -----------
Goodwill and other intangible assets 76,164 63,901
Property, plant and equipment 64,379 55,400
Derivative financial assets 256 -
-------------------------------------- ----------- -----------
Non-current assets 140,799 119,301
-------------------------------------- ----------- -----------
Stock 193,769 161,480
Net current payables (214,487) (165,154)
Cash and cash equivalents 119,191 74,340
Derivative financial assets 6,083 2,240
Current tax (liability)/asset (3,600) 2,217
Deferred tax liability (4,440) (1,393)
-------------------------------------- ----------- -----------
Net assets 237,315 193,031
-------------------------------------- ----------- -----------
Statement of cash flows
The Group's cash balance increased by GBP44.9m to GBP119.2m
(2014: GBP74.3m) as working capital improvements, particularly
timing in creditor's payments, ensured capital expenditure of
GBP50.4m on our warehousing and technology infrastructure was
exceeded by the cash inflow from operating activities. The summary
statement of cash flows is shown below.
Year to 31
GBP'000 August 2015 Year to 31 August 2014
-------------------------------------------------------------- ------------- ------------------------
Operating profit 47,260 46,646
Depreciation and amortisation 23,054 15,361
Losses on disposal of assets 4,893 150
Working capital 17,804 13,326
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Share-based payments charge/(credit) 2,245 (2,813)
Other non-cash items 637 (297)
Tax paid (2,837) (3,714)
Cash inflow from operating activities 93,056 68,659
Capital expenditure (50,396) (62,377)
Proceeds from issue of ordinary shares - 563
Net cash inflow/(outflow) relating to Employee Benefit Trust 912 (3,914)
Acquisition of subsidiary - 182
Net finance income received 252 231
Total cash inflow 43,824 3,344
-------------------------------------------------------------- ------------- ------------------------
Opening cash and cash equivalents 74,340 71,139
Effect of exchange rates on cash and cash equivalents 1,027 (143)
-------------------------------------------------------------- ------------- ------------------------
Closing cash and cash equivalents 119,191 74,340
-------------------------------------------------------------- ------------- ------------------------
Cash generated from operating activities increased by GBP24.4m,
due principally to EBITDA improvements of GBP8.3m, working capital
improvements of GBP4.5m and a GBP5.1m movement in share-based
payments charge, as the one-off ALTIP credit was not repeated in
the current year.
We renewed our credit facility for a further three years to
October 2018, although the Group had no bank borrowings at any
point during the current or prior financial year.
Fixed asset additions
Year to August Year to August
GBP'000 2015 2014
----------------------------- --------------- ----------------
IT 33,665 31,317
Office fixtures and fit-out 1,146 1,218
Warehouse 14,649 32,066
Total 49,460 64,601
----------------------------- --------------- ----------------
We continue to invest in our warehousing and IT infrastructure
to support our next staging post of GBP2.5bn sales. The majority of
our warehousing spend related to our automation technology at
Barnsley while our IT spend continued to focus on our modular
approach to re-platforming our legacy systems and IT enhancements
for our customer experience.
We plan to invest GBP80m during the new financial year,
increasing our previous guidance by an additional GBP20m. This
acceleration is principally due to the commencement of building our
new Eurohub site.
Outlook
We have started the new financial year well and preparations are
at an advanced stage for peak season. We intend to make further
investments in our prices where required during the year, as well
as continuing to invest in our global logistics infrastructure and
technology.
We currently anticipate sales growth for the new financial year
of c.20%, gross margin investment of up to 50bps and a similar EBIT
margin to the financial year just ended.
