TIDMASC
RNS Number : 2881N
ASOS PLC
09 June 2010
ASOS plc ("Group")
UK's leading online fashion store
Final Results for the year ended 31 March 2010
+-----------------------+-------------+----------------+----------------+
| GBP'000s | 2009/10 | 2008/09 | Increase |
+-----------------------+-------------+----------------+----------------+
| Group revenues* | 222,999 | 165,395 | 35% |
+-----------------------+-------------+----------------+----------------+
| - UK sales | 160,014 | 133,165 | 20% |
+-----------------------+-------------+----------------+----------------+
| - International | 62,985 | 32,230 | 95% |
| sales | | | |
+-----------------------+-------------+----------------+----------------+
| | | | |
+-----------------------+-------------+----------------+----------------+
| Gross profit | 93,136 | 71,699 | 30% |
+-----------------------+-------------+----------------+----------------+
| Gross margin | 41.8% | 43.3% | -150bps |
+-----------------------+-------------+----------------+----------------+
| Operating profit | 20,311 | 13,935 | 46% |
+-----------------------+-------------+----------------+----------------+
| Profit before tax | 20,339 | 14,125 | 44% |
| (PBT) | | | |
+-----------------------+-------------+----------------+----------------+
| Earnings per share | 18.7p | 12.8p | 46% |
| (diluted) | | | |
+-----------------------+-------------+----------------+----------------+
| Net cash | 15,645 | 13,587 | 15% |
+-----------------------+-------------+----------------+----------------+
*Includes retail sales, postage and packaging (P&P) income and 3rd party
revenues
Key highlights:
· Group revenues up 35% to GBP223 million, PBT up 44% to GBP20.3 million
· International sales up 95% to GBP63 million
· H2 gross margin recovery
· Operational leverage delivered
· Debt-free balance sheet - increase in net cash to GBP15.6 million
· Significant increase in offer to 36,000 products at end April 2010, up
from 22,000 prior year
· Number of active customers up 25% year on year to 1.6 million at end
April 2010
· Current trading: Group retail sales for 9 weeks to 6 June 2010 up 58%
(UK 36%, international 118%)
· GBP20 million investment into new warehouse with initial capacity of
GBP600 million annual sales
Nick Robertson, CEO, commented:
"These are a strong set of results and the team have again delivered record
sales and profits.
"We are more confident than at this time last year, with both UK and
international sales accelerating well. We are keeping a very close eye on
controlling our costs whilst at the same time encouraging the entrepreneurial
and innovative spirit that drives all that we do.
"We are excited about the future and believe that online fashion will continue
to outperform traditional retail channels. We are at the leading edge of our
sector and see enormous potential to drive our business forward, both in the UK
and internationally."
09 June 2010
For further information:
+---------------------------------------+----------------------+
| ASOS plc | |
+---------------------------------------+----------------------+
| Nick Robertson, Chief Executive | Tel: 0207 457 2020 |
| | (Today) |
+---------------------------------------+----------------------+
| Nick Beighton, Finance Director | Tel: 0207 756 1000 |
| | (Thereafter) |
+---------------------------------------+----------------------+
| Website: www.asos.com | |
+---------------------------------------+----------------------+
| | |
+---------------------------------------+----------------------+
| College Hill | |
+---------------------------------------+----------------------+
| Matthew Smallwood / Justine Warren / | Tel: 020 7457 2020 |
| Jamie Ramsay | |
+---------------------------------------+----------------------+
| | |
+---------------------------------------+----------------------+
| JPMorgan Cazenove | |
+---------------------------------------+----------------------+
| Luke Bordewich / Gina Gibson | Tel: 020 7588 2828 |
+---------------------------------------+----------------------+
| | |
+---------------------------------------+----------------------+
| Numis Securities | |
+---------------------------------------+----------------------+
| Alex Ham | Tel: 020 7260 1000 |
| | |
+---------------------------------------+----------------------+
Background note
Established in June 2000 and admitted to AIM in October 2001, ASOS.com is the
UK's largest independent online fashion and beauty retailer and offers over
36,000 branded and own label product lines across womenswear, menswear,
footwear, accessories, jewellery and beauty with approximately 1,300 new product
lines being introduced each week.
Aimed primarily at fashion forward 16-34 year olds, ASOS.com attracts over 8
million unique visitors a month and as at 30 April 2010 had 3.7 million
registered users and 1.6 million active customers (defined as having shopped in
the last 6 months). www.asos.com
ASOS plc ("Group")
UK's leading online fashion store
Final Results for the year ended 31 March 2010
Chairman's Statement
I am pleased to present another set of record results for ASOS. The year was
characterised by a more prudent approach in our planning, specifically around
stock levels and overheads whilst investing in our UK service proposition and
building our international capabilities. The results, whilst strong, were
under-potentialised. The widely predicted slowdown in consumer spending,
specifically amongst the younger customer groups did not materialise and the
Internet continued its strong growth as a retail channel. We are more confident
for the current year and it has started extremely positively. We believe the
prospects for ASOS, both in the UK and globally, remain very strong.
ASOS is 10 years old this year and has evolved from a small entrepreneurial
start-up to a leading UK fashion brand, credited with revolutionising online
fashion retail in the UK. I am pleased to report that the entrepreneurial
spirit is still very much alive but supported now by more robust operating
procedures, expertise and processes all of which will assist ASOS in delivering
its ambitious aim of GBP1bn sales, in five years from five main markets.
Management Incentive Plan
As outlined previously, we implemented a Management Incentive Plan ("MIP") in
March 2010 to align our senior management team directly with the long term
interests of shareholders. The MIP has a three year performance period ending
on 31 March 2012 and is based on challenging Earnings per Share ("EPS") growth
targets and Total Shareholder Return ("TSR") conditions.
