Final Results
ASOS PLC
10 July 2007
FOR RELEASE
7.00 AM
10 JULY 2007
ASOS plc
('ASOS or Group')
A leading Internet based fashion retailer
Final Results for the year ended 31 March 2007
RESULTS
Key business highlights
* ASOS.com revenues up 116% to 42.6m
* Group profit before tax up 144% to £3.4m (2005/6: £1.4m)
* Group profit before insurance proceeds, goodwill write offs and tax
£3.1m
* Group profit including insurance proceeds but before goodwill write
offs and tax £3.6m
* Cash at bank up 44% to £5.4m
* Fully diluted EPS up 74% to 3.3p
* ASOS.com registered users 1.3m as at 9 July 2007
* Revenues for the 13 weeks to 30 June 2007 85% ahead year on year
For further information:
ASOS plc Tel: 020 7756 1000
Nick Robertson, Chief Executive
Jon Kamaluddin, Finance Director
Cubitt Consulting Tel: 020 7367 5100
Brian Coleman Smith / Leanne Denman / James Verstringhe
Seymour Pierce Tel: 020 7107 8000
Mark Percy / Nicola Marrin
ASOS plc is an Internet Retail business, established in June 2000 and admitted
to AIM in October 2001. ASOS.com is the UK's largest independent online fashion
and beauty retailer. Aimed primarily at Internet savvy 18-34 year olds, ASOS
offers over 4500 fashion products across womenswear, menswear, footwear,
accessories, jewellery and beauty. ASOS.com attracts over 2 million unique
visitors a month and has 1.3 million registered users as at 9 July 2007.
www.asos.com
ASOS plc
Final Results for the year ended 31 March 2007
CHAIRMAN'S STATEMENT
I am delighted to report another set of record results for the group. Revenues
continue their healthy progression, rising 116% to £42.6m, although the
comparative year was affected by the Buncefield fuel depot explosion in December
2005. Profit before tax rose 144% to £3.4m.
Dividend
Due to the continued programme of investment in the business, the Board has
decided that, as in previous years, no dividend will be payable. This policy
remains under constant review.
Board Changes
In April 2006 we welcomed both Robert Bready to the Board as Retail Director and
Peter Williams to the Board as Non Executive Director, and Chairman of both the
Audit and Remuneration Committees.
Colleagues
We are extremely grateful for the energy and commitment of our colleagues and
extend our sincere thanks to all of them for their hard work and dedication. I
am delighted that their efforts are being constantly recognised both internally
and externally. In the last 12 months alone the company has won:
More Magazine 'Most Addictive Online Shopping Site'
Company Magazine 'Best Online Shopping'
AIM Awards 'Best Communication'
Drapers Awards 'E-tailer of the Year' (Second year running)
Retail Week 'Online Retailer of the Year'
Getlippy Awards 'Best Online Shopping'
Drapers Footwear Awards 'E-tailer of the Year'
Business XL 'Growth Company of the Year'
Business XL 'Company of the Year'
Outlook
Revenues for the first 13 weeks of the new financial year are 85% ahead of last
year. With tougher comparables ahead and the all important Christmas trading
period yet to come, these figures should not be taken as an indication of the
outcome for the full year.
We remain committed to building the current business and driving both profit and
revenues. Sustaining the current growth levels requires a programme of continued
investment in both personnel and infrastructure which will be reflected in our
costs over the short to medium term.
Lord Alli
Chairman
9 July 2007
CHIEF EXECUTIVE'S STATEMENT
The online marketplace
According to the IMRG (Interactive Media in Retail Group) total online spend in
the UK is expected to grow by 40% in 2007 and a further 30% in 2008.
Business Review
The business continues to grow following significant investment in people,
infrastructure and marketing. ASOS.com remains the second most visited online
clothing store in the UK, behind Next.co.uk, attracting over two million
visitors a month. Of these, 7% make a purchase, resulting in 140,000 orders a
month. The average basket has increased from £39.32 (including VAT) to £42.80.
There are now over 4,500 lines available and on average our stock is turning
just under 6 times per year.
As at the 9 July 2007, ASOS.com has 1.3m registered users.
Through better buying and stock control, we have improved the gross margin on
revenues by 0.5 percentage points and are on course to increase this further in
the 07/08 financial year.
