REG - ASOS PLC - Interim results for the 26 weeks to 3 March 2024
17/04/2024 07:01
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RNS Number : 8787K ASOS PLC 17 April 2024
17 April 2024
ASOS plc
Global Online Fashion Destination
Interim results for the 26 weeks to 3 March 2024
Strong progress on speed and profit initiatives under Back to Fashion strategy
Summary financial results
£m 26 weeks to 3 Six months to 28 Feb 2023 (HY23) Change Adjusted LfL CCY change
Mar 2024 (HY24)
Headline measures(1)
Adjusted group revenue(2,3) 1,497.5 1,838.5 (18%)
Adjusted gross margin 40.3% 42.9% (260bps)
Cost to serve(4) 41.5% 42.7% (120bps)
Adjusted EBITDA (16.3) 4.6 (20.9)
Adjusted EBIT (98.1) (69.4) (28.7)
Adjusted loss before tax (120.0) (87.4) (32.6)
Net debt (348.8) (431.7) +82.9
Free cash outflow (21.1) (258.8) +237.7
Statutory measures
Group revenue 1,505.8 1,840.6 (18%)
Gross margin 40.0% 36.1% +390bps
Operating loss (246.8) (272.5) +25.7
Loss before tax (270.0) (290.9) +20.9
Strategic update and results summary
· Strong progress on Back to Fashion strategic priorities to make ASOS
faster, more agile, and more profitable:
- Delivered c.£240m year-on-year ('YoY') improvement in H1 free cash flow
(outflow of c.£21m) through disciplined inventory and cost management,
representing our strongest H1 cash performance since 2017.
- Ahead of plan on stock reduction with £593m stock at H1 (vs. FY24
objective of c.£600m). Approximately half of the stock reduction came from
the clearance of stock over 12 months old.
- Sold through c.83% of AW23 stock in H1, representing a 17ppt YoY
improvement and resulting in two-thirds reduction in volume of AW stock
carried forward vs. prior year.
- Increased stock turn on newness by more than 40% YoY with a c.10ppt YoY
improvement in 12-week sell through - indicative of better and more relevant
product under the new model.
- Flexible models scaling well: Test & React running at c.5% own-brand
sales and already above 30% in launch category (ASOS Design Jersey Tops);
Partner Fulfils running at c.5% of partner brand GMV.
- Structurally improved profitability with cost to serve(4) down 120bps to
41.5% of sales despite volume deleverage over fixed costs and UK brand
marketing investment.
· As previously announced, H1 FY24 sales -18% as we annualised actions
taken during FY23 to improve core profitability under the Driving Change
agenda and with H1 intake c.-30% YoY as we right-size stock levels.
· Over 60% of sales from product now excluded from promotions. However,
adjusted gross margin down 260bps YoY due to planned discounting to clear old
stock. Further clearance activity planned in H2 to unlock the full benefit of
the new commercial model from FY25. Gross margin drag in H1 from heightened
mix of old product sales estimated over 5ppt. Consequently, adjusted EBITDA
('AEBITDA') loss of £16.3m in the half.
· Reiterating guidance for FY24 sales decline of 5 to 15%, positive
adjusted EBITDA and cash generation. Further clearance activity planned in H2
to unlock the full benefit of the new commercial model from FY25.
· AEBITDA for FY25 expected to be significantly higher than FY23 and
FY24 driven by: (1) materially higher gross margin following removal of old
stock and higher full-price sales mix of flexible stock models; and (2)
ongoing transformation of the business following cost action already taken in
FY23 and H1 FY24.
· Further strengthening of company leadership including appointment of
new CFO detailed in separate RNS.
ASOS plc
Global Online Fashion Destination
Interim results for the 26 weeks to 3 March 2024
( )
José Antonio Ramos Calamonte, Chief Executive Officer said:
"At the beginning of this year we explained that FY24 would be a year of
continued transformation for ASOS as we take the necessary actions to deliver
a more profitable and cash generative business. Under our Back to Fashion
strategy, we set out three priorities for the year - to offer the best and
most relevant product, to strengthen our relationship with customers and to
reduce our cost to serve. We have delivered on each of these in the first half
of the year, including right-sizing our stock ahead of target to drive our
best first half cash performance since 2017 and seeing excellent results in
our Test & React model, which is growing at pace. ASOS is becoming a
faster and more agile business, and we are reiterating our guidance for the
full year as we lay the foundations for sustainably profitable growth in FY25
and beyond."
CEO Review
We started this journey with a clear target in mind, to turn ASOS into a
company that delivers sustainable, profitable growth. That meant three things:
i) to provide our customers with the best and most relevant product through
better stock management and an obsession with speed; ii) to reduce our cost to
serve, removing waste and improving our use of data; iii) to strengthen our
relationship with customers, ensuring ASOS is top-of-mind for fashion. Over
the last six months we have seen progress on all fronts.
We have seen good momentum in our transformation to make ASOS faster and more
agile, bringing the most exciting product to our fashion-loving
twenty-something consumers from both our own brands and the best partner
brands. Product produced through our Test & React model, which brings
product from design to site in less than 3 weeks, is amongst our top sellers
every week, with strong full-price sell-through and a gross margin of 58%.
This is still a small part of our business but we are scaling it at pace, now
accounting for close to 40% of sales in one of the product categories we
launched with in November. I have the confidence that this model will be truly
transformational for ASOS, both for our customers and for the profitability
and cash generation of our business model. With better product and more
disciplined stock management, over 60% of our sales now come from product
excluded from any markdown or promotions.
We have also made great progress in reducing our cost to serve, ensuring we
focus our spending in areas that truly benefit our customer and deliver the
experience they value most. We reduced our cost to serve ratio below the prior
year despite the deleverage of some of our fixed costs from the decline in
sales. At the same time, we made considerable headway in strengthening our
relationship with customers, increasing our visibility across social media
platforms by increasing organic product seeding to more than 300 influencers
per month, building relevance for our core customer and ensuring ASOS is
top-of-mind for fashion.
This strong stock discipline and cost management has delivered our strongest
H1 cash performance since H1 FY17, but the impact of our meaningful strategic
progress on profit was concealed by the action we took to reduce our stock. We
have successfully sold through a significant volume of the old stock that
accumulated under our old commercial model, particularly over the Covid
period. At the same time we reduced intake by c.30% YoY in the period,
primarily to facilitate the right-sizing of stock, but also due to delays in
shipments cause by disruption to ocean freight routes to avoid the Red Sea.
The result of this is a sub-optimal level of newness and higher proportion of
sales of old stock, providing a less compelling customer proposition and
creating a drag on sales and gross margin over FY23 and FY24. However, it is
the medicine we needed to take. Our progress over the last six months means we
can feel confident that from FY25 we'll have the right level of newness to
excite our customers again.
While we can be proud of what we've achieved so far, there is always more to
do. We are relentlessly focussed on delivering even more against each of these
priorities throughout the remainder of H2 FY24.
Progress against our FY24 priorities:
1. More relevant product through disciplined stock management and an
obsession with speed
At its core, ASOS is about bringing exciting product to our fashion-loving
twenty-something customers and inspiring them to be whoever they want to be.
With our combination of prominent own brands including ASOS Design, Topshop
and Topman alongside a curated edit of the most relevant assortment from our
partner brands, we are uniquely positioned to offer exclusive product while
also meeting the desires of our target customer. As I set out in November, a
key mechanism by which we can offer the most relevant product is by becoming
faster and more agile, principles which we have successfully embedded at the
heart of both our new commercial model and our culture.
Our Test & React capability, which brings stock into the business on a
two-to-three week lead time, will ensure that ASOS is the first place that our
customers are able to access the latest trends. We have made good progress in
scaling this model to a run-rate of c.5% of own-brand since launch in November
and are now working with suppliers in Turkey and Morocco as well as the UK.
Test & React was initially launched in the strategically important ASOS
Design Womenswear Jersey Tops and Jersey Eveningwear Dresses categories,
together responsible for close to 20% of ASOS Design Womenswear sales. Test
& React has already scaled to over 20% of the Jersey Eveningwear Dresses
category and in Jersey tops is approaching 40%. We have now rolled out Test
& React to other categories such as Soft Wovens and will expand into Denim
in the second half. We are on track to hit our Test & React target of
exiting the year with a run-rate of c.10% of own-brand mix and achieving c.30%
in the mid-term. Gross margin on Test & React product in H1 was c.58%, an
exceptional achievement despite higher sourcing costs as a result of strong
full-price sell-through turning on just 3 weeks cover. These impacts will
become more visible in our group performance as Test & React becomes a
larger part of our mix in FY25 and beyond.