Dividend
We have decided that in the short term, our shareholders' best interests are
served by continuing to reinvest our cash to exploit the substantial growth
opportunities both in the UK and overseas. Accordingly, we have decided not to
declare a dividend for shareholders. This policy remains under regular review.
People
Our continued success is the direct result of our committed team and their
efforts. On behalf of the Board I would like to thank them all for their
contribution. During the year we appointed two additional non-executive
directors to the Board, Karen Jones and Mary Turner, and I would like to thank
them both for their valued input so far.
Lord Alli
Chairman
Chief Executive's Review
Overview
I am pleased to announce a very strong set of results in a year where the
economic conditions were at best uncertain and where we had planned rather more
cautiously than in previous years.
We delivered sales of GBP223 million in 2009/10, an increase of 35% and profit
before tax of GBP20.3 million, an increase of 44%. As guided, our gross margin
recovered strongly in the second half. Against varying levels of demand, we
managed the cost base tightly delivering operating leverage, part of which we
re-invested into the customer experience.
Our 16-34 year old customer base proved relatively resilient to the broader
economic climate and we were able to introduce new customers to ASOS as a result
of our international expansion.
The investments we made into our service proposition, including free returns and
now free delivery, as well as some significant improvements in product design
and ranges have meant that we are approaching this year with considerably more
confidence. This is reflected in our recent trading where we have seen sales
growth accelerate substantially both in the UK and internationally.
+-------------------------------------------+------------+------------+----------+
| KEY PERFORMANCE INDICATORS - UK | 2009/10 | 2008/09 | Increase |
| | | | (%) |
+-------------------------------------------+------------+------------+----------+
| Sales (GBP'000) | GBP160,014 | GBP133,165 | 20% |
+-------------------------------------------+------------+------------+----------+
| Retail margin (excludes 3rd party | 44.4% | 45.3% | -90bps |
| revenues and postage receipts) | | | |
+-------------------------------------------+------------+------------+----------+
| Average basket value (GBP, inc. VAT) | GBP62.74 | GBP56.48 | 11% |
+-------------------------------------------+------------+------------+----------+
| Average units per basket | 2.57 | 2.47 | 4% |
+-------------------------------------------+------------+------------+----------+
| Average selling price per unit (GBP, inc. | GBP24.38 | GBP22.87 | 7% |
| VAT) | | | |
+-------------------------------------------+------------+------------+----------+
| Number of orders ('000) | 3,940 | 3,441 | 15% |
+-------------------------------------------+------------+------------+----------+
+-------------------------------------------+-----------+-----------+----------+
| KEY PERFORMANCE INDICATORS - | 2009/10 | 2008/09 | Increase |
| International | | | (%) |
+-------------------------------------------+-----------+-----------+----------+
| Sales (GBP'000) | GBP62,985 | GBP32,230 | 95% |
+-------------------------------------------+-----------+-----------+----------+
| Retail margin (excludes 3rd party | 48.6% | 50.6% | -200bps |
| revenues and postage | | | |
| receipts) | | | |
+-------------------------------------------+-----------+-----------+----------+
| Average basket value (GBP, inc. VAT) | GBP80.08 | GBP72.06 | 11% |
+-------------------------------------------+-----------+-----------+----------+
| Average units per basket | 3.30 | 3.09 | 7% |
+-------------------------------------------+-----------+-----------+----------+
| Average selling price per unit (GBP, inc. | GBP24.25 | GBP23.35 | 4% |
| VAT) | | | |
+-------------------------------------------+-----------+-----------+----------+
| Number of orders ('000) | 929 | 508 | 83% |
+-------------------------------------------+-----------+-----------+----------+
"The World's Best Fashion" (Choice)
We further increased our product range from 22,000 lines in April 2009 to 36,000
lines as at the end April 2010. Womenswear and accessories accounted for 72% of
sales and we continued to evolve the range into new categories and price points.
Our premium range ASOS Black expanded from dresses to the full outfit including
shoes and bags. We launched the Green Room, an area dedicated to the sale of
ethically sourced brands. We introduced ASOS Africa, a range sourced and
manufactured in Africa. We introduced a work wardrobe, as well as ranges
inspired by vintage classics, ASOS Reclaimed. Menswear accounted for 20% of
sales and attracted a number of big name brands including Paul Smith, Hugo Boss
and the sports brands Nike and Adidas. We also introduced menswear into our ASOS
Outlet offer.
As we internationalise the product offer, we look forward to introducing a
number of new international brands into the mix in the coming seasons.
"The Service I Want" (Service)
We have always stated our desire to achieve a free delivery / free returns
proposition and I am pleased to report that we introduced free returns to all
our UK customers in September 2009 and as from April 2010 we introduced free
supersaver delivery in the UK. In addition we launched ASOS Premier, an annual
subscription service charged at GBP24.95 entitling customers to a free next day
delivery and free returns pick-up on an unlimited number of orders over a 12
month period. We also offer a returns pick-up service for all customers charged
at GBP2.95. We are very pleased with our customers' reaction to these
initiatives, impacting our main KPI's with positive trends in order frequency,
average basket and items per basket. The financial impact is all within budgeted
levels.
The next stage is to improve the delivery options still further allowing
customers to order on ASOS and pick up at locations other than their home or
office. A number of conversations are ongoing with leading retail brands in the
UK and we should be able to report on progress in the next few months.
Harnessing the main social networks, customers can now contact our customer care
teams via facebook and twitter as well as e-mail.
"Inspire and Engage Me" (Presentation)
As planned, we increased our marketing efforts to drive awareness of the ASOS
brand. We sponsored the Next Top Model series on Living TV as well as the
recent Capital Radio Summertime Ball. We also ran an outdoor campaign and
partnered with Diet Coke appearing on 42 million cans in March 2010. I am
pleased to report that awareness of the ASOS brand has increased significantly.