Key Performance Indicators
06/07 05/06
Retail margin (Excluding third party revenues) 44.3% 43.8%
Returns % to sales 21.7% 21.4%
Average Basket Value (Inc. VAT) £42.80 £39.32
Average units per basket 2.5 2.4
Average selling price per unit (Inc. VAT) £16.92 £16.54
% ASOS.com sales from North America 1.3% 1.6%
% ASOS.com sales from rest of world 9.2% 7.2%
ASOS Product Offer
Over the course of the year we invested heavily in our buying, merchandising,
design and garment technology departments as part of our strategy to broaden the
product offer and increase full price sell through. I am pleased to see the
positive effects of this coming through in both top line sales and achieved
margin.
Further investment in personnel is planned across the business to support our
growth plans.
The website
Most back office functions were upgraded and strengthened during the year. In
October 2006 we successfully implemented a new warehouse management system as
well as a new finance package.
Further changes are planned to the website in the coming months as part of our
commitment to continuous improvement and to showcase the increased product
offer. This includes better refining of product searches and improved
navigation. The category and product pages are also being updated.
Logistics
Twelve months into our partnership with Unipart Logistics Ltd, I am pleased to
report that we have made significant improvements to our service levels and our
cost per unit performance. The introduction of a new and improved warehouse
management system, a new 6 day / 2 shift pattern and a re-configured warehouse
have all contributed to a substantial reduction in average costs.
It was calculated that our current facility in Hemel Hempstead would support
retail sales of £50m. Growth in excess of our internal forecasts, two and a half
years ago, has meant that this level has been reached earlier than envisaged and
additional capacity is likely to be required this year. Together with Unipart we
will secure an additional site close to the existing facility. Our current
intention is to use the new site as overflow during the peak Christmas period
with a view to potentially moving the entire operation in early 2008.
Third party revenue
Our third party revenues grew 79% in the year to £656,000. These revenues
include banner advertising and revenue from list sales and inserts and revenue
derived from the ASOS magazine. We anticipate further growth in this area driven
by increased traffic to the website and the general shift by advertisers to
online advertising.
Marketing and the ASOS Magazine
In the second half of the year we diverted our advertising spend from
traditional magazine advertising and into our own monthly ASOS magazine. The
first six issues of the magazine were 68 pages and it was sent out with 100,000
orders each month. Since April 2007, the magazine has increased to 100 pages and
sent to 400,000 customers each month.
International
International revenues grew 158% in the year to £4.5m accounting for 10.5% of
sales. We are currently exploring ways of exploiting this further in 2007/8
prior to launching a potentially fully 'Internationalised' website within the
next few years.
Entertainment Marketing
The Board decided during the year that Entertainment Marketing (UK) Ltd was non
core and would be closed in order for management to focus all of its attention
on the significant growth opportunities within ASOS.com. The closure was
effective 31 March 2007.
Current Trading and Prospects
Revenues for the 13 weeks to 30 June 2007 are 85% ahead for the year. This
compares to the 65% increase for the similar period last year. With three
quarters of the year to go, including the important Christmas period, and
tougher comparables ahead it is too early to assess whether this performance
will continue for the full year.
However, we continue to outperform the market as a whole and have in place a
number of initiatives to drive continued organic growth. Further investment,
most notably in human resource, will be required to support these initiatives
and deliver our own ambitious growth targets.
We remain very confident about the prospects for ASOS and we look forward to
delivering sustainable growth.
Nick Robertson
Chief Executive
9 July 2007
FINANCE DIRECTOR'S REVIEW
Revenues
An analysis of Group revenues is shown below:
£'000s 2006/7 2005/6 Increase/
(Decrease)
Retail Sales 37,720 17,841 111%
Delivery Receipts 4,238 1,509 181%
Third Party Revenues 656 366 79%
ASOS.com Sales 42,614 19,716 116%
Entertainment Marketing* 488 601 (19%)
Group Sales 43,102 20,317 112%
* Entertainment Marketing was closed on 31 March 2007
During the prior year ASOS.com was closed for transactions for 5 weeks following
the Buncefield Fuel Depot Explosion. We believe that approximately £4m of sales
were lost as a result and that a sales uplift of 80% more accurately reflects
the performance of the business over the year.
The presentation in the accounts of delivery receipts has been changed since
last year and this income is now shown as revenue as opposed to netting it off
against the related cost. The prior year has also been re-presented.
Margin
The ASOS.com margin can be broken down as follows:
2006/7 2005/6
Retail Sales 44.3% 43.8%
Third Party Revenues 100.0% 100.0%
Total Margin ASOS.com 42.5% 40.8%
We anticipate that the retail sales margin will improve significantly over the
coming year and we are targeting an increase of around 3-4% points.
Operating costs
Operating costs, including depreciation, have increased in the year by £6.1m to
£15.3m.
