TIDMASC
RNS Number : 7552U
ASOS PLC
08 April 2021
8 April 2021 ASOS plc
Global Online Fashion Destination
Interim Results for the six months to 28 February 2021
ASOS delivers record results driven by exceptional execution
Summary financial results
Six months Six months CCY(2)
GBPm(1) to to Change Change
28 29
February February
2021 2020
--------------------------- ---------------------- ---------------------- -------------------- -------------------
Group
revenues(3) 1,975.9 1,596.8 24% 25%
Retail sales(4) 1,919.9 1,551.4 24% 25%
Gross profit 890.0 750.0 19%
Gross margin 45.0% 47.0% (200bps)
Adjusted EBITDA
(5) 180. 8 95.3 90%
Adjusted EBITDA
Margin 9.2% 6.0% 320bps
Adjusted EBIT
(6) 116.2 34.6 236%
Adjusted EBIT
Margin 5.9% 2.2% 370bps
Reported profit
before tax 106.4 30.1 253%
Adjusted profit
before tax(7) 112.9 30.1 275%
Diluted
earnings per
share 81.9p 27.5p 198%
Net
cash/(debt)(8) 92.0 (163.6)
--------------------------- ---------------------- ---------------------- -------------------- -------------------
(1) All numbers subject to rounding throughout this document,
(2) Co nstant currency is calculated to take account of hedged rate
movements on hedged sales and spot rate movements on unhedged
sales, (3) Includes retail sales, delivery receipts and third party
revenues, (4) Any reference to total or retail sales throughout the
document is on a constant currency basis, (5) Adjusted EBITDA is
the reported earnings before interest, tax, depreciation,
amortisation, share-based payments charges and Topshop brands
acquisition and integration one-off costs (please see full
reconciliation on page 12), (6) Adjusted EBIT is the reported
earnings before interest, tax, Topshop brands acquisition and
integration one-off costs and amortisation of acquired intangible
assets (please see full reconciliation on page 12), (7) Adjusted
profit before tax is the reported profit before tax, Topshop brands
acquisition and integration one-off costs and amortisation of
acquired intangible assets (please see full reconciliation on page
12), (8) Net cash/(debt) is the cash and cash equivalents less
borrowings
Results Summary
-- Active customer base increased to 24.9m, up 1.5m over six months. Good growth in new customers balancing fewer
event-led reasons for existing customers to shop
-- Total sales growth of 25% reflecting a strong performance throughout the period underpinned by excellent
operational delivery
-- Exceptional UK performance with 39% sales growth and good growth in international territories; EU +18%, US +16%,
ROW +16%
-- Gross margin down 200bps driven by increased freight costs due to COVID-19 disruption, foreign exchange movements
and continued 'lockdown' category product mix
-- Adjusted EBITDA margin up 320bps to 9.2% reflecting net COVID-19 benefit and continued underlying improvements,
alongside disciplined reinvestment into customer momentum
-- Record adjusted PBT7 of GBP112.9m including net COVID-19 benefit (GBP48.5m)
-- Net cash position of GBP92.0m, reflecting robust underlying cash generation, GBP266.0m investment in Topshop
brands and the anticipated working capital unwind, following COVID-19 delays to peak stock build
Strategic & Operational Highlights
-- Topshop brands integration progressing to plan as part of our strategy to further develop the ASOS brands:
-- Successful customer relaunch on 22February within 3 weeks of completion
-- Great early customer momentum
-- One-off acquisition and integration costs now expected to be c.GBP10m (reduced from c.GBP20m)
-- ASOS platform continues to strengthen, enhancing customer choice and product availability:
-- Investment in pricing, principally in Europe, to further strengthen customer proposition
-- Flexibility in shaping product offer to demand supported further outperformance of 'lockdown' product
-- Flexible fulfilment progressing to plan; further deployment of unified stock pool between UK and US ahead
of further rollout across ASOS and subsequent development of partner fulfilment capabilities by the end of
this calendar year
-- Continued platform expansion with 120 new brands added, over 100 new delivery enhancements and 18,300 new
Click and Collect locations to expand total Click and Collect offering to 166,000 locations globally
-- E xceptional executional delivery with continued discipline and strong operational grip
-- Global infrastructure development on track, fit out commenced on Lichfield fulfilment centre, US
automation on track for H2 FY23
-- Following a multi-year development programme and an extended period of parallel run, Truly Global Retail (
TGR) system launched successfully, delivering significantly enhanced global retail planning and pricing
capability and provides an essential foundation for our flexible fulfilment aspirations
Outlook
-- Increasing focus and investment to support global growth opportunity against backdrop of acceleration in online
penetration and consolidation in fashion retail
-- Well positioned to capture demand for event-led product when lifestyles normalise; retaining caution on near term
consumer outlook driven by uncertain 20-something economic prospects, timing of global restrictions lifting and
possible further COVID-19 peaks
-- FY21 expectations increased in line with first half performance; outlook for the second half unchanged despite
pricing investment to enhance our consumer proposition and support long-term competitiveness
-- Expect second half to be cash generative driven by underlying performance, continued capex discipline and
supported by our normal working capital cycle
Nick Beighton, CEO, commented:
"We are delighted with our exceptional first-half performance
and proud of the work our teams have put in to achieve this. These
record results, which include robust growth in sales, customer
numbers and profitability, demonstrate the significant progress we
have made against all of our strategic priorities and the strength
of our execution capability. The swift integration of the Topshop
brands and the impressive early customer engagement is also
especially pleasing.
"Looking ahead, while we are mindful of the short-term
uncertainty and potential economic consequences of the continuing
pandemic, we are confident in the momentum we have built, and
excited about delivering on our ambition of being the number one
destination for fashion-loving 20-somethings."
Investor and analyst meeting:
There will be a webcast for investors and analysts that will
take place at 8.30am, 8 April 2021. To access live please join the
following link https://event.sparq.me.uk/asos-hy-results/ or dial
+44 203 051 2874, and use Meeting ID: 872 6488 6754. Q&A will
be run via live video on Zoom, for conference call attendees a text
question option will be offered.
A recording of this webcast will be available on the ASOS Plc
investor centre website later today:
http://www.asosplc.com/investors.aspx
For further information:
ASOS plc Tel: 020 7756 1000
Nick Beighton, Chief Executive Officer
Mat Dunn, Chief Financial Officer
Alison Lygo, Investor Relations
Taryn Rosekilly, Investor Relations
Website: www.asosplc.com/investors
Headland Consultancy Tel: 020 3805 4822
Susanna Voyle / Stephen Malthouse / Fay
Rajaratnam
JPMorgan Cazenove Tel: 020 7742 4000
Bill Hutchings / Mika Niskanen
Numis Securities Tel: 020 7260 1000
Alex Ham / Jonathan Wilcox / Tom Jacob
Forward looking statements:
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements" (including words such as
"believe", "expect", "estimate", "intend", "anticipate" and words
of similar meaning). By their nature, forward-looking statements
involve risk and uncertainty since they relate to future events and
circumstances, and actual results may, and often do, differ
materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with
respect to future events as at the date of this announcement. Save
as required by applicable law, the Company undertakes no obligation
to publicly revise any forward-looking statements in this
announcement, whether following any change in its expectations or
to reflect events or circumstances after the date of this
announcement.
Background note
ASOS is an online retailer for fashion-loving 20-somethings
around the world, with a purpose to give its customers the
confidence to be whoever they want to be. Through its
market-leading app and mobile/desktop web experience, available in
ten languages and in over 200 markets, ASOS customers can shop a
curated edit of 85,000 products, sourced from 850 of the best
global and local third-party brands and its mix of fashion-led
in-house labels - ASOS Design, ASOS Edition, ASOS 4505, Collusion,
Reclaimed Vintage, Topshop, Topman, Miss Selfridge and HIIT. ASOS
aims to give all of its customers a truly frictionless experience,
with an ever-greater number of different payment methods and
hundreds of local deliveries and returns options, including
Next-Day Delivery and Same-Day Delivery, dispatched from
state-of-the-art fulfilment centres in the UK, US and Germany.