Prompted brand recognition amongst women aged 16-34 improved from 46% in
November 2009 to 62% by March 2010.
There remains more work to be done, particularly amongst our male customers, and
you can expect to see us addressing this in the short to medium term.
Our own magazine remains the key marketing tool and I am pleased to say that
ASOS Magazine is the second largest fashion magazine in the country behind
Glamour with an audited circulation of 450,000. In February we changed the size
to A4 from A5 and have had a positive reaction from both customers and the
brands that support us commercially. Third party revenue (income derived from
advertising) stepped up in the year to GBP2.3 million, up from GBP1 million in
the prior year.
"The Best Shopping Experience"
Our customers, their online behaviours and their preferred technology platforms
are continually evolving. To date, our website has been the only point of
contact with ASOS. As the use of mobile devices and the new iPad platform gain
traction the way our customers transact with ASOS will broaden.
In recognition of our customers' demands, we are planning to launch ASOS
Marketplace this year, a site accessible from the main ASOS site. Customers will
be able to re-sell their unwanted wardrobes to other fashion conscious customers
as well as enable pre-vetted small boutiques and designers to sell their
products directly to the ASOS customer base.
In addition we will be launching our own fashion aggregator, also accessible
from the main ASOS site where customers will be able to browse and purchase high
fashion items that are not necessarily sold through ASOS.
International
Over the course of 2009/10 international sales increased 95% to GBP63 million,
with retail sales up 103%, representing 28% of the business. In the first nine
weeks of the year sales have increased 118%. All of these sales have been
generated from the UK website and despatched from our UK distribution hub. In
total we now ship to 167 countries globally which has been achieved with little
or no country-specific marketing or sales initiatives to date.
We see enormous potential for ASOS in international markets and the US in
particular. We remain on track to launch our US website in September 2010 and
French and German websites will follow later this year. The US is now our
second biggest market outside the UK and is growing at an impressive rate of
over 180% per year. The US online apparel market is forecast to grow from
US$23.6 billion in 2008 to US$42.7 billion in 2014 (Source: Forrester, Online
Apparel) and has around 75 million 16-34 year olds, our core target customer.
International despatches will continue to be made from our UK based distribution
hub in the medium term. We have established in-country return solutions for our
US and Irish customers and expect to go live with French and German solutions
later this year.
At present the marketing activities include affiliate campaigns, some paid
search, PR and database mining. When we go live with the language specific
sites you can expect us to turn to more traditional forms of marketing to drive
awareness and sales.
Outlook
Business outlook
We are confident that the actions we have taken and the number of exciting new
initiatives in the pipeline continue to set ASOS apart from any competition and
enable us to drive increasing traffic and sales. There is no 'stand-out'
competitor to ASOS - in terms of breadth of range and fashion edge - in either
the UK or the main markets we are proposing to focus on.
Our short term strategy is clear: drive profitable growth in the UK as well as
take the ASOS proposition to three key international markets by the end of 2010
as well as shipping to over 160 other countries.
The business will continue to be managed from the UK with limited in-country
resource and infrastructure required. In order to accommodate the growth, we
are investing GBP20 million this year in a new, state-of-the-art distribution
centre with initial capacity of up to GBP600 million of sales. It is
anticipated this new facility will be fully operational by mid 2011.
Current trading
Our current sales performance is strong. For the first nine weeks, our retail
sales have increased 58% (UK 36%, International 118%). It is too early to
assume that these trading levels represent a sustainable trend, however, we have
entered the year with much more confidence and we will continue focussing on
cost control and generating strong cash flow. We are optimistic that 2010/11
will be another year of strong growth for ASOS.
Nick Robertson
Chief Executive
Finance Director's Review
The Group had another good year in the context of the overall retail landscape.
This, however, was a period of under-potentialisation where we held back the
investment into our stock levels in the expectation of a lower customer demand.
Despite this we continued to invest in our customer proposition with initiatives
such as free returns and improved delivery options, whilst improving operational
controls and tightly managing our stock and cost base.
Revenues
Total Group revenue increased by 35% to GBP223 million, as analysed below.
+----------------+----------------+----------------+---------------+
| GBP'000 | 2009/10 | 2008/09 | Increase |
+----------------+----------------+----------------+---------------+
| Retail sales | 205,491 | 149,343 | 38% |
+----------------+----------------+----------------+---------------+
| Delivery | 15,199 | 15,084 | 1% |
| receipts | | | |
+----------------+----------------+----------------+---------------+
| Third party | 2,309 | 968 | 139% |
| revenues | | | |
+----------------+----------------+----------------+---------------+
| Total Group | 222,999 | 165,395 | 35% |
| revenue | | | |
+----------------+----------------+----------------+---------------+
Retail sales increased by 38% during the year, with UK growth of 22% and
international growth of 103%.
The Group's investment in its delivery proposition, particularly in the second
half led to only a slight increase in delivery receipts during the year. These
investments included free UK delivery for orders over GBP75, the launch of ASOS
Premier and selective international delivery promotions.
Third party revenues increased significantly on the prior year to GBP2.3
million. The third party revenues mainly comprise advertising revenues both
online and within the ASOS Magazine.
