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 The company news service from the London Stock Exchange

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