ASOS' websites attracted 248.6m visits during February 2021
(February 2020(1) : 214.1m) and as at 28 February 2021 had 24.9m
active customers(2) (29 February 2020: 22.3m), of which 7.8m were
located in the UK and 17.1m were located in international
territories (29 February 2020: 6.8m in the UK and 15.5m
internationally).
(1) Restated visits, previously reported number 215.4m; visits
for February 2020 include an extra day, on a like for like basis
February 2020 visits would have been 206.7m, (2) Defined as having
shopped in the last 12 months as at 28/29 February
ASOS plc ("the Group")
Global Online Fashion Destination
Interim Results for the six months to 28 February 2021
Overview
ASOS delivered a strong performance in the first half of the
year with total sales growth of 25% and a record adjusted Profit
Before Tax of GBP112.9m, an increase of GBP82.8m on the previous
half-year.
In the first half of the year, we have seen a continuation of
the product mix shift away from occasion wear into casualwear. ASOS
has undoubtedly been a beneficiary of the consumer shifts
accelerated by COVID-19 , particularly in the UK and most of
Europe. We are pleased with our speed and agility in ensuring
relevant assortment and availability, which has enabled us to
capture strong growth in key 'lockdown' categories. ASOS is,
however, famous for its 'going-out' and occasion wear and this has
presented a significant headwind for the business in our US and ROW
markets, which have a higher mix of ASOS Design, and we
subsequently saw more muted growth in these areas. We continued to
target awareness and have upweighted our marketing investment to
drive engagement and stimulate demand.
During the period, we were presented with the compelling
opportunity to acquire four iconic brands that are a completely
natural fit with ASOS. Topshop, Topman, Miss Selfridge and HIIT are
strong brands that resonate with our core 20-something
fashion-loving consumers and have dropped seamlessly on to our
platform. We know we can leverage our market-leading capabilities
to grow these brands and we are confident in achieving strong
financial returns with a double-digit return on capital in the
first full year of completion. Finally, our 100-day plan is
progressing well with all key milestones delivered to date.
As our strong results indicate, we are, 12 months on from the
start of the pandemic, a more agile, flexible and resilient
organisation, with strong operational grip and robust cost
discipline. We continue to foresee economic disruptions and
sporadic lockdowns as countries around the world roll- out
vaccination programmes and react to new variants. However, we are
confident in our ability to navigate the uncertainty ahead and
continue to progress towards being the number one destination for
fashion-loving 20-somethings worldwide.
Financial Performance
ASOS delivered another exceptionally strong half, with record
adjusted Profit Before Tax of GBP112.9m (excluding Topshop, Topman,
Miss Selfridge and HIIT one-off acquisition and integration costs
and amortisation of acquired intangible assets). After backing out
net COVID-related tailwinds we have doubled our profitability.
Adjusted EBIT grew to GBP116.2m which represented an adjusted EBIT
margin of 5.9%, an improvement of 370bps year on year. Our
underlying profitability continued to benefit from our focus on the
removal of non-strategic costs and we are on track to deliver the
benefits we expected at the start of the year.
COVID-19 continued to impact our performance with
returns-related tailwinds in warehouse and distribution costs
driving improvements in our operating cost efficiency, although
these benefits were partially offset by an increase in freight
costs and less favourable product mix resulting in a lower gross
margin. Overall we saw a net COVID-19 tailwind of GBP48.5m - a
benefit which we expect to reverse once we see restrictions lifted
on the hospitality and tourism sectors. Whilst there remains a
level of uncertainty as we progress through the year, we expect to
see returns rates normalise as we start to see the removal of
social restrictions, particularly in markets where vaccine
roll-outs are proceeding as planned
We closed the half in a net cash position of GBP92.0m,
reflecting good underlying cash generation, together with
investment into the Topshop brands acquisition (GBP266.0m) and the
anticipated working capital unwind. Capital expenditure totalled
GBP64.7m (excluding Topshop brands acquired assets and IFRS16
capitalised leases) as we invested in the final stages of TGR
development, automation of the Euro hub, our new fourth fulfilment
centre in Lichfield and additional projects across our technology
platforms. Looking to the remainder of the year, our capex guidance
for the full year remains unchanged at c.GBP190m. Accordingly, we
expect the second half to be cash generative, driven by our
underlying performance and continued discipline in capital
expenditure, together with support from our normal working capital
cycle.
Performance Across the Five Strategic Pillars
Our vision is to be the number one destination for
fashion-loving 20-somethings worldwide, and in order to realise
this we have developed five strategic priorities designed to shape
our focus across the business over the next few years. These five
strategic priorities span our business, shape our intention in each
area and are defined as follows:
1. We will become a truly global retailer by enhancing our
systems, infrastructure and teams for global trading and
accelerating growth in key markets to expand our local and overall
scale
2. We will grow our unique ASOS brands, continuing to penetrate
into under-served segments of the market whilst continuing to
improve our speed to market and price propositions
3. We will enhance our flexible and multi-brand platform;
partnering with brands to expand high potential categories,
implementing flexible fulfilment capabilities to expand customer
choice and continuing to improve the relevance of our customer
proposition and tech platform
4. We will improve our inspiring and personalised customer
experience through the application of data and artificial
intelligence to deliver the most engaging customer experience
5. And lastly, we will support our growth through an effective,
efficient and sustainable operating model, continuing to evolve and
develop our culture, organisation, and talent whilst further
driving responsible fashion into everything we do
1. Becoming a Truly Global Retailer
In order to become a truly global retailer, it is essential to
have the right systems and infrastructure in place. Our TGR system
has been developed to replace our legacy technology infrastructure
with cutting edge planning and retail execution capability to
support our global growth ambitions. We successfully launched TGR
across the business on 23 March 2021, which involved a full
overhaul of the internal ASOS operating systems across all areas of
the business. The new tools and processes will allow us to
significantly improve the way we plan and trade our products so we
can offer the best choice to our global customers. More accurate,
relevant and timely information will enable better decision-making,
and the overall system design supports better pricing flexibility
in each of our markets, allowing us greater agility and pricing
speed by market. TGR is also an essential enabler for our flexible
fulfilment aspirations.
We are further supporting our global growth ambitions through
appropriate capacity expansion. In October 2020, we announced that
we will be opening Lichfield Fulfilment Centre in the UK which will
support our UK and ROW territories and we are on track to deliver
this as originally planned. This facility will initially go live as
a manual facility with a total stockholding of 6m units and will
ultimately be automated in H2 of FY23. Automation will expand
available capacity to 17m units. In line with our announcement in
our P1 trading statement, we are also pleased to confirm that the
automation of the US warehouse in Atlanta will be completed in H2
of FY23, which will increase stock capacity by c.50% to 15.5m units
in total and a warehouse throughput of 3.1m units per week. This
will expand total net sales throughput in excess of GBP4bn to more
than GBP6bn, representing a GBP2bn net sales throughput capacity
expansion over the next 2 years.
2. Growing our Unique ASOS Brands
Having announced the acquisition of four iconic brands in
February: Topshop, Topman, Miss Selfridge and HIIT, we have
undertaken a comprehensive 100-day plan, developed prior to
completion of the deal , covering all aspects of the business
including people, finance, legal and warehousing. We are delighted
with our integration progress to date, and with the successful
completion of several key milestones since we announced the
acquisition including: ASOS web pages and app content going live,
the completion of critical data transfers, successful customer
relaunch supported by multi-channel marketing, automatic website
re-direct and the successful extraction of stock and processing
thereof. We continue to focus on integrating these brands into our
business to ensure seamless integration within 100 days post deal
completion.
Since acquisition, we have seen a significant step change in
site traffic to these brands post customer relaunch on 22 February
2021, with a 226% increase in traffic on launch day alone, driving
strong sales momentum across Topshop, Topman, Miss Selfridge and
HIIT. The US has seen the strongest growth rates along with the UK
and Germany, supported by strong social media campaigns - of which
our two TikTok launch campaigns were the most successful, with a
combined reach of over 200m and almost 3bn video views. We know
that these brands resonate well with our consumers in these three
countries and are pleased to see this translate into strong initial
growth momentum on our platform, in line with our expectations.
ASOS Design continued to show pleasing growth overall despite
the continued shift towards 'lockdown' categories. Excluding the
mix effect of a shift away from 'going out' categories, ASOS Design
delivered 24% growth year on year, underlining our agility and
flexibility to shift into casual and activewear categories.