Beyond Test & React, we are working hard to increase speed to market
across all our own design product, significantly reducing lead times,
particularly in long lead regions. While still in its early stages we have
achieved promising results, with a c.30% reduction in lead times achieved by a
number of key suppliers of Jersey, Denim and Dresses. These initiatives will
ultimately enable ASOS to get product to market faster and to hold fewer units
of each style, meaning more relevant product for our customers while also
reducing inventory risk and improving profitability and cash generation.
On the partner brands side, we've started to ramp up our flexible fulfilment
models with Partner Fulfils making up c.5% of partner brand sales by the end
of H1. At FY23 we set out plans to double both the percentage of GMV and the
number of brands operating on Partner Fulfils over the course of this year.
Partner Fulfils allows us to be more flexible in how we collaborate with our
brand partners, while simultaneously providing increased width (i.e. expanding
the product range available on the ASOS platform) and depth (i.e. allowing us
to continue fulfilling orders on our bestsellers when our wholesale stock is
depleted). This is all without taking on inventory risk and hence provides the
ability to churn slow-moving styles off the site without any cost to ASOS. For
our brand partners, it provides access to our 21m fashion-loving
twenty-something customers with the flexibility to match supply to demand
across different distribution channels, including their own online
distribution. In December, we also launched a pilot of ASOS Fulfilment
Services ('AFS'), partnering with Spanish brand Scalpers. We will continue to
analyse data from this pilot and iterate the programme throughout the
remainder of FY24 before implementing our learnings as we scale AFS in FY25.
This approach will make ASOS a more profitable business going forward, with
less stock risk because shorter lead times enable lower initial purchase
orders on own-brand and because of stockless partner brand models. We will
also 'clear as we go' on product that doesn't work well. Our approach to
managing fashion-led stock under the new commercial model involves removing
aged stock from our model by clearing product close to the season in which it
is relevant. This avoids very deep aged clearance discounts, improving gross
margin and ensuring a better customer experience by presenting more fresh,
relevant product.
As expected, the significant steps forward we have made over the first half
are not reflected in the profit we have reported for the period. As you
already know, the business accumulated c.£550m of stock between FY20 and
FY22. This reality meant that throughout FY23 and FY24 we have had to
significantly reduce new intake (by c.30% in H1 FY24) while heavily
discounting old stock in order to reach our goal of holding c.£600m of
inventory by FY24, so that we can operate fully on our new commercial model in
FY25. We reached our goal early with H1 FY24 inventory of £593m. As already
explained, this clearing progress has had a direct impact on our adjusted
gross margin (310bp YoY impact from higher discounting). Driving sales to old
product also cannibalises slow-moving product in mid-season and end-of-season
sales, increasing the discount required to clear it, as well as diluting our
fashion-centric customer proposition. Pleasingly, despite this overhang, we
sold through 83% of our AW23 product in H1, a 17ppt improvement on the prior
year. We still have old Spring Summer stock to clear in H2 while seasonally
relevant, but we feel we have laid strong foundations for a significantly
better product proposition in FY25, which will come with substantially higher
gross margins and pre-Covid EBITDA margin (c.6%), as previously guided.
2. Reduce our cost to serve, remove waste and improve our use of data
We are laser-focused on ensuring the investments we make, both in terms of
cost and time, help us play to our strengths and further our strategic goals.
Actions taken over FY23 and the first half of FY24 have reduced our cost to
serve(4) by 120bps to 41.5% of sales, which is a notable achievement in the
face of volume deleverage over our fixed cost base and the incremental
investment we decided to make into full funnel marketing. The improvement is
the result of hundreds of initiatives, some of the more material of which are:
· Consolidation of our delivery network: A consolidation of parcel
volumes to fewer delivery partners across multiple regions has lowered our
contracted rates in the half, with the associated benefit continuing through
H2. The cessation of split orders from our two UK distribution centres in H1
FY23, alongside removal of Covid levies and fuel surcharges, has further
reduced our distribution costs. Distribution costs as a percentage of sales
have fallen by 100bps on the year, from 12.5% to 11.5%.
· Warehouse optimisation: We have delivered a reduction in both
variable and fixed warehouse costs. As of October, all UK and Rest of World
('RoW') orders are fulfilled from an automated distribution centre, reducing
the variable cost to serve. Further variable cost savings have been delivered
through the optimisation of shift patterns, which have more than offset
headwinds from continued wage inflation in the high single digits. Fixed costs
were also reduced by the sell-down of aged stock enabling the gradual closure
of off-site storage facilities in H1 FY23, as well as the implementation of
leaner management structures in our fulfilment centres. In total, warehouse
costs as a percentage of sales reduced by 130bps YoY in H1, from 12.4% to
11.1%.
· Head office: Other costs have also fallen as a percentage of sales,
the most significant element of which relates to the cost of head office
staff. Following the headcount reduction in January 2023 we have continued to
find efficiencies in our structure, including in relation to vacancies. As
such, staff costs have declined by 12.5% YoY despite offsetting headwinds from
wage inflation running at mid-single digits.
Looking ahead to H2, we expect incremental savings from the mothballing of
both the Lichfield fulfilment centre and closure of the Selby returns
facility, the timing of which means the impact on H1 has been limited. The
decision to mothball the Lichfield site was taken on the basis that the
business will hold less stock under the new commercial model and therefore the
capacity provided by the facility was no longer necessary to support ASOS'
future growth. With the majority of automation spend already committed, we
completed the project in March and site closure is scheduled for the end of
May. Mothballing the site is expected to result in cost savings of c.£20m
p.a. from FY25, with automation spend of c.£16m incurred post-impairment
treated as an adjusting item through our P&L rather than capex. The site
will be marketed for sale and is a versatile, fully automated pick-and-pack
distribution centre suitable for use in a range of industries, and as such we
hope to recover a portion of our investment. In the absence of an offer, a
non-cash impairment charge of c.£114.7m has been taken against the asset on
our balance sheet.
It is worth reiterating that we will never stop in our journey to optimise our
operations, instilling continuous improvement at the heart of our culture.
Beyond the projects outlined above, we have improved the data in our logistics
operations to better scrutinise our shipping performance and therefore improve
customer experience, we are upgrading our Product Lifecycle Management ('PLM')
systems and processes which will significantly improve our speed, accuracy,
and efficiency, and we are improving our use of data to increase the
efficiency of our marketing activity, amongst many other things.
3. Strengthen our relationship with consumers
ASOS' relationship with consumers is most critically about exciting them with
the most relevant product, brought to life in an inspirational way for
fashion-loving twenty-somethings. One of the biggest drivers of traffic,
conversion and customer retention is therefore our product. The other critical
component is creating the most inspirational shopping experience for our
customers. With our initiatives to deliver better and more relevant product
now well-entrenched and scaling, over the second half of the year we will
focus on our customer-based initiatives. We will provide more detail of this
work and update on our progress at our full year results in the Autumn.
Once we have product that is more relevant and a proposition that genuinely
inspires our customers, we will then turn up our marketing to amplify our
brand message. During our FY23 results, we announced a change of direction in
our approach to marketing, returning to our roots of cultural marketing,
content marketing and organic social media to provide inspiration and ensure
ASOS is top-of-mind for fashion for our core customer.
In November we launched our UK brand campaign 'ASOS Your Way'. Alongside the
campaign itself, we collaborated with top social talent to maximise reach
across all platforms and combined this with the first pulse of our
experiential guerilla marketing campaign 'ASOS IRL'. As we explained in
November, the impact of upper funnel marketing lags by around twelve months,
but in the short-term we used test and control groups to isolate the uplift
generated by the campaign activities. Early results demonstrated a 10% uplift
in new customers and a 2% uplift in organic web visits immediately following
the activations. Meanwhile, our first ever pop-up store in central London was
visited by more than 6,000 customers across the four days it was open. The
campaign achieved a combined paid and organic reach of over 30 million unique
users, and in the weeks following we saw a 17% YoY uplift in branded
search(5). We are looking to build on this success with our March activation,
'ASOS Unreal Finds', which aims to reposition ASOS as a destination for style
discovery and source of fashion inspiration through bespoke and personalised
recommendations.
In support of this new approach, we have launched an always-on multi-faceted
social and influencer programme providing us with the opportunity to showcase
our brand across platforms, building relevance for our core customer. Our
approach involves partnering with both micro and mega influencers, increasing
our organic product seeding globally to over 300 influencers per month, with
scope to grow further in H2. Concurrently, we have increased our on-site
inspiration through the scaling of our Buy the Look functionality. As a
multi-brand player and with our unique styling and studio capability, we can
provide customers with inspiration for 'looks' not just items, with benefits
for our basket economics. We have now created over 42,000 looks based on our
re-imagined Buy the Look, available to customers globally across Mobile Web,
iOS, and Android platforms. Early control tests have shown the average basket
value of orders that include a Buy the Look product is around 55% higher than
average, and baskets are larger as well as more valuable, with a basket almost
doubling in size when at least one Buy the Look product is included.