+-------------------+----------------+----------------+----------------+
| 2009/10 | UK | International | Total Group |
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------+----------------+----------------+----------------+
| Retail sales | 147,571 | 57,920 | 205,491 |
+-------------------+----------------+----------------+----------------+
| Increase | 22% | 103% | 38% |
+-------------------+----------------+----------------+----------------+
| | | | |
+-------------------+----------------+----------------+----------------+
| Delivery | 10,134 | 5,065 | 15,199 |
| receipts | | | |
+-------------------+----------------+----------------+----------------+
| Increase/decrease | -11% | 39% | 1% |
+-------------------+----------------+----------------+----------------+
| | | | |
+-------------------+----------------+----------------+----------------+
| Third party | 2,309 | - | 2,309 |
| revenues | | | |
+-------------------+----------------+----------------+----------------+
| Increase | 139% | - | 139% |
+-------------------+----------------+----------------+----------------+
| | | | |
+-------------------+----------------+----------------+----------------+
| Total Group | 160,014 | 62,985 | 222,999 |
| revenue | | | |
+-------------------+----------------+----------------+----------------+
| Increase | 20% | 95% | 35% |
+-------------------+----------------+----------------+----------------+
Retail sales in the UK were GBP147.6 million (up 22%), whereas international
sales grew to GBP57.9 million, up 103%. At 31 March 2010, the international
business accounted for around 30% of the Group's retail sales and the main
markets were USA, Denmark, France, Australia, Ireland and Germany.
During the year we made substantial investments in both the UK and international
service proposition, which is reflected in the lower year on year growth in
delivery receipts. We implemented our first in-country returns solutions in
Ireland. This was followed post year-end by a further in-country returns
solution in the USA. This investment will continue in the current financial year
with the launch of the US, French and German websites.
Gross profit
Total gross profit (which includes P&P) increased 30% on the prior year, with
the Group achieving a gross margin of 41.8% (2008/09: 43.3%). This represents a
150 basis points decline.
The Group retail profit grew 35%, achieving a gross margin percentage of 45.6%
(2008/09: 46.3%). In the first half, retail margin at 44.6% declined 370 basis
points but recovered strongly in the second half to 46.3%, up 130 basis points.
There was a gross loss for the year from P&P of GBP2.9 million. This is through
the implementation of free delivery thresholds and free returns. The cost of
free returns is charged directly against the P&P margin.
+-----------------------+--------+---------------+---------------+
| 2009/10 | UK | International | Total Group |
+-----------------------+--------+---------------+---------------+
| Retail gross profit | 65,546 | 28,144 | 93,690 |
| (GBP'000) | | | |
+-----------------------+--------+---------------+---------------+
| Increase | 20% | 95% | 35% |
+-----------------------+--------+---------------+---------------+
| | | | |
+-----------------------+--------+---------------+---------------+
| Retail gross margin | 44.4% | 48.6% | 45.6% |
| (%) | | | |
+-----------------------+--------+---------------+---------------+
| Decrease | 90bps | 200bps | 70bps |
+-----------------------+--------+---------------+---------------+
The UK retail gross margin declined considerably during the first half but
recovered strongly in the second half and ended the year down 90 basis points.
The decline in the gross margin was based primarily on increased sourcing costs,
incremental markdown from the extra sale period in the first half and a change
in the branded / own-label mix compared to prior year. The second half recovery
resulted from increased sourcing costs being offset by tighter stock management,
which lead to lower levels of markdown. Moreover, the second half retail gross
margin benefited from foreign currency gains.
During 2011, we expect to see the gross margin easing further through the impact
of changes in the delivery proposition, raw material and cost inflation. These
inflationary impacts will be partially offset through sourcing gains.
Operating costs
Operating costs were GBP72.8 million and equated to 33% of sales, a 220 basis
points decrease from last year. This reflects the benefits of economies of
scales and operating leverage as the business continues to grow, but also
management's focus on tight cost control.
+-------------------+--------------+--------------+--------------+
| GBP'000 | 2009/10 | 2008/09 | Increase |
+-------------------+--------------+--------------+--------------+
| Payroll and staff | 25,877 | 22,298 | 16% |
| costs | | | |
+-------------------+--------------+--------------+--------------+
| Warehousing | 19,399 | 15,566 | 25% |
+-------------------+--------------+--------------+--------------+
| Marketing | 9,252 | 6,430 | 44% |
+-------------------+--------------+--------------+--------------+
| Production | 1,999 | 1,764 | 13% |
+-------------------+--------------+--------------+--------------+
| Other operating | 12,976 | 9,856 | 32% |
| costs | | | |
+-------------------+--------------+--------------+--------------+
| Depreciation | 3,322 | 1,850 | 80% |
+-------------------+--------------+--------------+--------------+
| Operating costs | 72,825 | 57,764 | 26% |
+-------------------+--------------+--------------+--------------+
| % of sales | 32.7% | 34.9% | 220bps |
+-------------------+--------------+--------------+--------------+
We continued to invest in recruiting people across the business to meet the
requirements of our growth, leading to a 16% increase in payroll and staff
costs. Average headcount (which excludes the logistics team which is outsourced)
increased from 370 to 547 people with the main increases being in technology and
operations.
Warehouse costs increased by 25% to GBP19.4 million, but the operating cost
ratio reduced from 9.4% last year to 8.7%. In the first half of the year we
upgraded our warehouse management systems at our Hemel Hempstead warehouse. This
resulted in productivity gains in the second half of the financial year.
Marketing costs increased by 44% to GBP9.3 million due to significant second
half investment in increasing our brand awareness both domestically and
internationally. Marketing costs include the ASOS magazine production, direct
marketing, creative and PR costs.
Production costs increased 13% to GBP2 million due to the increased number of
lines on the website. During the year efficiency gains were made with production
costs representing 1% of retail sales (2009: 1.2%). Production costs relate to
preparing, photographing, editing and placing product images on the website and
during the year we increased our studio space to service the increased product
lines.