Supported by this shift in consumer behaviour, we saw ASOS 4505
continue to capture growth in activewear, posting a 68% increase
year on year. Sportswear will remain a strategic focus going
forward, supported by the addition of HIIT to our portfolio.
Within our venture brands, Collusion broke into the top three
womenswear brands on the ASOS platform and continues to show
exceptional performance with 93% growth year on year and 70bps mix
growth within our overall portfolio. Reclaimed Vintage posted
stellar performance with 92% growth year on year, expanding its
share of product mix by +30bps. We launched As You, our fashion
forward product offering at a lower price point, manufactured at
speed to give us maximum flexibility. Since launch, we have
expanded our product offering from 120 products to 600 products
currently on offer and have sold over 200,000 units, the majority
of which are jersey tops and casual bottoms. Given that this is a
glamorous brand for the "Generation Me", "sassy" and "sexy"
customer who is unafraid to express herself, we are confident that
with the return to normal life, underpinned by the successful
vaccine roll-out in some of our key markets, we will see further
strong momentum in this brand.
3. Enhancing our Flexible and Multi-brand Platform
Across our platform, we saw further outperformance of 'lockdown'
categories supported by continued flexibility in shaping our
product offer to demand. Our Face + Body category grew by a record
114%, with activewear growing by 95% and casualwear growing by 69%.
In the first half of the year we continued to focus on newness and
expanded customer choice by adding 120 brands to the platform. Many
of these new brands are small, niche and on-trend, reflecting our
focus on continued freshness and originality.
Our focus remains on building out our platform offering to
ensure flexibility, convenience and a friction-free shopping
experience. By adding 18,300 new Click and Collect locations, we
have ensured that we offer options for customers that allow them to
select the most convenient delivery proposition. We have also
launched over 100 new delivery improvements focused on improving
our express delivery offering in 24 markets and our standard
delivery proposition in 5 markets. Our emphasis on sustainability
remains front and centre of our business and we are pleased to
offer an expanded electric vehicle deliveries in Central London to
the W1 and W2 postcodes, whilst our electric delivery vehicles in
Birmingham, Manchester and Leeds have been wrapped in ASOS
branding. We are also continually focused on ensuring our customers
are always able to pay in a manner that best suits them, and we
added two new payment methods in the first half to facilitate
this.
We made further progress with the development and roll -out of
flexible fulfilment. Flexible fulfilment seeks to provide our
customers with greater availability of the products that they want
to buy, wherever they want to buy them, by utilising intelligent
fulfilment to source stock from the most appropriate location. This
consists of two phases. In phase 1, which we refer to as 'Unified
Stock Pool', we are rolling out unified stock availability which
enables us to optimise our offering across our fulfilment centres.
This enables the shipment of significantly more brands from
Barnsley to US customers, alongside the existing brands shipped
from Atlanta, and has allowed us to optimise our stock pool in the
US. This Unified Stock Pool is the basis of the second phase of
flexible fulfilment programme known as 'Partner Fulfilment'.
'Partner Fulfilment' will allow direct to consumer fulfilment. This
augments ASOS' own supply chain with our suppliers capability to
directly fulfil customer orders, allowing greater stock
availability and product assortment. We expect this to benefit our
customer experience by providing more consistent stock availability
as well as, in time, allowing our consumer greater opportunities to
view a wider range of product, supporting our focus on consistent
newness and broad product assortment whilst still retaining our
curated edit based on the needs of our 20-something customer. We
expect to begin our roll-out at the end of the calendar year with a
limited number of brands.
4. Improving our Inspiring and Personalised Customer Experience
We are advancing our use of artificial intelligence (AI) and
data science to deliver an aspirational and personalised experience
for our customers and have delivered in excess of 30 customer
experience updates in the first half. These include the launch of
ratings and reviews on the app in October 2020 and so far we have
collected 1m reviews with an average star rating of 4.1. We have
iterated our "New In" recommendations whereby the first products
displayed will be recommended to a customer based on their shopping
behaviour; along with our "For You" recommendations for Android
devices which introduces a "For You" tab displaying personalised
recommendations. Other app improvements include the introduction of
a homepage countdown, to let customers know how much time remains
for them to buy at a discounted price which has driven an overall
increase in conversion rate, and the introduction of SecuredTouch
which has reduced the number of reCAPTCHA challenges by 98%,
reducing friction for the customer and removing this barrier for
the majority of our customer base.
5. Developing our Effective, Efficient and Sustainable Model
To operate efficiently we continue to actively review
non-strategic costs and drive improvements across different
business areas which include, focused marketing investment on more
efficient channels, maximising our input pricing through more
effective supplier negotiations, delivering cost savings through
improved processes in key areas such as returns, product
re-processing and customer care, along with focused investment into
improving basket metrics.
Fashion With Integrity (FWI) is the backbone of our business and
we operate with sustainability at the heart of everything we do. We
have progressed across each of our four pillars: product, people,
planet and packaging. Within our product pillar, we have launched
the Circular Design Collection, which sold 8,000 units in the first
6 weeks, and our social posts on the collection received 756,000
views and reached 3.3m customers. Within our people pillar, we have
developed an app for migrant workers in Mauritius and helped to
develop a migrant resource centre in Mauritius; both aimed at
enabling workers to file grievances. We have also led the UK
garment industry in raising standards through our involvement in
Apparel and General Merchandising Public and Private Protocol and
providing support to the worker remediation programme. We aim to
achieve full disclosure and transparency of Tiers 1 to 3 across the
Topshop, Topman, Miss Selfridge and HIIT supply chains by the end
of 2021. Within our planet pillar, we are pleased to have joined
the British Retail Consortium's Net Zero carbon roadmap and have
committed to setting Science-Based Targets. 75% of all ASOS
operations arenow powered by renewable electricity and on-site
solar panel scoping is underway. Lastly, within the packaging
pillar, we are collaborating with the Ellen
MacArthur Foundation and Centre for Sustainable Fashion on a
circular design roadmap.
Performance by Market
UK
We posted exceptional growth in the UK with retail sales growing
by 39% to GBP800.4m as we successfully capitalised on the trends in
the market, expanding our reach and presence. With lockdown
restrictions closing hospitality venues and physical retail stores
for much of the half, we saw a strong growth in online share. We
were further able to capture available demand through the dynamic
reshaping of our customer offer, whilst continuing to trade with
flexibility and agility during the period. High levels of brand
awareness in our home market coupled with strong customer loyalty
saw excellent growth across Face + Body (+139%), activewear (+121%)
and casualwear (+86%) categories in the UK, with Face + Body mix
share increasing by 300bps. We added 0.7m new customers in the UK
during the period, and despite increased churn of occasion wear
shoppers with fewer occasion-led reasons to purchase, we have seen
a more engaged customer profile added to the platform. We saw the
number of Premier customers step back by 5% with reduced demand for
our next day delivery offer, however we expect this to reverse once
social restrictions lift. We continued to see a trend of more
deliberate purchasing for much of the half which further enhanced
profitability.
EU
Europe continued to deliver strong performance with retail sales
growth of 18% along with 14% growth in our active customer base. As
with the second half of last year, the nature of COVID-19
restrictions in place in each market had an impact. We benefited
where both hospitality and retail were closed together as opposed
to geographies where retail was open and hospitality was shut. We
delivered strong growth particularly in France, Germany also saw
good results especially when non-essential retail closed in the
middle of the half. We continue to see exceptionally strong
performance in Ireland, which grew to become our 3(rd) largest
market in Europe; whereas Spain declined year on year, driven
largely by the economic impact of COVID-19 on our 20-something
consumer base and aggressive local competition. Across Europe, we
undertook a realignment of ASOS Design pricing in the half,
sharpening our overall consumer proposition and relevance in a
number of markets - an investment which we believe will support our
ambitions across the region in the future.