Leadership Updates
Alongside our interim results, we are also pleased to welcome three new
appointments to our Management Committee, as well as Christine Cross, who has
been appointed as an Independent Non-Executive Director of the Company from 16
April 2024 and will Chair the Remuneration Committee.
As announced by separate RNS this morning, Dave Murray will join ASOS as CFO
on 29 April 2024. He joins with more than two decades' experience across a
range of finance roles in the retail and e-commerce industry, including at
Sainsbury's, Amazon, Farfetch, and most recently as CFO of MatchesFashion.
Interim CFO Sean Glithero will continue for a period to ensure a smooth
transition and leaves with our deepest thanks and well wishes.
Dave will be joined on the Management Committee by Rasila Vaghjiani, who will
join ASOS as EVP, People, in July; and Anthony Ben Sadoun, who joined ASOS as
EVP, Digital Product in February. EVP, Digital Product is a newly created role
which reflects our commitment to developing a customer experience.
Outlook & guidance
In H1 FY24 we delivered our strongest H1 cash generation since H1 FY17 because
of our stock discipline and cost management. Our guidance for FY24 and FY25
remain unchanged and we are committed to accelerating towards an 8% EBITDA
margin in the mid-term, enabling ASOS to be sustainably cash generative on an
ongoing basis. As set out in our FY23 results announcement:
· Our mid-term priorities are leveraging our strengths: to offer the
best & most relevant product; be a destination for style; build a customer
journey created around fashion and excitement; and offer competitive
convenience. These things will drive our economic model, delivering stronger
order economics and better customer lifetime value.
· In FY25 we expect to deliver revenue growth and return EBITDA margin
to around pre-Covid levels (c.6%). In the medium-term we have confidence in
our ability to return to double-digit growth; steadily improve gross margin
back towards c.50%; maintain EBITDA sustainably ahead of capex, interest, tax,
and leases; reduce capex to 3-4% of sales; and deliver inventory of c.100
days.
· FY24 is about taking the necessary action to get us to that path.
Our priorities of accelerating towards our new commercial model and
strengthening our relationship with consumers require investment in the near
term into marketing and the discounting of aged stock to exit the year with a
clean stock position, including using offsite clearance channels where
necessary.
· As such, our expectations for FY24 are unchanged:
- Sales decline of 5 to 15%, with P4 FY23 trends continuing through the
first half of FY24 and a return to growth in the final quarter of FY24.
- Adjusted EBITDA positive.
- Stock back to pre-Covid levels (c.£600m as previously
communicated).
- Capex of c.£130m(6).
- Positive cash generation, reducing our net debt position.
Our next update will take place following the end of the FY24 reporting
period.
José Antonio Ramos
Calamonte
Chief Executive Officer
Notes
(1) The alternative performance measures used by ASOS are explained, defined
and reconciled to statutory measures on pages 41-44.
(2) Adjusted revenue includes retail sales, wholesale and income from other
services, excluding jobber income.
(3) Like-for-like ('LfL') sales are adjusted to remove the benefit of one
additional day of trading in H1 FY24 (4 September 2023 to 3 March 2024) vs. H1
FY23 (1 September 2022 to 28 February 2023). The impact of the additional day
is less than 1%.
(4) Cost to serve defined as operating expenses (excluding depreciation and
amortisation and excluding adjusting items) as a percentage of adjusted
revenue.
(5) Data from campaign performance studies comparing test and control groups
in Nov/Dec 2023.
(6) Excluding Lichfield automation capex of £20.4m capitalised and
subsequently impaired.
Financial Review
All revenue growth figures are stated at constant currency ('CCY') throughout
this document unless otherwise indicated.
26 weeks to 3 March 2024
£m UK EU US RoW(1) Total reported Adjusting items(2) Total adjusted
Retail sales(3) 647.0 512.2 167.3 107.0 1,433.5 - 1,433.5
Income from other services(4) 29.1 15.2 23.0 5.0 72.3 (8.3) 64.0
Total revenue 676.1 527.4 190.3 112.0 1,505.8 (8.3) 1,497.5
Cost of sales (903.5) 10.2 (893.3)
Gross profit 602.3 1.9 604.2
Distribution expenses (172.6) - (172.6)
Administrative expenses (677.6) 146.8 (530.8)
Other income 1.1 - 1.1
Operating loss (246.8) 148.7 (98.1)
Finance income 5.4 - 5.4
Finance expense (28.6) 1.3 (27.3)
Loss before tax (270.0) 150.0 (120.0)
During the 26 weeks to 3 March 2024 ('the period') ASOS realised an adjusted
loss before tax of £120.0m as sales were impacted by continued challenges in
the market backdrop, including higher cost-of-living pressures and the impact
of profit initiatives taken in FY23 under our Driving Change agenda. The focus
of these changes is improving stock-health and clearing aged inventory to
improve cash flow and provide an efficient, sustainable operating model into
future periods. While hindering top-line growth, these initiatives are
simultaneously providing material, ongoing savings throughout our cost base.
The reported loss before tax of £270.0m for the period includes adjusting
items totalling £150.0m; including £139.3m relating to the mothballing of
our Lichfield fulfilment centre, announced in our FY23 results. £114.7m of
this is non-cash and represents the impairment of the tangible, intangible and
right-of-use assets associated with the facility. The remaining amount
associated with this programme, including £16.5m non-capitalised spend,
£6.9m exit provisions and £1.2m in other costs is expected to be
cash-settled in future periods.
Outside of the Lichfield programme, other adjusting items include £2.4m
relating to property reviews, £1.9m associated with the FY23 stock-write-off
programme and £1.0m relating to other initiatives. There was a further £5.4m
adjusting item for the amortisation of the Topshop brands as in prior periods.
During the second half of the previous financial year we aligned our internal
and external reporting periods to increase reporting efficiency. Previously
external reporting was based on calendar months with the half-year results
covering a period from 1 September 2022 to 28 February 2023. This year the
reporting period is from 4 September 2023 to 3 March 2024 and is therefore one
trading day shorter than the H1 FY23 results. The impact of this on group
sales growth was c.0.6% and the associated profit and cash flow impact is
immaterial.
Revenue
Total sales for the half declined by 18%(5) as we have continued to annualise
the impact of actions taken during FY23 to improve profitability. We continued
to reduce intake in the half (c.-30% YoY) to right-size our stock position and
newness was further limited by disruption to Red Sea shipping routes.
Strategic trading decisions facilitated improved profitability over the
crucial Black Friday period despite lower sales YoY. We also took the
opportunity to optimise discounting through the period to drive clearance of
old and aged stock. Concurrently, we have taken further steps to increase
profitability of our best performing stock through a more targeted discount
strategy, with increased use of promo exclusions that help to protect
fast-selling full price stock. These have however had some impact on
conversion, which fell by 20 bps vs. H1 FY23.
Active customers declined c.14% YoY, continuing trends seen in previous
periods as we focus on improving the profitability of our customers. Average
basket value ('ABV') CCY increased by 1.6%, as an increase in average selling
price driven by product mix more than offset the markdown investment used to
clear aged inventory.
Performance by market
United Kingdom
UK 26 weeks to
3 March 2024
Total Sales (16%)
Visits (14%)
Orders (19%)
Conversion (30bps)
ABV +3%
Active Customers 7.5m / (13%)
Sales in the UK declined by 16% YoY against a difficult consumer backdrop as a
result of the cost-of-living challenges which particularly impact the younger
ASOS customer demographic. A stronger delivery proposition, supported by
increased robustness in delivery networks post-peak and the launch of 'ASOS
Your Way' supported sales during November and December. However, in the
post-Christmas period, intake challenges associated with the disruption to
ocean freight through the Red Sea, alongside a more strategic approach to
promotions targeting clearance of old stock while excluding strong performers
impacted conversion, which was down 30bps YoY.
Active customers were down 13% YoY, broadly tracking sales trends based on the
same factors. The lower demand in the market also impacted visits throughout
the period which were down 14% YoY. ABV was up 3% YoY as mix impacts more than
offset discounting, while orders were down 19% YoY indicating that profit
actions are positively influencing customer behaviour to underpin basket
economics.