Other costs include the head office running costs, IT infrastructure and legal
and professional fees. The primary driver of the 32% increase in other costs was
the step change of investment in the IT function to support core system
replacement and website development. In addition, we acquired additional head
office space in the second half in order to accommodate the increased staff
levels.
Operating profit
Operating profit for the financial year 2009/10 increased by 46% to GBP20.3
million. The operating margin improved from 8.4% in 2008/09 to 9.1% in 2009/10.
The 150 basis points gross margin decline was therefore more than fully offset
by an improvement in operating cost ratios.
Finance income
As a result of lower prevailing interest rates, the finance income achieved on
our increased cash balances declined to GBP0.1 million (2009: GBP0.3 million).
Interest in joint venture
In September 2008, we acquired a 50% stake in a business called Crooked Tongues
Limited for a nominal sum. The business is still in its infancy and the website,
www.crookedtongues.com, is a leading authority in trainers and sneakers. This
investment allows us to participate in sales from an additional customer
segment. Our share of post tax losses for the financial year was GBP69,000.
Taxation
The effective tax rate for the Group was 28.3%, 80 basis points lower than last
year and 30 basis points above the UK corporation tax rate of 28.0%. Going
forward, we would expect the effective rate of tax to be broadly consistent with
2010.
Earnings per share
Diluted earnings per share increased by 46% to 18.7p (2009: 12.8p), whilst basic
earnings per share also increased 47% to 20.0p (2009: 13.6p). The increase in
basic and diluted earnings per share reflects the increase in profit and the
lower effective tax rate.
Cash flow and balance sheet
The Group continues to have a strong, cash backed balance sheet which is free
from long term liabilities and commitments. Net assets increased during the year
by 77% to GBP45.5 million (2009: GBP25.7 million).
The Group cash balance increased by GBP2 million from GBP13.6 million to GBP15.6
million.
+-------------+----------+---------+
| GBP' | 2009/10 | 2008/09 |
| 000 | | |
+-------------+----------+---------+
| EBITDA | 23,633 | 16,147 |
+-------------+----------+---------+
| Working | (10,667) | (4,770) |
| capital | | |
+-------------+----------+---------+
| Capital | (8,439) | (8,200) |
| expenditure | | |
+-------------+----------+---------+
| Taxation | (4,373) | (3,158) |
+-------------+----------+---------+
| Other | 2,593 | 4,187 |
| creditors | | |
+-------------+----------+---------+
| Investment | (805) | (1,929) |
| in EBT | | |
+-------------+----------+---------+
| Other | 116 | 941 |
+-------------+----------+---------+
| Total | 2,058 | 3,218 |
+-------------+----------+---------+
The increased cash inflow from EBITDA of GBP23.6 million in the year (up 46%)
was offset by a working capital outflow of GBP10.7 million combined with
increased tax and capital expenditure outflows compared to the prior year.
The Group continues to focus on working capital management. At year end,
inventories had increased by 34% to GBP38 million as we built stock levels to
service demand for our Spring Summer 2010 ranges. However, due to more efficient
payment of suppliers enabling early settlement discounts to be obtained, the
inventory increase was not offset by a counteracting increase in trade
creditors.
Capital expenditure
Capital expenditure during the year was GBP8.4 million, a GBP0.2 million
increase on the prior year.
+------------------------+--------------------+--------------------+
| GBP' 000 | 2009/10 | 2008/09 |
+------------------------+--------------------+--------------------+
| IT | 5,470 | 4,781 |
+------------------------+--------------------+--------------------+
| Warehouse | 2,211 | 2,749 |
+------------------------+--------------------+--------------------+
| Office fixtures and | 758 | 670 |
| fit-out | | |
+------------------------+--------------------+--------------------+
| Total | 8,439 | 8,200 |
+------------------------+--------------------+--------------------+
We continued to focus on the development and enhancement of our core systems,
with IT expenditure increasing by GBP0.7 million. During the year we completed
the replacement and enhancement of our warehouse management system and the
migration to a tier 1 data centre. In 2010, we also commenced work on the
replacement of our buying and merchandising system, which will complete in 2011.
Although, warehouse expenditure was lower than prior year, we have continued to
invest in measures to improve storage capacity and aid "pick and pack"
efficiency.
We anticipate that our ongoing capital expenditure for 2010/11 will be
approximately GBP10 million and that it will be deployed in a similar profile to
2009/10.
In addition, we are forecasting to spend a further GBP20 million of capital
expenditure in relation to the new warehouse this financial year. We expect that
this investment will enable the Group to fulfil GBP600 million of annual sales
capacity with further expenditure in 2011/12 of GBP13 million and then GBP6
million in 2012/13, which will further increase the sales capacity. The capital
expenditure in relation to the warehousing will return to a more normalised
level thereafter. These additional investments, which are dependent on the
future sales trajectory, will create further sales fulfilment capacity for the
Group to satisfy demand from both our UK and international markets.
All of our investments continue to be funded from operating cash flow, with
additional short term facilities to fund any working capital movement or capital
expenditure as required. Currently the Group has committed facilities of up to
GBP20 million. The Group seeks to reduce exposures to interest rate, foreign
exchange and other financial risks, to ensure liquidity is available to meet the
foreseeable needs and to invest cash assets safely and profitably. Our hedging
strategy seeks to hedge our future foreign currency exposure for between 6 and
12 months forward. We do not engage in speculative trading in financial
instruments and transact only in relation to underlying business requirements.
Surplus funds are invested in short-term deposits with the objective of
maximising the return on surplus cash.