US
We delivered growth of 16% in retail sales and 6% in our
customer base in the US, driven primarily by growth in casualwear
and sneakers which is pleasing. The US has generally over-indexed
in ASOS Design mix and occasion wear, with overall awareness of our
other offerings lower than in the UK and Europe, which has proved
to be a COVID-19 headwind for us over the past year. We have also
seen an impact on our stock levels due to COVID-19; however we have
focused on improving our stock profile this year, supported by the
roll-out of flexible fulfilment in the US to drive additional stock
availability from our warehouse in Barnsley. We have continued to
build good momentum with traffic levels increasing in tandem with
lockdown easings in several states. We saw particularly strong
growth in site visits following the announcement of the Topshop
brands acquisition, reflective of the fact that these brands
resonate strongly with our US consumer.
Rest of World
Retail sales in ROW grew 16% year on year with our customer base
growing by 5%. In our ROW territories we saw our average basket
value increase by 10% and average basket size increase by 15%,
largely driven by the increase in our delivery thresholds prompted
by the disruption caused by COVID-19. This COVID-19 related freight
disruption, along with increasingly promotional driven environments
in our larger markets has resulted in headwinds for our business.
We saw sales in Russia decline as the market weakened and the
environment became increasingly competitive and price sensitive.
Australia, however, continued to grow well despite COVID-19 related
air travel disruptions that led to long lead times for delivery as
a result of the Australian border closure and significantly reduced
flights to the region. The MENA region continued to perform well
during the first half of the year, with Israel posting strong
growth rates in excess of 60%.
Outlook
Twelve months on from the start of the most disruptive period
ever experienced in retail, we are excited about the significant
growth opportunity ahead of us. We believe the shift to online
retail as a result of the pandemic and the accelerating
consolidation of offline retail has increased consumer confidence
in shopping online. In the coming months we expect a portion of
consumer demand will move back to stores as restrictions are eased
throughout our markets, but we expect online penetration to remain
structurally higher than pre COVID-19 levels. To capitalise on this
opportunity, we have increased our investment to support the global
growth opportunity, accelerating our investment in platform and
infrastructure, whilst investing in pricing, particularly in
Europe, to enhance our long-term customer perception and
competitiveness.
We continue to be mindful of the uncertainty across our markets,
notably the threat of renewed lockdown restrictions and the likely
economic impact on our core 20-something consumer. However, we
believe that we are well-positioned to capture the available demand
in the market as restrictions lift and consumer demand for occasion
wear returns. Whilst we expect returns to start to normalise in
line with restrictions easing, the extent and pace of this is, at
present, largely unknown, with freight rates expected to remain at
very elevated levels for the remainder of the second half.
As a result, our expectations for the full year have increased
in line with our outperformance in the first half, and our outlook
for the second half unchanged despite our incremental pricing
investment. We continue to expect the second half to be cash
generative, driven by our underlying performance and continued
discipline in capital expenditure together with support from our
normal working capital cycle.
We remain focused on our vision to become the number one
destination for fashion-loving 20-somethings. We are confident that
our unique ASOS Brands and our ASOS Platform, backed by our global
warehouse and technology capabilities will continue to support our
proven ability to offer our customers more and more of the products
they love.
Nick Beighton Mathew Dunn
Chief Executive Officer Chief Financial Officer
Financial review
Overview
Six months to 28 February 2021
UK EU US ROW Total
GBPm GBPm GBPm GBPm GBPm
Retail sales 800.4 580 .1 225 .7 313.7 1,919.9
Delivery receipts 19.2 14.3 7.0 9.1 49.6
Third party revenues 6.2 - 0.2 - 6.4
Total revenue 825.8 594 .4 232 .9 322.8 1,975.9
Cost of sales (1,085.9)
----------------
Gross profit 890.0
Distribution expenses (247.9)
Administrative
expenses (532.4)
----------------
Operating profit 109.7
Net finance expense (3.3)
----------------
Profit before tax 106.4
================
Six months Six months Change
to 28 February to 29 February
2021 2020
-------------------------------- ------------------------------- ------------------------------- ------------------
Active customers(1) (m) 24.9 22.3 12%
Average basket value (including
VAT) GBP71.23 GBP73.44 (3%)
Average units per basket 3.08 3.05 1%
Average selling price per unit
(including VAT) GBP23.10 GBP24.12 (4%)
Average order frequency(2) 3.47 3.54 (2%)
Total orders (m) 47.1 41.1 15%
Total visits(3) (m) 1,585.1 1,332.2 19%
Conversion(4) 3.0% 3.1% -10bps
Mobile device visits 86.3% 85.2% 110bps
-------------------------------- ------------------------------- ------------------------------- ------------------
(1) Defined as having shopped in the last 12 months as at 28/29
February, (2) Calculated as last 12 months' total orders divided by
active customers, (3) Restated visits, previously
reported number 1,333.9m, (4) Calculated as total orders divided
by total visits
Retail sales grew 25% year on year, with consistently strong
performance throughout the period. Our growth was in part driven by
exceptional performance in the UK where retail sales growth of 36%
in P1 accelerated further in P2 with growth of 46%. Equally as
pleasing, we saw solid progress in our international markets,
particularly in the EU up 18% on the previous year. We further
focused on growing our ASOS brands architecture with the
acquisition of Topshop, Topman, Miss Selfridge and HIIT. These
brands resonate with our core customer base and site traffic saw a
significant step-change post acquisition and re-launch.
The shift to more deliberate purchasing continued in the period
with the impact of further global lockdowns reflected in visits,
orders and retail sales. Visits growth was particularly pleasing,
up 19% as we capitalised on customer demand. ABV stepped back 3% on
the year as customers continued to purchase 'lockdown' categories
with lower ASP such as loungewear and Face + Body.
Our active customer base grew in the first half by 1.5m to reach
24.9m active customers, up 12% year on year. We saw an impact to
churn with a reduction in event-led shopping, however this was
offset by encouraging new and reactivated customer growth
throughout the period. There was particularly strong growth in the
UK as we invested to capture the available demand, following the
accelerated shift to online shopping.
Profit before tax increased by 253% to GBP106.4m after one-off
acquisition and integration costs of GBP5.9m and amortisation of
acquired intangible assets of GBP0.6m. Record profitability was
boosted by the continued COVID-19 impact of GBP48.5m, with
intentional purchasing driving more efficient sales growth,
offsetting COVID-19 related cost drags. Gross margin reduced by
200bps in the period driven by COVID-19 related freight and duty
costs, the continuation of the shift in product mix towards
'lockdown categories' and foreign exchange movements. However, the
decline in gross margin was more than offset by lower operating
costs as a percentage of sales. This was enabled by our continued
focus on the removal of non-strategic costs driven by: focusing our
marketing investment on more efficient channels; further alignment
of our structures; targeted procurement activity and increased
efficiency across our returns, product re-processing and customer
care processes.,
UK performance
UK KPIs Six months to 28 February
2021
Retail Sales +39%
Visits +31%
Orders +24%
Conversion -30bps
ABV (5%)
Active Customers 7.8m (+15%)
Our first half results have been outstanding in the UK,
reaffirming our strength in our home market. This has been
supported by a forced shift to online retail off the back of
continued lockdowns with both retail and hospitality venues closed.
Our total UK customer base grew 15% on the year, to 7.8m with
investment in the period supporting growth in new customers.
Visits growth was strong at 31%, reflecting the continued
improvements made to product, promotions and engagement in the
first half. ABV stepped back 5% on the year, a continuation of the
pronounced skew towards lower ASP 'lockdown' categories mix.
Despite increased churn of occasion wear shoppers, we saw early
signs of a more engaged new customer profile.
EU performance
EU KPIs Six months to 28 February
2021
Retail Sales +19% (+18% CC)
Visits +15%
Orders +12%
Conversion Flat
ABV (4%)
Active Customers 9.9m (+14%)
EU retail sales grew 18%, which was particularly pleasing in
light of the divergent country level approaches to lockdown which
had a clear impact on customer demand. Customer momentum continued
throughout the period, with 0.7m customers added in the first half
driving growth of 14% year on year. This was underpinned by
continued strong performance in the French market, as we benefited
from increasing online penetration, with customer growth of 20% and
strong Premier subscription growth of 29%. Germany saw good results
supported by non essential retail closure in the middle of the
half.
ABV stepped back 4% on the year, which, as with the UK,
reflected the pronounced skew towards lower ASP 'lockdown'
categories mix. Visits grew by 15%, slightly ahead of orders growth
at 12% with conversion flat year on year.