Nick Beighton Helen Ashton
Chief Executive Officer Chief Financial Officer
Consolidated Statement of Total Comprehensive Income
For the year to 31 August 2015
Year to 31 Year to 31
August 2015 August 2014
GBP'000 GBP'000
Revenue 1,150,788 975,470
Cost of sales (575,989) (490,463)
------------- -------------
Gross profit 574,799 485,007
Distribution expenses (168,681) (147,303)
Administrative expenses (365,157) (294,108)
-------------------------------------------- ------------- -------------
Warehouse fire: stock loss and
other incremental costs - (8,486)
Warehouse fire: insurance reimbursements 6,299 11,536
-------------------------------------------- ------------- -------------
Net other income 6,299 3,050
Operating profit 47,260 46,646
Finance income 353 312
Finance expense (81) (57)
------------- -------------
Profit before tax 47,532 46,901
Income tax expense (10,680) (10,313)
------------- -------------
Profit for the period 36,852 36,588
============= =============
Net translation movements offset
in reserves (83) (176)
Net fair value gain on derivative
financial assets 4,099 2,015
------------- -------------
Other comprehensive income for
the period(1) 4,016 1,839
============= =============
Total comprehensive income 40,868 38,427
============= =============
Profit/(loss) attributable to:
Owners of the parent company 36,866 36,950
Non-controlling interest (14) (362)
------------- -------------
36,852 36,588
============= =============
Total comprehensive income/(loss)
attributable to:
Owners of the parent 40,882 38,789
Non-controlling interest (14) (362)
------------- -------------
40,868 38,427
============= =============
Earnings per share
Basic 44.4p 44.6p
Diluted 44.4p 44.5p
============= =============
(1) All items of other comprehensive income may subsequently be
reclassified to profit or loss.
Consolidated Statement of Changes in Equity
For the year to 31 August 2015
Called Employee Equity
up Benefit attributable
share Share Retained Trust Hedging Translation to owners of Non-controlling Total
capital premium earnings(1) reserve reserve reserve the parent interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 September
2013 2,890 6,368 152,133 (1,770) 225 (45) 159,801 (2) 159,799
Profit/(loss)
for the
period - - 36,950 - - - 36,950 (362) 36,588
Other
comprehensive
income/(loss)
for the
period - - - - 2,015 (176) 1,839 - 1,839
-------- ---------- ------------ --------- -------- ------------ ------------- ---------------- --------
Total
comprehensive
income/(loss)
for the
period - - 36,950 - 2,015 (176) 38,789 (362) 38,427
Shares
allotted in
the year 30 533 - - - - 563 - 563
Net purchase
of shares
by Employee
Benefit Trust - - - (3,914) - - (3,914) - (3,914)
Transfer of
shares from
Employee
Benefit Trust
on exercise - - (354) 354 - - - - -
Share-based
payments
credit - - (2,813) - - - (2,813) - (2,813)
Acquisition of
subsidiary - - - - - - - (42) (42)
Deferred tax
on share
options - - (8,730) - - - (8,730) - (8,730)
Current tax
on items
taken
directly to
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equity - - 9,741 - - - 9,741 - 9,741
Balance as at
31 August
2014 2,920 6,901 186,927 (5,330) 2,240 (221) 193,437 (406) 193,031
======== ========== ============ ========= ======== ============ ============= ================ ========
Called Employee Equity
up Benefit attributable
share Share Retained Trust Hedging Translation to owners of Non-controlling Total
capital premium earnings(1) reserve reserve reserve the parent interest equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 September
2014 2,920 6,901 186,927 (5,330) 2,240 (221) 193,437 (406) 193,031
Profit/(loss)
for the period - - 36,866 - - - 36,866 (14) 36,852
Other
comprehensive
income/(loss)
for the period - - - - 4,099 (83) 4,016 - 4,016
-------- ---------- ------------ --------- -------- ------------ ------------- ---------------- --------
Total
comprehensive
income/(loss)
for the period - - 36,866 - 4,099 (83) 40,882 (14) 40,868
Net cash
received on
exercise of
shares from
Employee
Benefit Trust - - - 912 - - 912 - 912
Transfer of
shares from
Employee
Benefit Trust
on exercise - - (780) 780 - - - - -
Share-based
payments charge - - 3,530 - - - 3,530 - 3,530
Acquisition of
non-controlling
interest in
Covetique Ltd - - (394) - - - (394) 394 -
Deferred tax on
share options - - (1,323) - - - (1,323) - (1,323)
Current tax on
items taken
directly to
equity - - 297 - - - 297 - 297