Nick Beighton
Finance Director
ASOS PLC
CONSOLIDATed statement of COMPREHENSIVE INCOME
for the YEAR ended 31 MARCH 2010
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| | | | 31 March | 31 |
| | | | | March |
+-----------------------------------+--+----+-----------+----------+
| | | | 2010 | 2009 |
+-----------------------------------+--+----+-----------+----------+
| | | | GBP'000 | GBP'000 |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| Revenue | | | 222,999 | 165,395 |
+-----------------------------------+--+----+-----------+----------+
| Cost of sales | | | (129,863) | (93,696) |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| Gross profit | | | 93,136 | 71,699 |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| Administrative expenses | | | (72,825) | (57,764) |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| Operating profit | | | 20,311 | 13,935 |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| Share of post tax losses of joint | | | (69) | (78) |
| venture | | | | |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| Finance income | | | 97 | 268 |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| Profit before tax | | | 20,339 | 14,125 |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| Income tax expense | | | (5,759) | (4,116) |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| Total comprehensive income attributable | 14,580 | 10,009 |
| to owners of the parent | | |
+-------------------------------------------+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
| | | | | |
| Earnings per share | | | | |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| Basic | | | 20.0p | 13.6p |
+-----------------------------------+--+----+-----------+----------+
| Diluted | | | 18.7p | 12.8p |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
| | | | | |
+-----------------------------------+--+----+-----------+----------+
ASOS PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2010
+--------------------------+------+-------------+----------+----------+
| | | | |
+--------------------------+------+------------------------+----------+
| | | | |
+--------------------------+------+------------------------+----------+
| | | 2010 | 2009 |
+--------------------------+------+------------------------+----------+
| | | | | GBP'000 |
| | | | GBP'000 | |
+--------------------------+------+-------------+----------+----------+
| Non-current assets | | | | |
+--------------------------+------+-------------+----------+----------+
| Goodwill | | | 1,060 | 1,060 |
+--------------------------+------+-------------+----------+----------+
| Other intangible assets | | | 3,918 | 1,245 |
+--------------------------+------+-------------+----------+----------+
| Property, plant and | | | 12,777 | 10,333 |
| equipment | | | | |
+--------------------------+------+-------------+----------+----------+
| Interest in joint | | | 153 | 162 |
| venture | | | | |
+--------------------------+------+-------------+----------+----------+
| Deferred tax asset | | | 6,636 | 3,562 |
+--------------------------+------+-------------+----------+----------+
| | | | 24,544 | 16,362 |
+--------------------------+------+-------------+----------+----------+
| | | | | |
+--------------------------+------+-------------+----------+----------+
| Current assets | | | | |
+--------------------------+------+-------------+----------+----------+
| Inventories | | | 37,728 | 28,085 |
+--------------------------+------+-------------+----------+----------+
| Trade and other | | | 4,835 | 3,404 |
| receivables | | | | |
+--------------------------+------+-------------+----------+----------+
| Derivative financial | | | 18 | - |
| assets | | | | |
+--------------------------+------+-------------+----------+----------+
| Cash and cash | | | 15,645 | 13,587 |
| equivalents | | | | |
+--------------------------+------+-------------+----------+----------+
| | | | 58,226 | 45,076 |
+--------------------------+------+-------------+----------+----------+
| | | | | |
+--------------------------+------+-------------+----------+----------+
| | | | | |
+--------------------------+------+-------------+----------+----------+
| Current liabilities | | | | |
+--------------------------+------+-------------+----------+----------+
| Trade and other payables | | | (34,839) | (34,135) |
+--------------------------+------+-------------+----------+----------+
| Current tax liabilities | | | (2,453) | (1,594) |
+--------------------------+------+-------------+----------+----------+
| | | | (37,292) | (35,729) |
+--------------------------+------+-------------+----------+----------+
| | | | | |
+--------------------------+------+-------------+----------+----------+
| Net current assets | | | 20,934 | 9,347 |
+--------------------------+------+-------------+----------+----------+
| | | | | |
+--------------------------+------+-------------+----------+----------+
| Net assets | | | 45,478 | 25,709 |
+--------------------------+------+-------------+----------+----------+
| | | | | |
+--------------------------+------+-------------+----------+----------+
| | | | | |
+--------------------------+------+-------------+----------+----------+
| Equity | | | | |
+--------------------------+------+-------------+----------+----------+
| Called up share capital | | | 2,617 | 2,590 |
+--------------------------+------+-------------+----------+----------+
| Share premium | | | 4,138 | 3,608 |
+--------------------------+------+-------------+----------+----------+
| Employee Benefit Trust | | | (3,197) | (2,872) |
| reserve | | | | |
+--------------------------+------+-------------+----------+----------+
| Retained earnings | | | 41,920 | 22,383 |
+--------------------------+------+-------------+----------+----------+
| | | | | |
+--------------------------+------+-------------+----------+----------+
| Total equity | | | 45,478 | 25,709 |
+--------------------------+------+-------------+----------+----------+
| | | | | |
+--------------------------+------+-------------+----------+----------+
| | | | | |
+--------------------------+------+-------------+----------+----------+
ASos PLC
Consolidated Cash Flow Statement
for the YEAR ended 31 MARCH 2010
+------------------------------+--+----+----------+----+------------+------------+--------------+
| | | | | | |
+------------------------------+------------------+----+------------+------------+--------------+
| | | | | | |
+------------------------------+------------------+----+------------+------------+--------------+
| | | | 31 March | 31 March | |
+------------------------------+------------------+----+------------+------------+--------------+
| | | | 2010 | 2009 | |
+------------------------------+------------------+----+------------+------------+--------------+
| | | | GBP'000 | GBP'000 | |
+------------------------------+------------------+----+------------+------------+--------------+
| | | | | | |
+------------------------------+------------------+----+------------+------------+--------------+
| Operating profit | | | 20,311 | 13,935 | |
+--------------------------------------+----------+----+------------+------------+--------------+
| | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Adjusted for: | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Depreciation of property, plant and | | | 3,103 | 1,792 | |
| equipment | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Impairment of property, plant and | | | - | 362 | |
| equipment | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Amortisation of other intangible | | | 219 | 58 | |