US performance
US KPIs Six months to 28 February
2021
Retail Sales +11% (+16% CC)
Visits +22%
Orders Flat
Conversion -60bps
ABV Flat
Active Customers 3.3m (+6%)
US retail sales grew by 16% as we continue to rebuild momentum
since COVID-19. Order growth was challenging, reflective of the
reduction in occasion wear customers, with a high level of occasion
wear mix in this market. This was exacerbated by stock build
pressures associated with COVID-19 particularly in the early part
of the period. Our focus on improving product flows to the US
warehouse, coupled with the extension of flexible fulfilment to a
greater number of brands held in our UK warehouse has improved our
stock offering and supported our growth since the start of the
financial year.
Traffic growth of 22% was particularly pleasing, with the growth
rate continuing to improve in the first half driven by increased
investment in promotional and marketing activity. The US total
active customer base grew at 6% year on year to 3.3m, with new
customer growth underpinning total customer growth.
ROW performance
ROW KPIs Six months to 28 February
2021
Retail Sales +11% (+16% CC)
Visits +10%
Orders (2%)
Conversion -20bps
ABV +10%
Active Customers 3.9m (+5%)
ROW retail sales grew by 16%. Growth in Australia remained
strong despite difficulties with our delivery proposition due to
COVID-19. Israel and Saudi Arabia continue to represent an
increasingly significant proportion of our ROW segment, with Israel
seeing strong growth in excess of 60% . Russia proved more
challenging, as overall demand slowed.
ABV increased 10% driven mainly by action taken to protect
basket economics in response to a significant increase in
airfreight costs. This drove a notable increase in items per basket
and also contributed to the reduction in conversion as customers
placed larger and more considered orders.
Gross margin
Gross margin reduced by 200bps in the period driven by COVID-19
related freight and duty costs, the continuation of the shift in
product mix to 'lockdown' categories and foreign exchange movements
as a result of GBP strengthening. Gross margin was also impacted by
our planned investment into promotional activity to drive customer
growth. These drags were partially offset by an improvement in our
underlying buying margin.
Operating expenses
Six months Six months
to 28 February to 29 February % of
GBPm 2021 % of sales 2020 sales Change
Distribution costs (247.9) 12.5% (223.5) 14.0% (11%)
Warehousing (171.9) 8.7% (161.3) 10.1% (7%)
Marketing (108.9) 5.5% (69.3) 4.3% (57%)
Other operating
costs (190.6) 9.7% (203.9) 12.8% 7%
Depreciation and
amortisation (61.0) 3.1% (57.4) 3.6% (6%)
-------------------- ---------------- ----------- ---------------- ------- -------
Total operating
costs (780.3) 39.5% (715.4) 44.8% (9%)
-------------------- ---------------- ----------- ---------------- ------- -------
Operating expenses increased 9% to GBP780.3m and decreased by
530bps as a percentage of sales. The year on year decrease in
distribution costs as a percentage of sales was partly driven by a
favourable return rate and therefore a lower corresponding
distribution cost. This has been partially offset by additional
delivery costs incurred due to COVID-19 surcharges, predominantly
impacting ROW markets. The improvement in warehousing costs as a
percentage of sales was also driven by a reduction in processing
returned items, coupled with increasing efficiency from Euro Hub
automation driving improved KPIs throughout the period.
Marketing costs increased by 120bps as a percentage of sales as
we upweighted our investment in digital marketing and social media
to capitalise on demand and drive new customer acquisition. Payroll
costs, within other operating costs, improved materially as a
percentage of sales driven by ongoing work to improve the
efficiency of our operational structure. Other cost savings were
driven by reduced travel and office utilities costs, with stricter
lockdown restrictions in place throughout most of the first half,
coupled with the continued progress on the removal of non-strategic
costs across the business.
Interest
Net interest costs were GBP3.3m in the period, a reduction of
GBP1.2m year on year as we incurred less costs on our revolving
credit facility which was undrawn during the period.
Taxation
The effective tax rate at 23.1% is broadly in line with the
prior year comparable (23.3%). Going forward, ASOS expects the
effective tax rate to continue to be approximately 100bps higher
than the prevailing rate of UK corporation tax due to permanently
disallowable items. Following the Chancellor's budget announcement
on 3 March 2021, the UK headline corporation tax rate is expected
to increase on 1 April 2023 from 19% to 25%. This has not yet been
substantively enacted, however to the extent the rate does increase
we would expect the effective tax rate to increase accordingly.
Earnings per share
Basic and diluted earnings per share increased by 197% to 82.1p
and 198% to 81.9p respectively (H120: 27.6p and 27.5p). With
increased profit after tax partly offset by the increase in
weighted average shares in issue mainly due to the equity placing
in April 2020.
Cash flow
There was a GBP315.5m decrease in net cash (cash and cash
equivalents less borrowings) in the period, including the net cash
outflow associated with the acquired assets of Topshop brands in
Feb 2021 of GBP266.0m. This compares with a GBP73.1m increase in
net debt in the previous period. The working capital cash outflow
of GBP133.6m reflects our typical working capital cycle combined
with the anticipated working capital unwind, following COVID-19
disruption to peak stock build of c.GBP89m. Capital expenditure of
GBP64.7m relates to cash capital expenditure of GBP60.6m and a
capital creditor increase of GBP4.1m.
Adjusted Measures
ASOS defines the below non-IFRS performance measures to allow
shareholders to better understand underlying financial performance,
both in comparison to prior periods and within the online retail
sector. Adjusting items have been isolated as a result of their
nature, frequency and materiality. Amortisation associated with the
acquired intangibles has been excluded and in FY21, one-off costs
associated with the Topshop brands acquisition and integration have
also been excluded. In addition, non-cash share-based payment
charge has been excluded from adjusted EBITDA to give a clearer
indication of cash generation and to allow for more representative
comparison with online retail peers.
Reported Adjusted Reported Adjusted Reported Adjusted
H1 2021 measures H1 2020 measures measures measures
GBPm H1 2021 H1 2020 change Change
---------------------------- --------- ---------- --------- ---------- ---------- ----------
Adjusting items:
Share-based payment
charges (4.2) (3.3)
Topshop brands acquisition (5.9) -
and integration
one-off costs
Amortisation of (0.6) -
acquired intangible
assets*
---------------------------- --------- ---------- --------- ---------- ---------- ----------
Total sales 1,975.9 1,975.9 1,596.8 1,596.8 24% 24%
PBT 106.4 112.9 30.1 30.1 253% 275%
PBT margin 5.4% 5.7% 1.9% 1.9% 350bps 380bps
Net interest (3.3) (3.3) (4.5) (4.5)
116.