Europe
EU 26 weeks to
3 March 2024
Total Sales (11%) / (11%) CCY
Visits (14%)
Orders (14%)
Conversion -
ABV (2%) / 3% CCY
Active Customers 9.5m / (11%)
Total sales were down 11% YoY with weak demand in a number of key markets in
the period. Colder weather provided some support in the first quarter, driving
a mix into higher average selling price ('ASP') Autumn-Winter products, which
helped improve the overall ABV despite higher levels of promotional activity
to clear older inventory.
Despite headwinds to top-line growth created by actions under the Driving
Change agenda, share in core markets has proved resilient. France was
particularly challenging in the half, however a more aggressive promotional
stance in January, during Soldes, allowed us to grow share and capitalise on
demand through this key trading period. Meanwhile, Germany has historically
had a particularly high cost to serve with some of the highest return rates in
the world experienced across the industry. As such, the profit initiatives
introduced in this market have been among the widest-ranging, including delays
to the launch of high returning categories such as formal dresses, reduced
prominence of certain product categories in customer communications and on the
ASOS homepage, and changes to delivery charging infrastructure to align with
best-in-class local competitors. Despite weakness in the German market overall
market share has held up well, indicating that the changes introduced have not
negatively impacted our proposition relative to competitors.
United States
US 26 weeks to
3 March 2024
Total Sales (29%) / (25%) CCY
Visits (16%)
Orders (26%)
Conversion (30bps)
ABV (8%) / (2%) CCY
Active Customers 2.6m / (19%)
Total US sales fell by 25% YoY, reflecting challenges in visits down 16% due
to general market weakness, strong competition bolstered by high levels of
promotional aggression, and our more restrained approach to paid media spend
with a focus on increasing return on investment. Conversion also declined
30bps YoY as a result of the wide-ranging actions taken throughout last year
to improve the region's profitability.
Rest of World
RoW 26 weeks to
3 March 2024
Total Sales (35%) / (36%) CCY
Visits (16%)
Orders (40%)
Conversion (40bps)
ABV 10% / 8% CCY
Active Customers 1.8m / (26%)
Rest of World ('RoW') sales fell by 36% YoY reflecting the annualisation of
the widespread profitability measures outside our core geographies which were
implemented towards the end of H1 FY23, including price increases and changes
to our delivery proposition. This can be seen in the key trading metrics with
reduced visits and conversion partially offset by ABV up 8%, building on the
double-digit ABV increase already achieved last financial year.
Gross margin
Adjusted gross margin(2) fell 260bps YoY to 40.3%. Increased discounting as
part of our planned activities to accelerate clearance of old and aged stock
as we transition to the 'New commercial model' was responsible for 310bps of
gross margin decline. On a reported basis gross margin improved by 390bps,
primarily due to the c.£130m stock write-off programme in the prior year
which was treated as an adjusting item.
The lower freight rates contracted in FY23 continued to provide a benefit to
gross margin in the half, although surcharges imposed to reflect re-routing of
ocean freight to avoid the Red Sea alongside highly selective use of air
freight for high priority shipments will reduce this benefit in the second
half of the year. These impacts will be offset by supply chain efficiencies
elsewhere in our P&L.
Operating expenses
£m 26 weeks to % of Six months to % of Change
3 March 2024
sales(13)
28 February 2023
sales(13)
Distribution costs (172.6) (11.5%) (229.8) (12.5%) (24.9%)
Warehousing (166.1) (11.1%) (227.9) (12.4%) (27.1%)
Marketing (100.8) (6.7%) (109.9) (6.0%) (8.2%)
Other operating costs (182.1) (12.2%) (218.1) (11.9%) (16.5%)
Cost to serve (621.6) (41.5%) (785.7) (42.7%) (20.9%)
(excl. D&A and adj. items)
Depreciation and amortisation (81.8) (5.5%) (74.0) (4.0%) 10.5%
Total operating costs (703.4) (47.0%) (859.7) (46.8%) (18.2%)
(excl. adjusting items)
Adjusting Items (146.8) (9.8%) (78.5) (4.2%) 87.0%
Total operating costs (850.2) (56.8%) (938.2) (51.0%) (9.4%)
Despite volume declines, cost to serve fell by 120bps to 41.5% of sales in the
half as operating expenses excluding depreciation, amortisation and adjusting
items decreased by 20.9% YoY, with supply chain efficiencies (i.e. reduced
warehouse and distribution costs) providing a combined benefit of c.£119m.
This improvement has outpaced the reduction in revenue with a combined benefit
of 2.3% to AEBITDA.
Distribution costs at 11.5% of sales decreased by 100bps YoY primarily as a
result of the optimisation of our UK fulfilment operations in FY23 to avoid
split orders. Lower YoY volumes provided a headwind in the half, reducing the
benefit from volume-based rebates and rates. However, through working with our
key delivery partners across each region we have been able to continue to
mitigate the impact of this as well as the ongoing pressure on fuel rates and
other inflationary cost increases.
Warehouse costs as a percentage of sales decreased by 130bps YoY to 11.1%
despite the deleveraging of fixed costs from reduced volumes. Initiatives from
our Driving Change agenda in FY23 have annualised into the first half,
including the network rationalisation activities and closure of offsite
storage and returns-processing facilities all providing YoY benefits. The
refined peak trading strategy drove lower, more profitable volumes during this
critical period which alongside the easing of labour challenges following
general declines in the e-commerce sector post-Covid drove further benefits.
Peak incentives and pre-peak excess labour both significantly reduced YoY.
Marketing costs decreased by 8.2% YoY. However, as a result of volume
deleverage on our fixed spend and the introduction of the UK brand and
upper-funnel marketing activity announced at FY23, marketing as a percentage
of revenue increased 70bps YoY to 6.7%.
Other operating costs fell by £36.0m or 16.5% YoY. However, as a % of revenue
they increased by 30bps to 12.2% of revenue. The reduction in absolute spend
represents the continued benefits from right-sizing our fixed cost base
throughout FY23. Headcount was 9.2% lower at the end of the period compared to
H1 FY23, which was delivered through both the Driving Change agenda activities
in FY23 as well as continued management focus on controlling vacancies,
providing c.£13m benefit to operational costs YTD. Technology spend also
reduced, despite inflationary pressures with benefits from the Driving Change
agenda annualising alongside continued focus on cost efficiency.
Depreciation and amortisation costs (excluding adjusting items) as a
percentage of sales increased by 150bps YoY. In addition to the deleveraging
impact of lower revenue; similarly to our FY23 results, the absolute
depreciation and amortisation charge increased, primarily as a result of the
growth in intangible assets including data services, operations systems and
improvements to web and payments platforms.
Interest
A finance expense (excluding adjusting items) of £27.3m was incurred compared
to £20.5m in H1 FY23. This reflected rising interest rates (SONIA at c.5.2%
throughout the period, vs. an average of c.2.9% in the six months to 28
February 2023) as well as a higher margin payable post the May 2023
refinancing (see Net Debt, Refinancing and Liquidity section below).
Finance income of £5.4m includes interest earned on deposits at financial
institutions. A higher level of return in the period to 3 March 2024 compared
to the £2.5m in H1 FY23 reflects the higher average cash balance and rising
global interest rate environment.
Taxation
The reported effective tax rate is 9.9% based on the reported loss before tax
of £270.0m. This is lower than the H1 FY23 effective tax rate due to the
impact of derecognising £34.8m of deferred tax assets in the period.
Earnings per share
Both basic and diluted loss per share were 204.3p (H1 FY23: basic and diluted
loss per share of 218.7p). The lower loss per share is a function of the
increase in shares in issue following the equity raise in May 2023, partially
offset by the increased loss for the period of £243.2m (H1 FY23: £218.2m).
The potentially convertible shares related to both the convertible bond and
ASOS' employee share schemes have been excluded from the calculation of
diluted loss per share as they are anti-dilutive for the period ended 3 March
2024.
Free cash flow
£m 26 weeks to Six months to
3 March 2024
28 February 2023
AEBITDA (16.3) 4.6
Share based payments & non-cash items incl. in AEBITDA 3.2 7.9
Cash impact of adjusting items (7.7) (23.0)
Income tax received 5.2 23.5
Decrease/(Increase) in inventory (excl. stock-write-off)(12) 175.5 (27.6)
(Increase) in other working capital(13) (66.7) (113.6)
Operating cash flow 93.2 (128.2)
Purchase of property, plant & equipment and intangible assets (86.1) (115.0)
Payment of lease liabilities (principal) (12.5) (12.1)
Interest received 5.4 2.5
Interest paid (21.1) (6.0)
Free cash flow (before financing) (21.1) (258.8)
Proceeds from borrowings - 250.0
Refinancing fees - (3.9)
Cash flow (21.1) (12.7)
There was a free cash outflow(14) (before items relating to financing) of
£21.1m for the half, an improvement of £237.7m YoY with the reduction in
inventory driving a £175.5m inflow (+£203.1m YoY) during the period.