-------- ---------- ------------ --------- -------- ------------ ------------- ---------------- --------
Balance as at 31
August 2015 2,920 6,901 225,123 (3,638) 6,339 (304) 237,341 (26) 237,315
======== ========== ============ ========= ======== ============ ============= ================ ========
(1) Retained earnings includes the share-based payments
reserve
Consolidated Statement of Financial PositioN
At 31 August 2015
At 31 August At 31 August
2015 2014
GBP'000 GBP'000
Non-current assets
Goodwill 1,060 1,325
Other intangible assets 75,104 62,576
Property, plant and equipment 64,379 55,400
Derivative financial assets 256 -
------------- -------------
140,799 119,301
------------- -------------
Current assets
Inventories 193,769 161,480
Trade and other receivables 18,055 20,385
Derivative financial assets 6,083 2,240
Current tax asset - 2,217
Cash and cash equivalents 119,191 74,340
337,098 260,662
------------- -------------
Current liabilities
Trade and other payables (232,542) (185,539)
Current tax liability (3,600) -
Deferred tax liability (1,156) -
------------- -------------
(237,298) (185,539)
------------- -------------
Net current assets 99,800 75,123
Non-current liabilities
------------- -------------
Deferred tax liability (3,284) (1,393)
------------- -------------
Net assets 237,315 193,031
============= =============
Equity attributable to owners of the parent
Called up share capital 2,920 2,920
Share premium 6,901 6,901
Employee Benefit Trust reserve (3,638) (5,330)
Hedging reserve 6,339 2,240
Translation reserve (304) (221)
Retained earnings 225,123 186,927
237,341 193,437
------------- -------------
Non-controlling interests (26) (406)
Total equity 237,315 193,031
============= =============
Consolidated Statement of Cash Flows
For the year to 31 August 2015
Year to 31 Year to 31
August 2015 August
2014
GBP'000 GBP'000
Operating profit 47,260 46,646
Adjusted for:
Depreciation of property, plant and equipment 8,294 5,860
Amortisation of other intangible assets 14,760 9,501
Loss on disposal of non-current assets 4,893 150
Increase in inventories (32,111) (18,352)
Decrease/(increase) in trade and other receivables 2,300 (1,844)
Increase in trade and other payables 47,615 33,522
Share-based payments charge/(credit) 2,245 (2,813)
Other non-cash items 637 (297)
Income tax paid (2,837) (3,714)
------------- -----------
Net cash generated from operating activities 93,056 68,659
Investing activities
Payments to acquire other intangible assets (32,470) (32,627)
Payments to acquire property, plant and equipment (17,926) (29,750)
Finance income 339 296
Acquisition of subsidiary, net of cash acquired - 182
-------------
Net cash used in investing activities (50,057) (61,899)
Financing activities
Proceeds from issue of ordinary shares - 563
Net cash inflow/(outflow) relating to Employee
Benefit Trust 912 (3,914)
Finance expense (87) (65)
------------- -----------
Net cash generated/(used in) from financing
activities 825 (3,416)
Net increase in cash and cash equivalents 43,824 3,344
============= ===========
Opening cash and cash equivalents 74,340 71,139
Effect of exchange rates on cash and cash equivalents 1,027 (143)
------------- -----------
Closing cash and cash equivalents 119,191 74,340
------------- -----------
Notes to the financial information
For the year to 31 August 2015
1. Preparation of the audited condensed consolidated financial
information
a) Basis of preparation
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The condensed consolidated financial information for the year to
31 August 2015 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 ended 31 August 2014.
The financial information contained within this preliminary
announcement for the years to 31 August 2015 and 31 August 2014
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 2014 have been filed with the Registrar of
Companies and those for the year to 31 August 2015 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
2015 and 31 August 2014 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
The Directors have reviewed current performance and forecasts,
combined with expenditure commitments, including capital
expenditure. After making enquiries, the Directors have a
reasonable expectation that the Group has adequate financial
resources to continue its current operations, including contractual
and commercial commitments for the foreseeable future. For this
reason, they have continued to adopt the going concern basis in
preparing the financial statements.