Shown below is an analysis of the movements against last year:
£'000s 2006/7 2005/6
Payroll and staff costs 5,814 3,062
Office costs 614 403
Warehousing 5,435 3,527
Marketing 1,276 881
Production 668 360
IT 430 228
Depreciation 467 222
Finance, Legal and PLC Costs 558 448
Staff costs have increased by £2.8m to £5.8m as we continued to expand all areas
of the business in order to broaden our product ranges and to cope with the
increased activity.
Our strategy of broadening the product offer has been a key driver of revenue
growth. We will continue to broaden our ranges and, to facilitate this, we will
make further increases in our Buying and Merchandising team over 2007/8 which
will increase from 46 at the start of the year to 83 people by March 2008. We
are also increasing our headcount in IT and marketing in order to bring forward
some of the planned changes to our systems, improvements to our web site and to
support an increase in our marketing initiatives. Accordingly, our payroll and
staff costs will increase from £5.8m to approximately £9.0m for the year to
March 2008. Staff numbers will increase from 128 at the year end to around 210
by March 2008.
As planned, due to the expiry of our lease, we moved our London office to Camden
in May 2007. This move will increase head office costs in 2007/08 from £0.6m to
£1.6m.
Warehousing costs have fallen as a percentage of sales as the fixed costs of £1m
are spread over a greater number of orders. Our variable warehouse costs have
decreased from 12.7% of sales to 11.8% of sales, and we anticipate a further
fall to approximately 11.5% during 2007/8. This improvement is attributable to
improvements made to the warehouse processes by Unipart and to the
implementation of a new warehouse management system in October 2007.
If additional warehouse capacity is secured during 2007/8, this will add in the
region of £0.8m to this year's fixed warehouse costs.
In 2006/7 our marketing spend increased to £1.3m. This was spent on magazine
advertising, TV sponsorship and on the ASOS magazine. The magazine has proved to
be a success and we are planning 11 issues during 2007/8 at a cost in the region
of £3.2m. Other marketing activity will amount to a further £0.5m.
Production costs, which relate to the shooting of images for the web site and
for use in print will increase in 2007/8 to approximately £0.9m in line with the
broadening of the range.
Buncefield Fuel Depot Explosion
The credit of £0.6m shown in the profit and loss account represents the
remaining insurance proceeds that were identified in the last annual report.
Closure of Entertainment Marketing (UK) Ltd
The decision was made in 2006/7 to exit this non-core business. We were unable
to find a buyer and hence the business was closed in March 2007 with a resulting
write off in the carrying value of goodwill of £188,000.
Taxation
The effective tax rate of the Group was 27.7%.
2006/7 is the first year in which brought forward losses have not fully offset
taxable profits and the Group will make its first corporation tax payment during
the 2007/8 financial year.
Balance Sheet Review
The write off of the carrying value of Entertainment Marketing (UK) Ltd of
£188,000 has reduced goodwill since last year. The remaining £1.1m relates to
the purchase of ASOS.com Ltd at the time of the flotation.
We invested over £1.6m in the year, primarily in improving our computer systems
including a new warehouse management system, finance system and management
reporting tool. As stated above the new warehouse management system is driving
down our labour costs and we anticipate that this investment will payback in
under 2 years.
The Group has recognised a deferred tax asset of £0.5m (2005/6: £0.6m) as the
directors believe that this amount is likely to be recovered in the foreseeable
future. This asset predominantly arises from the availability of tax relief
following the exercise of employee share options.
Closing inventories have grown in the year by 122% in line with sales growth and
our strategy of broadening all product areas.
Receivables have fallen in the year by £0.2m. Receivables as at 31 March 2006
included insurance proceeds receivable of £0.8m.
We are now taking greater advantage of the early settlement terms offered by our
suppliers and accordingly the increase in our trade and other payables of 30%
year on year is lower than our growth in stock and overheads.
Current tax liabilities have increased to £1.4m from £0.4m mainly due to a
corporation tax creditor of £0.8m (2005/6: Nil).
Overall net assets have increased by £2.9m to £8.4m.
Cash flow and cash balances
The Group continues to be highly cash generative and there was a net cash inflow
over the period of £1.6m. The Group has sufficient cash reserves to meet its
forecast working capital requirements and capital expenditure plans for the next
year. Surplus funds are on time deposit with the Group's bank.
During the period share options under the Group's EMI approved Share Option
Scheme were exercised raising £148,000.
Capital Expenditure for 2007/8
Since the year end we have moved offices and the capital expenditure relating to
the fit out will be in the region of £0.7m. In addition to this we will take a
provision of £0.2m relating to decommissioning at the end of the lease. This
provision will be expensed over the life of the lease.