Cash was used to fund capital investments of £86.1m, a reduction of £28.9m
or 25.1% YoY with spend lower across both intangible assets and property,
plant and equipment. This figure includes £20.4m of spend in the period
relating to the Lichfield fulfilment centre which has subsequently been
impaired; excluding this, the total capital investment would total £65.7m for
the period.
Net debt, refinancing and liquidity
£m 26 weeks to Six months to
3 March 2024
28 February 2023
Convertible bond (fair value of debt component) 471.1 457.3
Term loan & RCF, including accrued interest 187.7 258.0
Nordstrom loan 20.3 22.0
Put option liability 2.0 3.0
Borrowings 681.1 740.3
Cash & cash equivalents (332.3) (308.6)
Net debt (excluding lease liabilities) 348.8 431.7
Excluding lease liabilities, net debt at 3 March 2024 was £348.8m, an
increase in the half of £29.3m, with a free cash outflow of £21.1m being the
primary movement. The non-cash change in the fair value of the convertible
bond and unwind of capitalised fees accounting for the remaining movement. Net
debt was £82.9m lower YoY.
Cash and undrawn facilities totalled £361.2m at 3 March 2024 (H1 FY23:
£408.6m) and included cash and cash equivalents of £332.3m (H1 FY23:
£308.6m). The strong progress on inventory in the period has reduced the
available RCF under the Bantry Bay facility to £28.9m which remains undrawn
(H1 FY23: undrawn Old RCF of £100.0m).
Sean Glithero
Interim Chief Financial Officer
Notes
(1) Rest of World.
(2) The adjusting items are explained in note 3 of the financial statements.
(3) Retail sales are internet sales recorded net of an appropriate deduction
for actual and expected returns, relevant vouchers, discounts and sales taxes.
(4) Income from other services comprises of delivery receipt payments,
marketing services, commission on partner-fulfilled sales and revenue from
wholesale sales.
(5) Includes retail sales, wholesale and income from other services, adjusted
for the impact of foreign exchange translation, non-underlying jobber income
and the impact of one additional trading day in H1 FY24.
(6) Active customers defined as having shopped in the last 12 financial
months.
(7) Average basket value is defined as adjusted net retail sales divided by
shipped orders.
(8) Average basket value CCY is calculated as adjusted constant currency net
retail sales divided by shipped orders.
(9) Average order frequency is calculated as total shipped orders in the last
12 financial months divided by active customers.
(10) Conversion is calculated as total shipped orders divided by total visits.
(11) As a percentage of adjusted revenue.
(12) Stock-write-offs associated with our driving change agenda in FY23, which
accounted for a £127.5m reduction in inventory during H1 FY23.
(13)Includes working capital movements associated with adjusting items; a
breakdown is included on page 44.
(14) Free cash flow is net cash generated from operating activities, less
payments to acquire intangible and tangible assets, payment of the principal
portion of lease liabilities and net finance expenses.
Investor and analyst meeting:
The group will be hosting an in-person presentation for analysts at 9.30am at
ASOS HQ, Greater London House, NW1 7FB. A live webcast will also be available,
and a recording of the presentation will be uploaded to the ASOS investor
relations website afterwards.
To access live please dial +44 208 080 6591 and use Meeting ID: 835 5126 0264
and passcode: 677000. A live stream of the event will be available here
(http://www.asoshy.live/) .
A recording of this webcast will be available on the ASOS Plc investor centre
website after the event: https://www.asosplc.com/investor-relations/
(https://www.asosplc.com/investor-relations/)
For further information:
Investors:
Holly Cassell, ASOS Head of Investor Relations Tel: 020 7756 1000
Media:
Jonathan Sibun / Will Palfreyman, Teneo Tel: 020 7353 4200
Background note
ASOS is a destination for fashion-loving twenty-somethings around the world,
with a purpose to give its customers the confidence to be whoever they want to
be. Through its app and mobile/desktop web experience, available in nine
languages and in over 200 markets, ASOS customers can shop a curated edit of
nearly 50,000 products, sourced from nearly 900 global and local third-party
brands alongside a mix of fashion-led own-brand labels - including ASOS
Design, ASOS Edition, ASOS 4505, Collusion, Reclaimed Vintage, Topshop,
Topman, and Miss Selfridge. ASOS aims to give all its customers a truly
frictionless experience, with an ever-greater number of different payment
methods and hundreds of local deliveries and return options, including
Next-Day Delivery and Same-Day Delivery, dispatched from state-of-the-art
fulfilment centres in the UK, US, and Germany.
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, ASOS plc 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.
CONSOLIDATED INCOME STATEMENT
for the 26 weeks to 3 March 2024
All activities are continuing.
The notes on pages 19 to 36 form part of this condensed consolidated financial
information.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the 26 weeks to 3 March 2024
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Loss for the financial period (243.2) (218.2)
Items that will not be reclassified to consolidated income statement
Net fair value losses on cash flow hedges (2.8) (13.3)
Tax on items that will not be reclassified 1.2 2.4
(1.6) (10.9)
Items that may be subsequently reclassified to consolidated income statement
Net fair value gains on cash flow hedges - 13.7
Fair value movements reclassified from cash flow hedge reserve to consolidated (6.8) 1.1
income statement
Tax on items that may be reclassified 1.7 (0.2)
(5.1) 14.6
Other comprehensive (loss)/income for the period (6.7) 3.7
Total comprehensive loss for the period attributable to owners of the parent (249.9) (214.5)
company
The notes on pages 19 to 36 form part of this condensed consolidated financial
information.
CONSOLIDATED BALANCE SHEET
at 3 March 2024
Note 3 March 2024 3 September 2023 28 February 2023
£m £m £m
Non-current assets
Goodwill and other intangible assets 8 691.7 700.5 703.6
Property, plant and equipment 9 289.0 362.6 367.4
Right-of-use assets 10 265.8 295.2 299.9
Investment properties 10 9.4 10.9 12.8
Derivative financial assets 0.4 4.1 9.7
Deferred tax assets 6 50.9 17.8 15.2
1,307.2 1,391.1 1,408.6
Current assets
Inventories 592.5 768.0 978.4
Trade and other receivables 81.8 81.4 63.4
Derivative financial assets 12.9 22.4 25.2
Cash and cash equivalents 16 332.3 353.3 308.6
Current tax assets 3.5 9.4 3.9
1,023.0 1,234.5 1,379.5
Current liabilities
Trade and other payables 12 (633.0) (680.4) (837.3)
Borrowings 15 (2.3) (1.5) (9.3)
Lease liabilities 10 (34.8) (25.3) (29.8)
Derivative financial liabilities (3.3) (6.0) (11.2)
Provisions 13 (3.0) (2.0) (1.7)
(676.4) (715.2) (889.3)
Net current assets 346.6 519.3 490.2
Non-current liabilities
Borrowings 15 (678.8) (671.3) (731.0)
Lease liabilities 10 (268.3) (303.7) (316.1)
Derivative financial liabilities (0.5) (0.5) (3.8)
Provisions 13 (86.6) (68.2) (54.2)
(1,034.2) (1,043.7) (1,105.1)
Net assets 619.6 866.7 793.7
Equity attributable to owners of the parent
Called up share capital 4.2 4.2 3.5
Share premium 322.6 322.6 245.7
Other reserves 65.3 73.1 75.1
Retained earnings 227.5 466.8 469.4
Total equity 619.6 866.7 793.7
The notes on pages 19 to 36 form part of this condensed consolidated financial
information.
These unaudited condensed consolidated interim financial statements for the 26
weeks to 3 March 2024 were approved by the Board on 16 April 2024.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the 26 weeks to 3 March 2024
Called up share capital Share premium Other reserves(1) Retained earnings(2) Total equity
£m £m £m £m £m
As at 4 September 2023 4.2 322.6 73.1 466.8 866.7
Loss for the period - - - (243.2) (243.2)
Other comprehensive loss for the period - - (6.7) - (6.7)
Total comprehensive loss for the period - - (6.7) (243.2) (249.9)
Cash flow hedges gains and losses transferred to non-financial assets - - (1.1) - (1.1)
Share-based payments charge - - - 4.0 4.0
Tax relating to share option scheme - - - (0.1) (0.1)
Balance as at 3 March 2024 4.2 322.6 65.3 227.5 619.6
As at 1 September 2022 3.5 245.7 82.4 683.3 1,014.9
Loss for the year - - - (218.2) (218.2)
Other comprehensive income for the year - - 3.7 - 3.7
Total comprehensive income/(loss) for the year - - 3.7 (218.2) (214.5)
Cash flow hedges gains and losses transferred to non-financial assets - - (11.0) - (11.0)
Share-based payments charge - - - 4.0 4.0
Tax relating to share option scheme - - - 0.3 0.3
Balance as at 28 February 2023 3.5 245.7 75.1 469.4 793.7
1 Other reserves includes the cash flow hedge reserve, currency translation
reserve and convertible bond reserve.