In preparing the preliminary announcement, the Directors have
also made reasonable and prudent judgements and estimates and
prepared the preliminary announcement on the going concern basis.
The preliminary announcement and management report contained herein
give a true and fair view of the assets, liabilities, financial
position and profit and loss of the Group.
Changes to accounting standards
There have been no changes to accounting standards during the
year which have had or are expected to have any significant impact
on 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 and has determined that
the primary segmental reporting format of the Group is geographical
by customer location, based on the Group's management and internal
reporting structure.
The Executive Board assesses the performance of each segment
based on revenue and gross profit after distribution expenses,
which excludes administrative expenses.
Year to 31 August 2015
UK US EU RoW Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Retail sales 473,884 119,530 293,983 232,549 1,119,946
Delivery receipts 11,496 3,660 5,085 5,426 25,667
Third party revenues 4,403 755 17 - 5,175
Internal revenues 39 - 336 3,067 3,442
---------- --------- ---------- ---------- ----------
Total segment revenue 489,822 123,945 299,421 241,042 1,154,230
---------- --------- ---------- ---------- ----------
Eliminations (39) - (336) (3,067) (3,442)
---------- --------- ---------- ---------- ----------
Total revenue 489,783 123,945 299,085 237,975 1,150,788
Cost of sales (260,709) (49,301) (151,783) (114,196) (575,989)
---------- --------- ---------- ---------- ----------
Gross profit 229,074 74,644 147,302 123,779 574,799
Distribution expenses (52,825) (38,382) (40,761) (36,713) (168,681)
---------- --------- ---------- ---------- ----------
Segment result 176,249 36,262 106,541 87,066 406,118
Administrative expenses (365,157)
Net other income 6,299
Operating profit 47,260
Finance income 353
Finance expense (81)
----------
Profit before tax 47,532
==========
Internal revenues relate largely to sale of stock by ASOS.com to
ASOS (Shanghai) Commerce Co. Limited.
Year to 31 August 2014
UK US EU RoW Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Retail sales 372,241 92,311 256,385 234,358 955,295
Delivery receipts 7,412 1,773 3,162 3,604 15,951
Third party revenues 4,224 - - - 4,224
Internal revenues 111 - - 7,654 7,765
Total segment revenue 383,988 94,084 259,547 245,616 983,235
Eliminations (111) - - (7,654) (7,765)
Total revenue 383,877 94,084 259,547 237,962 975,470
Cost of sales (207,853) (40,137) (126,460) (116,013) (490,463)
---------- --------- ---------- ---------- ----------
Gross profit 176,024 53,947 133,087 121,949 485,007
Distribution expenses (39,618) (28,804) (37,062) (41,819) (147,303)
---------- --------- ---------- ---------- ----------
Segment result 136,406 25,143 96,025 80,130 337,704
Administrative expenses (294,108)
Net other income 3,050
Operating profit 46,646
Finance income 312
Finance expense (57)
----------
Profit before tax 46,901
==========
Due to the nature of its activities, the Group is not reliant on
any individual major customers.
No analysis of the assets and liabilities of each operating
segment is provided to the Chief Operating Decision Maker in the
monthly management accounts therefore no measure of segments assets
or liabilities is disclosed in this note. There are no material
non-current assets located outside the UK.
3. Net other income
Net other income recognised during the year to 31 August 2015
relates to final business interruption reimbursements as a result
of the fire in our main distribution hub in June 2014. Amounts
recognised during the year to 31 August 2014 related to insurance
reimbursements related to stock loss and other incremental costs
plus a portion of business interruption losses.
Year to 31 August Year to 31
2015 August
2014
GBP'000 GBP'000
Stock loss and other incremental costs - (8,486)
Insurance reimbursements 6,299 11,536
Total 6,299 3,050
================== ===========
At 31 August 2014, the Group disclosed a contingent asset in
relation to these expected final business interruption
reimbursements. This contingent asset no longer exists as at 31
August 2015 as a result of the reimbursements received above.
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.
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