EBIT 109.7 2 34.6 34.6 217% 236%
EBIT margin 5.6% 5.9% 2.2% 2.2% 340bps 370bps
Depreciation and
amortisation (61.0) (61.0) (57.4) (57.4)
EBITDA 170.7 180.8 92.0 95.3 86% 90%
EBITDA margin 8.6% 9.2% 5.8% 6.0% 280bps 320bps
---------------------------- --------- ---------- --------- ---------- ---------- ----------
*Intangible assets acquired through Topshop brands
acquisition
The definitions for the above adjusted measures are as
follows:
-- Adjusted PBT is the profit before tax, Topshop brands acquisition and integration one-off costs and amortisation
of acquired intangible assets. Adjusted PBT margin is the Adjusted PBT divided by total sales
-- Adjusted EBIT is the profit before tax, interest, Topshop brands acquisition and integration one-off costs and
amortisation of acquired intangible assets. Adjusted EBIT margin is the Adjusted EBIT divided by total sales
-- Adjusted EBITDA is the profit before tax, interest, depreciation, amortisation, share-based payment charges and
Topshop brands acquisition and integration one-off costs. Adjusted EBITDA margin is the Adjusted EBITDA divided
by total sales
Consolidated UNAUDITED Statement of Total Comprehensive
Income
Interim Results for the six months to 28 February 2021
Six months Six months Year to
to to
28 February 29 February 31 August
2021 2020 2020 (audited)
(unaudited) (unaudited)
GBPm GBPm GBPm
Revenue 1,975.9 1,596.8 3,263.5
Cost of sales (1,085.9) (846.8) (1,716.1)
------------------------------------ -------------- ------------------------- -----------------
Gross profit 890.0 750.0 1,547.4
Distribution expenses (247.9) (223.5) (444.6)
Administrative expenses (532.4) (491.9) (951.7)
Operating profit 109.7 34.6 151.1
Finance income 0.1 0.2 0.5
Finance expense (3.4) (4.7) (9.5)
Profit before tax 106.4 30.1 142.1
Income tax expense (24.6) (7.0) (28.8)
------------------------------------ -------------- ------------------------- -----------------
Profit for the period 81.8 23.1 113.3
------------------------------------ -------------- ------------------------- -----------------
Profit for the period attributable
to owners of the parent company 81.8 23.1 113.3
------------------------------------ -------------- ------------------------- -----------------
Net translation movements offset
in reserves (0.1) (0.4) 0.1
Net fair value gains/(losses)
on derivative financial assets 31.5 62.3 (13.9)
Income tax relating to these
items (6.0) (9.5) 2.9
------------------------------------ -------------- ------------------------- -----------------
Other comprehensive income/(loss)
for the period (1) 25.4 52.4 (10.9)
------------------------------------ -------------- ------------------------- -----------------
Total comprehensive income for
the period attributable to owners
of the parent company 107.2 75.5 102.4
------------------------------------ -------------- ------------------------- -----------------
Earnings per share (Note 4)
Basic 82.1p 27.6p 126.3p
Diluted 81.9p 27.5p 125.6p
------------------------------------ -------------- ------------------------- -----------------
(1) All items of other comprehensive income will subsequently be
reclassified to profit or loss
Consolidated UNAUDITED Statement of Changes in EquitY
Interim Results for the six months to 28 February 2021
Employee
Called Benefit
up share Share Retained Trust reserve Hedging Translation Total
capital premium earnings(1) (EBT) (2) reserve reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 September
2020 3.5 245.7 577.0 2.0 (15.8) (2.1) 810.3
Profit for the
period - - 81.8 - - 81.8
Other
comprehensive
income/(loss)
for
the period - - - - 25.5 (0.1) 25.4
---------- -------------- ------------- --------------- --------- ------------ --------
Total
comprehensive
income/(loss)
for
the period - - 81.8 - 25.5 (0.1) 107.2
---------- -------------- ------------- --------------- --------- ------------ --------
Net cash
received
on exercise
of shares
from EBT(2) - - - 0.2 - - 0.2
Share-based
payments
charge - - 5.0 - - - 5.0
Tax relating
to share
option scheme - - 1.4 - - - 1.4
---------- -------------- ------------- --------------- --------- ------------ --------
Balance as at
28
February 2021 3.5 245.7 665.2 2.2 9.7 (2.2) 924.1
========== ============== ============= =============== ========= ============ ========
Called Employee
up Benefit
share Share Retained Trust reserve Hedging Translation Total
capital premium earnings(1) (EBT)(2) reserve reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 September
2019 2.9 6.9 449.5 1.3 (4.8) (2.2) 453.6
Profit for the
period - - 23.1 - - - 23.1
Other
comprehensive
income/(loss)
for the
period - - - - 52.8 (0.4) 52.4
-------- ------------- ------------- ---------------- ---------- -------------- --------
Total
comprehensive
income/(loss)
for the
period - - 23.1 - 52.8 (0.4) 75.5
-------- ------------- ------------- ---------------- ---------- -------------- --------
Net cash
received on
exercise of
shares
from EBT(2) - - - 0.7 - - 0.7
Share-based
payments
charge - - 4.0 - - - 4.0
Tax relating
to share
option scheme - - (0.4) - - - (0.4)
-------- ------------- ------------- ---------------- ---------- -------------- --------
Balance as at
29 February
2020 2.9 6.9 476.2 2.0 48.0 (2.6) 533.4
======== ============= ============= ================ ========== ============== ========
(1) Retained earnings includes share-based payments reserves
(2) Employee Benefit Trust and Link Trust
CONSOLIDATED UNAUDITED STATEMENT OF CHANGES IN EQUITY
(CONTINUED)
Employee
Benefit
Trust
Called reserve
up share Share Retained (EBT) Hedging Translation Total
capital premium earnings(1) (2) reserve reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 September 2019 2.9 6.9 449.5 1.3 (4.8) (2.2) 453.6
Profit for the year - - 113.3 - - - 113.3
Other comprehensive
loss for the year - - - - (11.0) 0.1 (10.9)
---------- ----------- ------------- --------- --------- ------------ --------
Total comprehensive
income/(loss) for the
year - - 113.3 - (11.0) 0.1 102.4
Proceeds from share
issue, net of
transaction costs 0.6 238.8 - - - - 239.4
Net cash received on
exercise of shares
from EBT(2) - - - 0.7 - - 0.7
Share-based payments
charge - - 12.9 - - - 12.9
Tax relating to share
option scheme - - 1.3 - - - 1.3
---------- ----------- ------------- --------- --------- ------------ --------
Balance as at 31 August
2020 3.5 245.7 577.0 2.0 (15.8) (2.1) 810.3
========== =========== ============= ========= ========= ============ ========
(1) Retained earnings includes share-based payments reserves
(2) Employee Benefit Trust and Link Trust
Consolidated UNAUDITED Statement of Financial PositioN
Interim Results for the six months to 28 February 2021
At At At
28 February 29 February 31 August
2021 2020 2020 (audited)
(unaudited) (unaudited)
GBPm GBPm GBPm
Non-current assets
Goodwill 23.4 1.1 1.1
Other intangible assets 613.6 339.7 346.9
Property, plant and equipment 628.6 640.1 616.8
Derivative financial assets 14.5 31.1 4.8
1,280.1 1,012.0 969.6
------------- ------------------ -----------------
Current assets
Inventories 694.6 581.6 532.4
Trade and other receivables 86.8 84.0 60.3
Derivative financial assets 27.9 40.6 19.6
Cash and cash equivalents 92.0 8.9 407.5
Current tax asset - 1.8 -
-------------
901.3 716.9 1,019.8
------------- ------------------ -----------------
Current liabilities
Trade and other payables (861.3) (660.3) (806.1)
Borrowings - (172.5) -
Lease liabilities (20.0) (23.2) (22.3)
Derivative financial liabilities (24.1) (11.0) (25.4)
Current tax liability (9.0) - (0.3)
(914.4) (867.0) (854.1)
------------- ------------------ -----------------
Net current (liabilities)/assets (13.1) (150.1) 165.7
-------------
Non-current liabilities
Lease liabilities (309.6) (299.4) (290.8)
Deferred tax liability (22.0) (24.2) (11.4)
Derivative financial liabilities (11.3) (4.9) (22.8)
-------------
(342.9) (328.5) (325.0)
------------- ------------------ -----------------
Net assets 924.1 533.4 810.3
============= ================== =================
Equity attributable to owners
of the parent
Called up share capital 3.5 2.9 3.5
Share premium 245.7 6.9 245.7
Employee Benefit Trust reserve(1) 2.2 2.0 2.0
Hedging reserve 9.7 48.0 (15.8)
Translation reserve (2.2) (2.6) (2.1)
Retained earnings 665.2 476.2 577.0
------------- ------------------ -----------------
Total equity 924.1 533.4 810.3
============= ================== =================
(1) Employee Benefit Trust and Link Trust
Consolidated UNAUDITED Statement of Cash Flows
Interim Results for the six months to 28 February 2021
Six months Six months Year to
to to
28 February 29 February 31 August
2021 2020 2020 (audited)
(unaudited) (unaudited)
GBPm GBPm GBPm
Operating profit 109.7 34.6 151.1
------------- -------------------- ----------------------
Adjusted for:
Depreciation of property, plant
and equipment 31.0 27.4 57.4
Amortisation of other intangible
assets 30.0 30.0 60.0
Fixed asset impairment 0.1 0.6 4.1
(Increase)/decrease in inventories (159.4) (44.8) 4.4
Decrease/(increase) in trade
and other receivables 0.7 (16.3) 6.5
Increase/(decrease) in trade
and other payables 25.1 (21.2) 129.4
Share based payments charge 4.2 3.3 10.9
Other non-cash items (1.6) (0.5) -
Income tax paid (15.1) (3.9) (20.5)
------------- -------------------- --------------------------
Net cash inflow from operating
activities 24.7 9.2 403.3
Investing activities
Payments to acquire other intangible
assets (50.9) (43.9) (88.4)
Payments to acquire property,
plant and equipment (9.7) (25.7) (28.2)
Payments to acquire assets in
a business combination (266.0) - -
Finance income 0.1 0.2 0.5
Net cash used in investing activities (326.5) (69.4) (116.1)
Financing activities
Proceeds from share issue, net
of transaction costs - - 239.4
Net cash inflow relating to EBT(1) 0.2 0.7 0.7
Proceeds/(repayments) of borrowings - 97.5 (75.0)
Principal portion of lease liabilities (11.1) (10.0) (21.4)
Finance expense (2.8) (3.3) (8.0)
Net cash ( utilised)/generated
in financing activities (13.7) 84.9 135.7
Net (decrease)/increase in cash
and cash equivalents (315.5) 24.7 422.9
============= ==================== ======================
Opening cash and cash equivalents 407.5 (15.5) (15.5)
Effect of exchange rates on cash
and cash equivalents - (0.3) 0.1
------------- -------------------- ----------------------
Closing cash and cash equivalents 92.0 8.9 407.5
============= ==================== ======================
(1) Employee Benefit Trust and Link Trust
Notes to the financial information
Interim Results for the six months to 28 February 2021
1. Preparation of the consolidated financial information
a) General information
ASOS Plc ('the Company') and its subsidiaries (together, 'the
Group') is a global fashion retailer. The Group sells products
across the world and has websites targeting the UK, US, Australia,
France, Germany, Spain, Italy, the Netherlands, Russia, Sweden,
Denmark and Poland. The Company is a public limited company which
is listed on the Alternative Investment Market (AIM) and is
incorporated and domiciled in the UK. The address of its registered
office is Greater London House, Hampstead Road, London, NW1
7FB.