2 Retained earnings includes the share-based payments reserve, and employee
benefit trust reserve.
The notes on pages 19 to 36 form part of this condensed consolidated financial
information.
CONSOLIDATED CASH FLOW STATEMENT
for the 26 weeks to 3 March 2024
26 weeks to 3 March 2024 Six months to 28 February 2023
Operating loss (246.8) (272.5)
Adjusted for:
Depreciation of property, plant and equipment, right-of-use assets and 28.9 34.5
investment property
Amortisation of other intangible assets 58.3 48.8
Impairment charges on non-financial assets 115.8 28.9
Share-based payments charge 3.2 3.3
Other non-cash items - 4.6
Decrease in inventories 175.5 99.9
(Increase)/decrease in trade and other receivables (0.4) 28.8
Decrease in trade and other payables (52.8) (142.0)
Increase in provisions 6.3 14.0
Cash generated from/(used in) operating activities 88.0 (151.7)
Net income tax received 5.2 23.5
Net cash generated from/(used in) operating activities 93.2 (128.2)
Investing activities
Purchase of other intangible assets (53.4) (68.8)
Purchase of property, plant and equipment (32.7) (46.2)
Interest received 5.4 2.5
Net cash used in investing activities (80.7) (112.5)
Financing activities
Drawdown of revolving credit facility - 250.0
Refinancing amendment fees paid - (3.9)
Repayment of principal portion of lease liabilities (12.5) (12.1)
Interest paid (21.1) (6.0)
Net cash (used in)/generated from financing activities (33.6) 228.0
Net decrease in cash and cash equivalents (21.1) (12.7)
Opening cash and cash equivalents 353.3 323.0
Effect of exchange rates on cash and cash equivalents 0.1 (1.7)
Closing cash and cash equivalents 332.3 308.6
The notes on pages 19 to 36 form part of this condensed consolidated financial
information.
1. 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 countries that include the UK, US, Australia, France,
Germany, Spain, Italy, Sweden, the Netherlands, Denmark and Poland. The
Company is a public limited company whose shares are publicly traded on the
London Stock Exchange. The Company is incorporated and domiciled in the UK and
the address of its registered office is Greater London House, Hampstead Road,
London NW1 7FB.
The financial period represents the 26 weeks to 3 March 2024 (comparative
financial period six months to 28 February 2023; prior financial period 1
September 2022 to 3 September 2023). The financial information comprises the
results of the Company and its subsidiaries.
2. Basis of preparation
The interim financial statements for the 26 weeks to 3 March 2024 have been
prepared in accordance with the UK-adopted IAS 34, "Interim Financial
Reporting" and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority. The interim financial statements should
be read in conjunction with the Group's Annual Report and Accounts for the
financial period from 1 September 2022 to 3 September 2023, which was prepared
in accordance with UK adopted international accounting standards in conformity
with the requirements of the Companies Act 2006.
The interim financial statements are unaudited, but have been reviewed by the
auditors. The financial information presented herein does not constitute
statutory accounts within the meaning of section 434 of the Companies Act
2006. The Annual Report and Accounts for the period from 1 September 2022 to 3
September 2023 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 section 498 of the
Companies Act 2006.
The financial information contained in the Interim Results is presented in
sterling, rounded to the nearest million (£m) unless otherwise stated.
2.1. Changes in presentation
Consistent with the presentation in the Annual Report and Accounts, the cash
flow hedge reserve, convertible bond reserve and translation reserve have been
grouped and presented as Other Reserves in the consolidated balance sheet, and
within the consolidated statement of changes in equity. The amounts were
separately presented in the prior year interim financial statements.
2.2. Going concern
The Directors are satisfied that the Group has sufficient resources to
continue in operation for a period of at least 12 months from the date of
approval of the financial statements, and therefore continue to adopt the
going concern basis in preparing the financial statements. To support this
assessment, detailed cash flow forecasts were prepared for the 18-month period
to August 2025.
The Directors have considered the Group's forecasting process which reflects
the Group's financial performance, position and cash flows over the going
concern period (the base case). These cash flow forecasts represent the
Directors' best estimate of future performance based on expected consumer
demand, market forces and internal business initiatives.
2. Basis of preparation continued
The review included the continued availability of existing borrowings,
principally related to the Bantry Bay debt facility and issued convertible
bonds, details of which can be found in note 15. At 3 March 2024, the Group
was fully drawn on the £200m term loan with Bantry Bay, and had an available
undrawn Revolving Credit Facility ("RCF") of £28.9m, with a maturity of April
2026, along with £500m convertible bonds with a maturity of April 2026. The
only covenant the Group is subject to under the debt facilities is a minimum
liquidity covenant of £90m, defined as available cash, cash equivalents and
amounts undrawn under the RCF.
Key assumptions - forecasting business cash flows
The assessment of the Group's going concern position required significant
management judgement, particularly with regard to the key input assumptions to
the financial forecast, and the range of reasonably possible outcomes of those
assumptions. The economic environment has remained challenging throughout H1
FY24 with cost of living pressures continuing to impact consumer spending on
discretionary items, and the outlook remains uncertain. For the purposes of
the Group's going concern assessment, the Directors have therefore made
assumptions on the likely future cash flows in the uncertain macro
environment. The assumptions considered include the continued transition to
the Group's new operating model delivering improved stock sell-through at full
price, as well as a marginal improvement in the macro trading environment,
with the online fashion market assumed to return to growth on an aggregated
basis across the Group's key territories. The base case assumes the market
backdrop within the initial going concern period is improved but remains
challenging, resulting in assumed year-on-year Group reported sales declines
in H2 FY24 of between 0% and (10)%, returning to year-on-year mid-single digit
sales growth in the latter part of the assessment period. The base case also
assumes improved adjusted gross margin performance in H2 FY24 vs the first
half, resulting in a modest year-on-year increase vs H2 FY23, with up to
c.300bps year-on-year growth in FY25.
Aligned to the Group's principal risks, the Directors have also considered
various severe but plausible downside scenarios against the base case,
comprising of the following assumptions:
• Sales growth reduction;
• Gross margin reduction;
• Potential working capital cash impacts.
The downside scenarios are plotted by half, with more severe downside
sensitivities being applied to areas with greater levels of assumption-based
improvements. Sensitivities mapped against the base case within the downside
case are highlighted below:
Downside vs base case H2 FY24 H1 FY25 H2 FY25
Sales (13%) (20%) (22%)
Margin (260bps) (290bps) (190bps)
Working capital impact (average) £(113m) £(115m) £(113m)
Should the Group see such significant events materialise it has several
mitigating actions that can be implemented to manage liquidity risk, such as
deferring capital investment spend, reducing stock levels through flexible
intake, and implementing further cost management to maintain a sufficient
level of liquidity headroom during the going concern period. The combined
impact of the above downside scenarios and mitigations does not trigger a
minimum liquidity breach at any point in the going concern period, and offers
suitable headroom above the minimum liquidity threshold.
Reverse stress tests have also been performed on both the Group's revenue and
gross margin. The tests under consideration hold all metrics in line with the
downside case highlighted above, analysing how far the stress metric would
need to decline against the base case to cause a liquidity breach. Such
scenarios would have to see an aggregate c.35% decline in sales over the base
case, or a decline in gross margin from the base case of c.500bps across the
entire assessment period. Both are considered remote based on results of
previous significant economic events and recent trading performance.
2. Basis of preparation continued
Based on the above, the Directors have concluded that, on the basis of there
being liquidity headroom under both the base case and downside scenarios, and
the consideration that the reverse stress test scenario is remote, it is
appropriate to adopt the going concern basis of accounting in the preparation
of the Group's interim financial statements, with no material uncertainty to
disclose.
2.3. Accounting policies
The Group has considered the following amendments to published standards that
are effective for the Group for the financial period beginning 4 September
2023 and concluded that they are either not relevant to the Group or that they
do not have a significant impact on the Group's financial statements other
than disclosures.