We are anticipating a need for additional warehouse capacity in 2007/8. We are
still at the planning stage and the fit out of a new facility will be phased as
new capacity is required, however, the requirement in 2007/8 could be in the
region of £3.0m.
Earning per Share (EPS)
Fully diluted EPS has grown by 74% to 3.3p.
Accounting Policies
Our results for the year have been prepared under IFRS for the first time, one
year ahead of the required deadline for AIM listed companies.
Jon Kamaluddin
Finance Director
9 July 2007
ASOS PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2007
Year ended Year ended
31 March 31 March
2007 2006
£'000s £'000s
Revenue 42,614 19,716
Cost of sales (24,488) (11,664)
Gross Profit 18,126 8,052
Operating costs (15,262) (9,131)
Operating Profit 2,864 (1,079)
Finance Income 124 60
Profit/(Loss) for the year on discontinued 65 (15)
operations
Profit before insurance proceeds, 3,053 (1,034)
goodwill impairment and taxation
Insurance proceeds 570 2,439
Goodwill impairment (188) -
Profit before tax 3,435 1,405
Taxation (951) 12
Profit for the year 2,484 1,417
EPS - Basic 3.4p 2.0p
EPS - Diluted 3.3p 1.9p
ASOS PLC
CONSOLIDATED BALANCE SHEET
AT 31 MARCH 2007
31 March 31 March
2007 2006
£'000s £'000s £'000s
Non-Current Assets
Goodwill 1,060 1,248
Property, plant and 2,086 990
equipment
Deferred tax asset 490 549
3,636 2,787
Current Assets
Inventories 5,683 2,564
Trade and other receivables 1,669 1,877
Cash and cash equivalents 5,379 3,744
12,731 8,185
Current Liabilities
Trade and other payables (6,577) (5,064)
Current tax liabilities (1,405) (386)
(7,982) (5,450)
Net Current Assets 4,749 2,735
Net Assets 8,385 5,522
Equity
Ordinary shares 2,544 2,517
Share premium 3,354 3,007
EBT own shares (236) -
Retained earnings 2,723 (2)
Total Equity 8,385 5,522
ASOS PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2007
Year ended Year ended
31 March 31 March
2007 2006
£'000s £'000s
Cash flows from operating
activities
Profit before discontinued 3,246 1,374
operations, Interest, and tax
Adjusted for
Goodwill write off 188 -
Depreciation charge 467 222
Loss on disposal of fixed assets 15 16
Increase in inventories (3,119) (977)
Decrease/(Increase) in receivables 169 (931)
Increase in payables 1,822 2,607
Share options charge 328 226
Cash generated from operations 3,116 2,523
Finance Income 124 60
Net cash generated from operating
activities 3,240 2,583
Cash flow from investing
activities
Payments to acquire fixed assets (1,621) (904)
Proceeds from disposal of fixed assets 43 3
Net cash from investing activities (1,578) (901)
Cash flow from financing
activities
Proceeds from issue of ordinary shares 149 16
Purchase of own shares by EBT (236) -
Net cash from financing (87) 16
activities
Net increase in cash and cash equivalents 1,575 1,698
from continuing operations
Net increase/decrease in cash and cash
equivalents from discontinued operations
60 (15)
Net increase in cash and cash equivalents 1,635 1,683
EARNINGS PER SHARE
The calculations of earnings per share are based on the following:
2007 2006
£'000s £'000s
Profit attributable to shareholders 2,484 1,417
Weighted Average number of shares
For basic earnings per share 72,089,825 71,753,281
For diluted earnings per share 75,522,076 74,785,943
539,701 share options were granted in April 2007 and 125,000 ordinary shares
were issued in July 2007 following the exercise of employee share options.
IFRS RESTATEMENT
In the IFRS Re-Statement of 2005/6 Results issued 24 November 2006, the IFRS 2
share option charge was calculated by spreading the fair value of the option
over an average period of 4 years. The restatement will be changed in the final
results to spread this charge over the period from grant of option to its
vesting date.
This change has led to an additional charge of £123,000 and a related deferred
tax credit of £76,000 to the income statement for the twelve months ending 31
March 2006.
The financial information contained in this announcement does not constitute the
Company's statutory financial statements. The Company's auditors have issued an
unqualified report on the statutory financial statements for the 12 months ended
31 March 2007 and have not made any statement under section 237(2) or (3) of the
Companies Act 1985. A copy of the company's statutory financial statements will
be delivered to the Registrar of Companies shortly.
This information is provided by RNS
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