The interim financial statements have been reviewed, not
audited, and were approved by the Board of Directors on
7 April 2021.
b) Basis of preparation
The interim financial statements for the six months to 28
February 2021 have been prepared in accordance with IAS 34,
"Interim Financial Reporting" as issued by the IASB and the AIM
Rules for Companies. The interim financial statements should be
read in conjunction with the Group's Annual Report and Accounts for
the year to 31 August 2020, which was prepared in accordance with
IFRSs as adopted by the European Union.
The interim financial statements have been reviewed, not
audited, and do not constitute statutory accounts within the
meaning of section 434 of the Companies Act 2006. The Annual Report
and Accounts for the year to 31 August 2020 have been filed with
the Registrar of Companies. The auditors' report on those accounts
was unqualified, did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying the report and did not contain statements under s498 of
the Companies Act 2006.
The Group's business activities, together with the factors that
are likely to affect its future developments, performance and
position, are set out on pages 4 to 8. The Financial Review on
pages 9 to 12 describes the Group's financial position and cash
flows.
Going concern
The Directors have reviewed current performance and cash flow
forecasts, and are satisfied that the Group's forecasts and
projections, taking account of potential changes in trading
performance, show that the Group will be able to operate within the
level of its available facilities for the foreseeable future . The
Directors have therefore continued to adopt the going concern basis
in preparing the Group's financial statements.
Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge, the
interim financial statements have been prepared in accordance with
IAS 34 "Interim Financial Reporting" as adopted by the European
Union a nd the AIM Rules for Companies , and that the interim
management report includes a fair review of the information
required.
Accounting policies
The interim financial statements have been prepared in
accordance with the accounting policies set out in the Annual
Report and Accounts for the year to 31 August 2020.
2. Principal risks and uncertainties
The Board considers that the principal risks and uncertainties
which could impact the Group over the remaining six months of the
financial year to 31 August 2021 to be unchanged from those set out
in the Annual Report and Accounts for the year to 31 August 2020,
aside from the integration of the acquired Arcadia brands' trade
and assets into the Group's processes. The applicable risks are
summarised as follows:
-- Operational risks, including:
- Transformation projects are delayed or fail to deliver;
- The increasing complexity of our operating model;
- Challenges with stock sourcing resulting in stock shortage;
- Developments in the COVID-19 pandemic;
- Understanding local market context, globally;
- The impact of Brexit;
- Integration of Arcadia brands' trade and assets; and
- Ethical trade or sourcing issues in our supply chain
-- Market risks, including:
- Geopolitical uncertainty;
- Shift in e-commerce market dynamics;
- Cyber threat and data security;
- Key third party supplier or service provider failure and business continuity; and
- Foreign exchange movement
These are set out in detail on pages 32 to 35 of the Group's
Annual Report and Accounts for the year to 31 August 2020, a copy
of which is available on the Group's website, www.asosplc.com.
Information on financial risk management is also detailed on pages
99 to 102 of the Annual Report.
3. 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 Committee which receives
information on the basis of the Group's operations in key
geographical territories, based on the Group's management and
internal reporting structure. The Executive Board assesses the
performance of each segment based on revenue and KPIs reflecting
territory and customer performance.
Six months to 28 February 2021 (unaudited)
UK EU US ROW Total
GBPm GBPm GBPm GBPm GBPm
Retail sales 800.4 580.1 225.7 313.7 1,919.9
Delivery receipts 19.2 14.3 7.0 9.1 49.6
Third party revenues 6.2 - 0.2 - 6.4
Total revenue 825.8 594.4 232.9 322.8 1,975.9
Cost of sales (1,085.9)
-----------------
Gross profit 890.0
Distribution expenses (247.9)
Administrative expenses (532.4)
-----------------
Operating profit 109.7
Net finance expense (3.3)
-----------------
Profit before tax 106.4
=================
Six months to 29 February 2020 (unaudited)
UK EU US ROW Total
GBPm GBPm GBPm GBPm GBPm
Retail sales 577.1 488.1 202.6 283.6 1,551.4
Delivery receipts 15.8 11.4 7.1 6.9 41.2
Third party revenues 4.1 - 0.1 - 4.2
Total revenue 597.0 499.5 209.8 290.5 1,596.8
Cost of sales (846.8)
----------------
Gross profit 750.0
Distribution expenses (223.5)
Administrative expenses (491.9)
----------------
Operating profit 34.6
Net finance expense (4.5)
----------------
Profit before tax 30.1
================
Year to 31 August 2020 (audited)
UK EU US ROW Total
GBPm GBPm GBPm GBPm GBPm
Retail sales 1,175.9 1,005.3 401.9 587.9 3,171.0
Delivery receipts 32.1 24.9 13.3 16.0 86.3
Third party revenues 6.1 - 0.1 - 6.2
Total revenue 1,214.1 1,030.2 415.3 603.9 3,263.5
Cost of sales (1,716.1)
------------------
Gross profit 1,547.4
Distribution expenses (444.6)
Administrative
expenses (951.7)
------------------
Operating profit 151.1
Net finance expense (9.0)
------------------
Profit before tax 142.1
==================
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 segment assets or liabilities is disclosed
in this note. The total amount of non-current assets excluding
goodwill and derivatives located in the UK is GBP967.7m (31 August
2020: GBP679.6m), EU: GBP198.9m (31 August 2020: GBP204.0m), US:
GBP75.6m (31 August 2020: GBP80.1m) and ROW: GBPnil (31 August
2020: GBPnil).
4. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to the owners of the parent company by the weighted
average number of ordinary shares in issue during the period. Own
shares held by the Employee Benefit Trust and Link Trust are
eliminated from the weighted average number of ordinary shares.
Diluted earnings per share is calculated by dividing the profit
attributable to the owners of the parent company by the weighted
average number of ordinary shares in issue during the period,
adjusted for the effects of potentially dilutive share options.