· IFRS 17 Insurance Contracts
· Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
· Definition of Accounting Estimates - Amendments to IAS 8
· Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - Amendments to IAS 12
· International Tax Reform-Pillar Two Model Rules - Amendments to
IAS 12
The interim financial statements have been prepared in accordance with the
accounting policies set out in the Annual Report and Accounts for the
financial period from 1 September 2022 to 3 September 2023.
2.4. Significant accounting judgements and key sources of estimation uncertainty
The preparation of the interim financial statements requires the use of
judgements, estimates and assumptions in applying the Group's accounting
policies to determine the reported amounts of assets, liabilities, income and
expenses. Estimates and judgements are continually reviewed and are based on
historical experience and other factors, including expectations of future
events that are believed to be reasonable under the current circumstances.
Actual results may differ from these estimates. Any revisions to accounting
estimates are applied prospectively.
In preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
applied to the consolidated financial statements for the financial period 1
September 2022 to 3 September 2023, with the exception of the recognition of
deferred tax assets which has been added as a key source of estimation
uncertainty this period. Refer to note 6 for further information.
2.5. Alternative performance measures (APMs)
In the reporting of financial information, the Directors use various APMs.
These APMs are defined and reconciled on pages 41-44, and should be considered
in addition to, and are not intended to be a substitute for, IFRS
measurements. As they are not defined by International Financial Reporting
Standards, they may not be directly comparable with other companies' APMs.
3. Adjusted earnings before tax
In order to provide shareholders with additional insight into the year-on-year
performance of the business, an adjusted measure of profit is provided to
supplement the reported IFRS numbers, and reflects how the business measures
performance internally. Adjusted items are those which are significant either
by virtue of their size and/or nature, the inclusion of which could distort
comparability between periods. The assessment is made both on an individual
basis and, if of a similar type, in aggregate.
The assessment of whether to adjust certain items requires judgement, and
covers the nature of the item, the cause of its occurrence and the scale of
impact of that item on reported performance and individual financial statement
line items, as well as consistency with prior periods. The same assessment is
applied consistently to any reversals of prior adjusting items. Adjusted
profit before tax (and similarly adjusted EBIT) is not an IFRS measure and
therefore not directly comparable to other companies.
The consolidated income statement is presented in a columnar format to enable
users of the financial statements to see the Group's performance before
adjusting items, the adjusting items, and the statutory total on a
line-by-line basis. An analysis of the adjusting items included in the
consolidated income statement, together with the impact of these items on the
consolidated cash flow statement, is disclosed below.
3. Adjusted earnings before tax continued
Income statement
26 weeks to 3 March 2024
Revenue Cost of sales Administrative expenses Finance expenses Total before tax Tax Total
£m £m £m £m £m £m £m
Commercial operating model change 8.3 (10.2) - - (1.9) 0.5 (1.4)
Property-related costs - - (140.4) (1.3) (141.7) 35.5 (106.2)
Other strategic initiatives - - (1.0) - (1.0) 0.2 (0.8)
Amortisation of acquisition intangibles - - (5.4) - (5.4) 1.3 (4.1)
Derecognition of deferred tax assets - - - - - (9.0) (9.0)
8.3 (10.2) (146.8) (1.3) (150.0) 28.5 (121.5)
Six months to 28 February 2023
Revenue Cost of sales Administrative expenses Finance expenses Total before tax Tax Total
£m
£m
£m
£m
£m
£m
£m
Driving change agenda
Commercial operating model change 2.1 (121.8) (8.5) - (128.2) 32.3 (95.9)
Property-related costs - - (49.4) - (49.4) 12.4 (37.0)
Other strategic initiatives - - (10.6) (0.4) (11.0) 2.7 (8.3)
Non-underlying sales tax - (4.9) (4.9) - (9.8) 1.8 (8.0)
Amortisation of acquisition intangibles - - (5.1) - (5.1) 1.3 (3.8)
2.1 (126.7) (78.5) (0.4) (203.5) 50.5 (153.0)
Cash flow statement
The total cash flow impact of adjusting items is as follows:
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Commercial operating model change (0.9) (0.9)
Other strategic initiatives (6.8) (22.1)
Total adjusting items within operating cash flow (7.7) (23.0)
Of the net cash outflow in the current year, £10.4m relates to net
expenditure incurred in the prior year.
Commercial operating model change
During the prior year, the Board approved the introduction of a new commercial
operating model. The new model involves a more disciplined approach to intake,
increased speed to market and clearing product more quickly to reduce the
Group's inventory requirement, increase full price sales and hence gross
margin, and improve customer engagement. To unlock these benefits, the Group
has had to clear old stock acquired under its previous ways of working. As
such and in addition to clearance via its own platform, ASOS has been
utilising offsite clearance routes to support its transition to the new model,
and as a result additional costs were recognised in the prior financial year
totalling £133.2m (28 February 2023: £128.2m). This comprised losses on
stock cleared during the period, net of income received, as well as provisions
for stock that would be sold through alternative clearance channels (i.e. not
via the ASOS website).
The Group has continued to sell through this inventory during the half-year,
with additional costs of £1.9m predominantly relating to changes in expected
income rates.
3. Adjusted earnings before tax continued
Property-related costs
In October 2023, the Board approved the commencement of a process to either
sell or mothball the Lichfield fulfillment centre, following completion of the
automation project during the current financial year. The site is not yet
being actively marketed, however during the period the Group commenced
activities to vacate and mothball the site. As a result, costs of £139.3m
have been incurred, which are analysed further below. Comparative amounts
relate to similar costs recognised in the prior period, for other properties
which were agreed would be vacated last year.
£m £m
Lichfield
Impairment of property, plant and equipment (a) (97.7) (5.7)
Impairment of intangible assets (a) (1.8) (1.7)
Impairment of right of use assets (a) (15.2) (21.5)
Non-capitalised spend (b) (16.5) -
Onerous occupancy costs (c) (6.9) (17.0)
Accelerated depreciation (d) - (3.5)
Other (1.2) -
(139.3) (49.4)
Other
Impairment of investment property (1.1) -
Other (1.3) -
Total property initiatives (141.7) (49.4)
a) Impairment of assets following activity to vacate the site. The
recoverable amount for Lichfield was based on its value-in-use, and determined
to be £nil on the basis that the site would be mothballed.
b) Following activity to commence vacating Lichfield at the end of January
2024, the Group considered whether subsequent committed spend to complete the
automation could be capitalised and concluded not, on the basis that it was no
longer probable that the spend would result in future economic benefits. The
spend has therefore been recognised in the income statement during the period,
outside of adjusted profit. Prior to this date, the spend incurred was
considered capital.
c) Onerous contract costs that the Group is contractually committed to due
to being party to the lease. Upon initial recognition of such provisions,
management uses its best estimates of the relevant costs to be incurred as
well as expected closure dates. This excludes business rates on leased
property which are recognised in the period they are incurred.
d) Where sites are to be vacated in a later period, the remaining useful
economic lives of corresponding sites are reassessed to align with closure
dates, resulting in an acceleration in depreciation of these assets. The
accelerated depreciation (over and above the charge absent the closure
decision) is recognised within adjusting items.
Costs incurred in FY23 in relation to property initiatives totalled £60.7m,
bringing total costs to date on property initiatives to £202.4m.
Other strategic initiatives
Other strategic initiatives relate to external consultancy costs incurred
during the period as the Group continues to enact its Driving Change strategy
that was announced during the FY22 results.
Amortisation of acquired intangible assets
The amortisation of acquired intangible assets is adjusted for as the
acquisition that the amortisation relates to was outside business-as-usual
operations for ASOS. These assets would not normally be recognised outside of
a business combination, therefore the associated amortisation is adjusted.
Derecognition of deferred tax assets
Deferred tax assets of £34.8m were derecognised in the period, of which
£9.0m was recognised outside adjusted profit. Further information is included
in note 6.
4. Segmental analysis
IFRS 8 'Operating Segments' requires operating segments to be identified on
the basis of internal reporting on components of the Group that are regularly
reviewed by the chief operating decision-maker to allocate resources to the
segments and to assess their performance.
The Chief Operating Decision Maker has been determined to be the Management
Committee. It is the Management Committee that reviews the Group's internal
reporting in order to assess performance and allocate resources across the
business. In doing so, the Management Committee reviews performance across the
Group via a number of sources, comprising regular monthly management accounts,
and ad hoc analysis that provides deep dives into different areas, including
territory, brands and revenue streams.
In determining the Group's operating segments, management has considered the
level of information which is regularly reviewed by the Management Committee.