| assets | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Increase in inventories | | | (9,643) | (16,391) | |
+--------------------------------------+----------+----+------------+------------+--------------+
| (Increase) / decrease in trade and | | | (1,449) | 1,374 | |
| other receivables | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Increase in trade and other payables | | | 1,622 | 15,487 | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Decrease in provision for other | | | - | (680) | |
| liabilities and charges | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Share-based payments charges | | | 918 | 262 | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Cash generated from trading | | | 15,081 | 16,199 | |
| operations | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Income taxes paid | | | (4,373) | (3,158) | |
+--------------------------------------+----------+----+------------+------------+--------------+
| | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Net cash generated from operating activities | | 10,708 | 13,041 | |
+-------------------------------------------------+----+------------+------------+--------------+
| | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Investing activities | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Payments to acquire other intangible | | | (2,892) | (1,303) | |
| assets | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Payments to acquire property, plant | | | (5,547) | (6,897) | |
| and equipment | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Payments to acquire investments in | | | (60) | (240) | |
| joint venture | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Finance income | | | 97 | 268 | |
+--------------------------------------+----------+----+------------+------------+--------------+
| | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Net cash outflow used in investing | | | (8,402) | (8,172) | |
| activities | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Financing activities | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Proceeds from issue of ordinary | | | 557 | 278 | |
| shares | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Purchase of own shares by Employee | | | (805) | (1,929) | |
| Benefit Trust | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Net cash used in financing | | | (248) | (1,651) | |
| activities | | | | | |
+---------------------------------+---------------+----+------------+------------+--------------+
| | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Net increase in cash and cash equivalents | | 2,058 | 3,218 | |
+-------------------------------------------------+----+------------+------------+--------------+
| | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Opening cash and cash equivalents | | | 13,587 | 10,369 | |
+--------------------------------------+----------+----+------------+------------+--------------+
| | | | | | |
+--------------------------------------+----------+----+------------+------------+--------------+
| Closing cash and cash equivalents | | | 15,645 | 13,587 | |
+--------------------------------------+----------+----+------------+------------+--------------+
| | | | | | | | |
+------------------------------+--+----+----------+----+------------+------------+--------------+
ASOS PLC
statements of changes in equity
for the year ended 31 MARCH 2010
Group
+--------------------+---+---------+---------+-----------+----------+---------+
| | | Called | | Retained | Employee | Total |
| | | up | Share | earnings1 | Benefit | |
| | | share | premium | | Trust | |
| | | capital | | | reserve | |
+--------------------+---+---------+---------+-----------+----------+---------+
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------+---+---------+---------+-----------+----------+---------+
| | | | | | | |
+--------------------+---+---------+---------+-----------+----------+---------+
| Balance as at 1 | | 2,564 | 3,356 | 10,967 | (943) | 15,944 |
| April 2008 | | | | | | |
+--------------------+---+---------+---------+-----------+----------+---------+
| | | | | | | |
+--------------------+---+---------+---------+-----------+----------+---------+
| Shares allotted in | | 26 | 252 | - | - | 278 |
| the year | | | | | | |
+--------------------+---+---------+---------+-----------+----------+---------+
| Purchase of shares | | | | | | |
| by Employee | | - | - | - | (1,929) | (1,929) |
| Benefit Trust | | | | | | |
+--------------------+---+---------+---------+-----------+----------+---------+
| Employee share | | - | - | 262 | - | 262 |
| schemes | | | | | | |
+--------------------+---+---------+---------+-----------+----------+---------+
| Total | | - | - | 10,009 | - | 10,009 |
| comprehensive | | | | | | |
| income | | | | | | |
+--------------------+---+---------+---------+-----------+----------+---------+
| Deferred tax on | | - | - | 711 | - | 711 |
| share options | | | | | | |
+--------------------+---+---------+---------+-----------+----------+---------+
| Current tax on | | - | - | 434 | - | 434 |
| items taken | | | | | | |
| directly to equity | | | | | | |
+--------------------+---+---------+---------+-----------+----------+---------+
| | | | | | | |
+--------------------+---+---------+---------+-----------+----------+---------+
| Balance as at 31 | | 2,590 | 3,608 | 22,383 | (2,872) | 25,709 |
| March 2009 | | | | | | |
+--------------------+---+---------+---------+-----------+----------+---------+
+--------------------+--+-------+-------+--------+---------+---------+
| Balance as at 1 | | 2,590 | 3,608 | 22,383 | (2,872) | 25,709 |
| April 2009 | | | | | | |
+--------------------+--+-------+-------+--------+---------+---------+
| | | | | | | |
+--------------------+--+-------+-------+--------+---------+---------+
| Shares allotted in | | 27 | 530 | - | - | 557 |
| the year | | | | | | |
+--------------------+--+-------+-------+--------+---------+---------+
| Purchase of shares | | - | - | - | (805) | (805) |
| by Employee | | | | | | |
| Benefit Trust | | | | | | |
+--------------------+--+-------+-------+--------+---------+---------+
| Employee share | | - | - | 1,420 | 480 | 1,900 |
| schemes | | | | | | |
+--------------------+--+-------+-------+--------+---------+---------+
| Total | | - | - | 14,580 | - | 14,580 |
| comprehensive | | | | | | |
| income | | | | | | |
+--------------------+--+-------+-------+--------+---------+---------+
| Deferred tax on | | - | - | 2,683 | - | 2,683 |
| share options | | | | | | |
+--------------------+--+-------+-------+--------+---------+---------+
| Current tax on | | - | - | 854 | - | 854 |
| items taken | | | | | | |
| directly to equity | | | | | | |
+--------------------+--+-------+-------+--------+---------+---------+
| | | | | | | |
+--------------------+--+-------+-------+--------+---------+---------+
| Balance as at 31 | | 2,617 | 4,138 | 41,920 | (3,197) | 45,478 |
| March 2010 | | | | | | |
+--------------------+--+-------+-------+--------+---------+---------+
1Retained earnings includes the share-based payments reserve
SELECTED NOTES TO THE FINANCIAL INFORMATION
PREPARATION of preliminary announcement
a) Basis of preparation
Whilst the information included in this preliminary announcement has been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards ("IFRSs") as adopted for use in the
European Union and as issued by the International Accounting Standards Board,
this announcement does not itself contain sufficient information to comply with
IFRSs.