Six months Six months Year to
to to
28 February 29 February 31 August
2021 2020 (unaudited) 2020 (audited)
(unaudited)
No. of shares No. of shares No. of shares
Weighted average share capital
Weighted average shares in issue for
basic earnings per share 99,574,955 83,625,962 89,697,034
Weighted average effect of dilutive
options 303,613 249,987 443,417
-------------- ------------------- -----------------
Weighted average shares in issue for
diluted earnings per share 99,878,568 83,875,949 90,140,451
============== =================== =================
Earnings (GBPm)
Earnings attributable to owners of
the parent 81.8 23.1 113.3
================= ================ =================
Basic earnings per share 82.1p 27.6p 126.3p
Diluted earnings per share 81.9p 27.5p 125.6p
================= ================ =================
5. Capital expenditure and commitments
During the period, the Group capitalised intangible assets of
GBP296.9m (29 February 2020: GBP44.9m) and property, plant and
equipment of GBP44.4m (29 February 2020: GBP25.7m). GBP243.8m of
the intangibles capitalised relate to the acquisition described in
more detail in note 8. Included within the property, plant and
equipment additions is the right-of-use asset for the Group's 4th
fulfilment centre in Lichfield totalling GBP32.8m. At the period
end capital commitments contracted, but not provided for by the
Group, amounted to GBP49.1m (29 February 2020: GBP44.7m).
6. Contingent liabilities
From time to time, the Group is subject to various legal
proceedings and claims that arise in the ordinary course of
business, which due to the fast-growing nature of the Group and its
ecommerce base, may concern the Group's brand and trading name or
its product designs. All such cases brought against the Group are
robustly defended and a liability is recorded only when it is
probable that the case will result in a future economic outflow
which can be reliably measured.
At 28 February 2021, the Group had contingent liabilities of
GBP6.4m (H1 restated 2020: GBPnil) arising as a result of the
business combination, further detail has been disclosed in note
8.
The Group had previously reported contingent liabilities of
GBP21.6m as at 31 August 2020 and GBP21.2m as at 29 February 2020.
Upon further assessment, the Group identified that these
arrangements did not meet the definition of a contingent liability
and therefore contingent liabilities of GBPnil should have been
reported at 29 February 2020 and 31 August 2020.
7. Financial instruments
Six months Six months Year to
to 28 February to 29 February 31 August
2021 (unaudited) 2020 (unaudited) 2020 (audited)
GBPm GBPm GBPm
Financial assets
Derivative assets used for hedging
at fair value 42.4 71.7 24.4
Amortised cost(1) 72.1 67.2 50.2
Cash and cash equivalents 92.0 8.9 407.5
Financial liabilities
Derivative liabilities used for
hedging at fair value (35.4) (15.9) (48.2)
Lease liabilities (329.6) (322.6) (313.1)
Amortised cost(2) (861.3) (832.8) (794.4)
================== ================== ================
(1) Financial assets at amortised cost include trade and other
receivables but exclude prepayments
(2) Financial liabilities at amortised cost include trade
payables, accruals, borrowings and other payables
The Group operates internationally and is therefore exposed to
foreign currency transaction risk, primarily on sales denominated
in Euros, US dollars, Australian dollars and Russian roubles. The
Group's policy is to mitigate foreign currency transaction
exposures where possible and the Group uses financial instruments
in the form of forward foreign exchange contracts and vanilla
options to hedge future highly probable foreign currency cash
flows.
These forward foreign exchange contracts are classified above as
derivative financial liabilities and are classified as Level 2
financial instruments under IFRS 13, "Fair Value Measurement." They
have been fair valued at 28 February 2021 with reference to forward
exchange rates that are quoted in an active market, with the
resulting value discounted back to present value. The approach to
fair valuation can be seen within the Group's Annual Report and
Accounts for the year ended 31 August 2020. All forward foreign
exchange contracts were assessed to be highly effective during the
period to 28 February 2021. All derivative financial liabilities at
28 February 2021 mature within three years based on the related
contractual arrangements.
The Group has in place a GBP350.0m RCF available until July 2023
(with a one-year extension to July 2024 applicable subject to the
agreement of all parties). At 28 February 2021 the Group had drawn
down GBPnil of the RCF (31 August 2020: GBPnil).
8. Business combination
On 4 February 2021, the Group acquired the trade and assets of a
number of businesses under the Arcadia Group from the
administrators of Arcadia Group limited. The businesses were
purchased out of administration for total consideration of
GBP293.8m.
Purchase consideration GBPm
------------------------------ ------
Cash paid 264.8
Contingent consideration 29.0
Total purchase consideration 293.8
------------------------------ ------
The fair value of assets and liabilities acquired at that date
was GBP271.5m. This includes GBP219.4m in relation to the Topshop,
Topman, Miss Selfridge and HIIT brands and GBP52.1m of other net
assets. The fair value of assets acquired was less than the fair
value of the consideration by GBP22.3m, which has been recognised
as goodwill. The goodwill is attributable to the workforce, the
high profitability of the acquired business and expected synergies.
It will not be deductible for tax purposes.
The assets and liabilities recognised as a result of the
acquisition are as follows:
Fair value of net assets acquired
At 4 February 2021 (provisional) GBPm
-------------------------------------------------- -------
Intangible assets(1) 243.8
Inventories 11.0
Non-financial assets Ð inventory receivable 27.7
Total assets acquired 282.5
Contingent liability (6.4)
Deferred tax liability (4.6)
Total liabilities acquired (11.0)
-------------------------------------------------- -------
Net identifiable assets acquired at fair value 271.5
-------------------------------------------------- -------
Goodwill arising on acquisition 22.3
-------------------------------------------------- -------
Purchase consideration transferred 293.8
-------------------------------------------------- -------
(1) Intangible assets include brands of GBP219.4m relating to
Topshop, Topman, Miss Selfridge and HIIT and reflects their fair
value at the acquisition date. They are estimated to have a useful
economic life of between 10 and 30 years. Also acquired were
wholesale customer relationships with a fair value of GBP24.4m
which are estimated to have a useful economic life of 8 years.
Separately to the acquisition of the trade and assets outlined
above, the Group also agreed to assume a number of purchase orders
that were placed with suppliers by the Arcadia Group prior to the
acquisition. As at 28 February 2021 no inventory had been delivered
against these purchase orders. Inventory amounts will be recorded
in line with the requirements of IAS 2 upon receipt, when control
transfers.
In accordance with IFRS 3 'Business Combinations', the
acquisition accounting will be finalised within 12 months of the
acquisition date of 4 February 2021.
a) Acquisition-related costs
Acquisition-related costs of GBP2.0m were incurred and have been
included in administrative expenses in the statement of profit or
loss and in operating cash flows in the statement of cash
flows.
b) Contingent consideration
The contingent consideration arrangements primarily relate to
amounts ASOS will pay to Arcadia in relation to qualifying
inventory totalling GBP23.0m upon collection.
c) Contingent liability
A contingent liability of GBP6.4m has been recognised in
relation to employee and other liabilities. The Group's assessment
of the fair value of these liabilities represents the probability
adjusted possible outcome and the timing of any payment is expected
to be within the 12 month remeasurement period.
9. Related parties
The Group's related party transactions are with the Employee
Benefit Trust, Link Trust, key management personnel and other
related parties as disclosed in the Group's Annual Report and
Accounts for the year to 31 August 2020. There have been no
material changes to the Group's related party transactions during
the six months to 28 February 2021.
Independent review report to ASOS Plc
Report on the CONSOLIDATED interim financial statements
Our conclusion
We have reviewed ASOS Plc's consolidated interim financial
statements (the "interim financial statements") for the 6 month
period ended 28 February 2021 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as issued by the IASB and the AIM Rules for
Companies.
What we have reviewed
The interim financial statements comprise:
-- the consolidated unaudited statement of financial position as at 28 February 2021;
-- the consolidated unaudited statement of total comprehensive income for the period then ended;
-- the consolidated unaudited statement of cash flows for the period then ended;
-- the consolidated unaudited statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as issued by the IASB and the AIM Rules for
Companies.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the group is
applicable law and International Financial Reporting Standards
(IFRSs) as issued by the IASB.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim financial statements are the responsibility of, and
have been approved by the directors. The directors are responsible
for preparing the interim financial statements in accordance with
the AIM Rules for Companies which require that the financial
information must be presented and prepared in a form consistent
with that which will be adopted in the company's annual financial
statements.
Our responsibility is to express a conclusion on the interim
financial statements based on our review. This report, including
the conclusion, has been prepared for and only for the company for
the purpose of complying with the AIM Rules for Companies and for
no other purpose. We do not, in giving this conclusion, accept or
assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
PricewaterhouseCoopers LLP
Chartered Accountants
Watford
7 April 2021
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