The preliminary announcement for the 12 months to 31 March 2010 has been
prepared on a consistent basis with the financial accounting policies set out in
the Accounting Policies section of the ASOS PLC Annual Report and Accounts 2009.
b) Preliminary announcement
The financial information contained within this preliminary announcement for the
12 months to 31 March 2010 and 12 months to 31 March 2009 do not comprise
statutory financial statements for the purpose of the Companies Act 2006, but
are derived from those statements. The statutory accounts for ASOS PLC for the
12 months to 31 March 2009 have been filed with the Registrar of Companies and
those for the 12 months to 31 March 2010 will be filed following the Company's
annual general meeting.
In preparing the preliminary consolidated financial information, the Directors
have also made reasonable and prudent judgements and estimates and prepared the
preliminary consolidated financial information on the going concern basis. The
preliminary consolidated financial information and management report contained
herein give a true and fair view of the assets, liabilities, financial position
and profit and loss of the Group.
The auditors' report on the accounts for the 12 months to 31 March 2010 was
unqualified and did not include a statement under Section 498 (2) or (3) of the
Companies Act 2006. The auditors' report on the accounts for the 12 months to 31
March 2009 was unqualified and did not include a statement under Section 237(2)
or (3) of the Companies Act 1985.
SEGMENTAL ANALYSIS
SELECTED NOTES TO THE FINANCIAL INFORMATION
PREPARATION of preliminary announcement
a) Basis of preparation
IFRS 8 'Operating Segments' requires operating segments to be determined based
on the Group's internal reporting to the Chief Operating Decision Maker
("CODM"). The CODM has been determined to be the Operating Board. The
Operating Board has determined that the primary segmental reporting format is
geographical, based on the Group's management and internal reporting structure.
The Operating Board assesses the performance of each segment based on revenue
and gross profit which excludes unallocated central costs which include items
such as warehouse costs, staff costs and other administration costs. The Group
has central distribution centres and one head office, which are in the United
Kingdom, therefore it is not practical to determine a segmental split of the
Balance Sheet.
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| | | 2010 | | | | 2009 | |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| | UK | International | Total | | UK | International | Total |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| | GBP000 | GBP000 | GBP000 | | GBP000 | GBP000 | GBP000 |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| Revenue | 160,014 | 62,985 | 222,999 | | 133,165 | 32,230 | 165,395 |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| Cost of | (93,710) | (36,153) | (129,863) | | (76,336) | (17,360) | (93,696) |
| sales | | | | | | | |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| Gross | 66,304 | 26,832 | 93,136 | | 56,829 | 14,870 | 71,699 |
| profit | | | | | | | |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| Administration | | | (72,825) | | | | (57,764) |
| expenses | | | | | | | |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| Operating | | | 20,311 | | | | 13,935 |
| profit | | | | | | | |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| Share of | | | (69) | | | | (78) |
| post tax | | | | | | | |
| losses of | | | | | | | |
| joint | | | | | | | |
| venture | | | | | | | |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| Finance | | | 97 | | | | 268 |
| income | | | | | | | |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| Profit | | | 20,339 | | | | 14,125 |
| before | | | | | | | |
| tax | | | | | | | |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| | | | | | | | |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
| | | | | | | | |
+----------------+----------+---------------+-----------+--+----------+---------------+----------+
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit attributable to
the owners of the Parent Company by the weighted average number of ordinary
shares in issue during the year. Own shares held by the ASOS.com Limited
Employee Benefit Trust are eliminated from the weighted average number of
ordinary shares.
Diluted earnings per share amounts are calculated by dividing the profit
attributable to the owners of the Parent Company by the weighted average number
of ordinary shares in issue during the year, adjusted for the effects of
potentially dilutive share options.
+--------------------------------------------+------------+------------+
| | 2010 | 2009 |
+--------------------------------------------+------------+------------+
| | No. of | No. of |
| | shares | shares |
+--------------------------------------------+------------+------------+
| | | |
+--------------------------------------------+------------+------------+
| Weighted average shares in issue for basic | 72,956,550 | 73,635,398 |
| earnings per share | | |
+--------------------------------------------+------------+------------+
| Effect of dilutive options | 4,940,859 | 4,508,766 |
+--------------------------------------------+------------+------------+
| Weighted average shares in issue for | 77,897,409 | 78,144,164 |
| diluted earnings per share | | |
+--------------------------------------------+------------+------------+
+--------------------------------------------+----------+----------+
| Earnings attributable to shareholders | 14,580 | 10,009 |
| (GBP'000) | | |
+--------------------------------------------+----------+----------+
| | | |
+--------------------------------------------+----------+----------+
| Basic earnings per share | 20.0p | 13.6p |
+--------------------------------------------+----------+----------+
| | | |
+--------------------------------------------+----------+----------+
| Diluted earnings per share | 18.7p | 12.8p |
+--------------------------------------------+----------+----------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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