Information regularly reviewed by the Management Committee is at a
consolidated Group level only, with some disaggregated revenue information and
associated metrics provided for the geographical territories of the UK, the
US, Europe and the Rest of the World. However, decisions on resource
allocation are not made based on this information. Such decisions are made on
ad hoc analysis, separately provided to the Management Committee, and does not
constitute information that is either regularly provided to, nor reviewed by,
the Management Committee. As a result, it has been concluded that the Group
has only one operating segment (the Group level).
The following sets out the Group's revenue in the key geographic markets in
which customers are located:
26 weeks to 3 March 2024
UK EU US Rest of world Total
£m £m £m £m £m
Retail sales 647.0 512.2 167.3 107.0 1,433.5
Income from other services 29.1 15.2 23.0 5.0 72.3
Total revenue 676.1 527.4 190.3 112.0 1,505.8
Cost of sales (903.5)
Gross profit 602.3
Distribution expenses (172.6)
Administrative expenses (677.6)
Other income 1.1
Operating loss (246.8)
Finance income 5.4
Finance expense (28.6)
Loss before tax (270.0)
Non-current assets(1) 858.8 182.4 179.5 - 1,220.7
Six months to 28 February 2023
UK EU US Rest of world Total
£m £m £m £m £m
Retail sales 775.1 572.7 244.3 172.7 1,764.8
Income from other services 28.6 13.9 24.9 8.4 75.8
Total revenue 803.7 586.6 269.2 181.1 1,840.6
Cost of sales (1,175.9)
Gross profit 664.7
Distribution expenses (229.8)
Administrative expenses (708.4)
Other Income 1.0
Operating loss (272.5)
Finance income 2.5
Finance expense (20.9)
Loss before tax (290.9)
Non-current assets (as at 28 February 2023)(1) 1,013.7 183.4 151.4 - 1,348.5
Non-current assets (as at 3 September 2023)(1) 994.1 177.9 162.0 - 1,334.0
1 Excluding goodwill, derivative financial assets and deferred tax assets.
5. Finance income and expenses
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Finance income
Interest on deposits 5.4 2.5
Finance expenses
Interest on borrowings (29.5) (19.1)
IFRS 16 lease interest (2.5) (2.9)
Provisions - unwind of discount (1.4) (0.6)
Interest capitalised 4.8 1.7
Total finance expense (28.6) (20.9)
Net finance expense (23.2) (18.4)
6. Taxation
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Current year overseas tax 0.1 0.6
Adjustment in respect of prior year corporation tax 2.6 (2.9)
Total current tax expense/(credit) 2.7 (2.3)
Origination and reversal of temporary differences (65.3) (71.1)
Derecognition of deferred tax assets 34.8 -
Adjustment in respect of prior years 1.0 0.7
Total deferred tax credit (29.5) (70.4)
Total income tax credit in income statement (26.8) (72.7)
Analysed as:
Tax on adjusted profit 1.7 (22.2)
Tax on items excluded from adjusted profit (28.5) (50.5)
Total income tax credit in income statement (26.8) (72.7)
Effective tax rate 9.9% 25.0%
Income tax is recognised on management's estimate of the weighted average
effective annual income tax rates for corporate and deferred taxes expected
for the full financial year, including stock provision adjustments but
excluding all other adjusting items (refer to note 3 for adjusting items),
prior year adjustments, share based payments and derivatives, which are
recognised on an actuals basis. The estimated average annual tax rate used for
the 26 weeks to 3 March 2024 is 24.1% compared to 20.8% for the six months to
28 February 2023.
The reported effective tax rate is 9.9% based on the reported loss before tax
of £270.0m.
Significant source of estimation uncertainty - Recognition of deferred tax
assets
In accordance with IAS 12 'Income Taxes', the company recognises deferred tax
assets to the extent that it is probable that future taxable profit will be
available, against which the deductible temporary differences and the
carry-forward of unused tax losses can be utilised. In line therefore with the
judgements and estimates disclosed with going concern (refer note 2) and
impairment (refer note 11), the recognition of deferred tax assets requires
the Group to make significant estimates about the future profitability of its
operations.
In determining the amount of deferred tax assets recognised, management makes estimates of future taxable profits and the period over which deferred tax assets will be recoverable. In making these estimates, management considers the current and projected financial performance of the Group, including profit margins, revenue growth, and cost management strategies, which are derived from management forecasts and consistent with those used as part of the Group's going concern and impairment assessments. Risk adjustments are then applied, with a greater adjustment applied to periods where there is less evidence of profits, in particular, those further in the future. The Group also considers the timing and amount of deductible temporary differences.
As at 3 March 2024, the Group has recognised net deferred tax assets amounting
to £50.9m. A further £34.8m of deferred tax assets in relation to losses
have not been recognised.
The Group believes that it is probable that future taxable profits will be
sufficient to utilise the recognised deferred tax assets, however actual
outcomes could differ from these estimates due to changes in the factors
mentioned above. A movement of +/-10% in the forecast taxable profits would
increase/decrease the amount of deferred tax asset recognised by £16m, which
is considered a reasonably possible change.
The deferred tax assets derecognised relate to losses on a mix of adjusted and
non-adjusted items. Therefore the derecognition has been apportioned between
adjusted and unadjusted profit in proportion to the total tax losses arising
within each category, with £9.0m recognised outside adjusted profit, and
£25.8m within adjusted profit.
7. (Loss)/Earnings per Share
Basic earnings per share is calculated by dividing the profit attributable to
the owners of the parent company ASOS Plc 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 excluded 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, excluding own shares held, adjusted for the
effects of potentially dilutive ordinary shares. The dilutive impact is
calculated as the weighted average of all potentially dilutive ordinary
shares. These represent share options granted by the Group, including
performance-based options, where the scheme to date performance is deemed to
have been earned. It also includes the number of shares that would be issued
if all convertible bonds are assumed to be converted unless the convertible
instrument is out-of-the-money and not expected to convert. All operations are
continuing for the periods presented.
26 weeks to 3 March 2024 Six months to 28 February 2023
Weighted average share capital
Weighted average shares in issue for basic earnings per share (no. of shares) 119,034,795 99,775,925
Weighted average effect of dilutive options (no. of shares)(1) - -
Weighted average effect of convertible bond (no. of shares)(2) - -
Weighted average shares in issue for diluted earnings per share (no. of 119,034,795 99,775,925
shares)
Loss after tax for the financial period (£m)
Loss attributable to owners of the parent company for basic earnings per share (243.2) (218.2)
Interest expense on convertible bonds(2) - -
Diluted loss attributable to owners of the parent company for diluted loss per (243.2) (218.2)
share
Basic loss per share (pence per share) (204.3) (218.7)
Diluted loss per share (pence per share) (204.3) (218.7)
(1)Dilutive shares and interest not included where their effect is
anti-dilutive.
(2)The impact of convertible bonds has been excluded as it is not assumed they
will be exercised
8. Goodwill and other intangible assets
26 weeks to 3 March 2024 Period to 3 September 2023 Six months to 28 February 2023
£m £m £m
Net book value
At the beginning of the period 700.5 683.9 683.9
Additions 51.3 126.5 70.2
Amortisation charge (58.3) (104.7) (48.8)
Impairment charge (1.8) (5.2) (1.7)
At the end of the period 691.7 700.5 703.6
The net book value comprises:
3 March 2024 3 September 2023 28 February 2023
£m £m £m
Net book value
Goodwill 35.2 35.2 35.2
Software 428.6 432.0 443.6
Customer relationships 15.1 16.6 18.2
Brands and domain names 195.9 199.8 203.8
Assets under construction 16.9 16.9 2.8
At the end of the period 691.7 700.5 703.6
Details of the impairment charges are included in note 3 and relate to the
Group's fulfilment centre in Lichfield.
Goodwill at ASOS predominantly relates to that recognised as part of the
acquisition of Topshop, and is monitored on an entity wide basis at the
reporting segment level as a singular CGU, the ASOS Group CGU.
Goodwill is not amortised but is reviewed for impairment at least annually (or
more frequently where there is an indication that the asset may be impaired)
by assessing the recoverable amount of each cash-generating unit (CGU), or
group of cash generating units, to which the goodwill relates. Refer to note
11 for further information on impairment testing for the half-year.
9. Property, plant and equipment
26 weeks to 3 March 2024 Period to 3 September 2023 Six months to 28 February 2023
£m £m £m
Net book value
At the beginning of the period 362.6 351.7 351.7
Additions 40.0 47.9 36.8
Depreciation charge (15.9) (31.4) (15.4)
Impairment charge (97.7) (5.6) (5.7)
At the end of the period 289.0 362.6 367.4
Details of the impairment charges are included in note 3 and relate to the
Group's fulfilment centre in Lichfield.
The net book value of property, plant and equipment comprises:
3 March 2024 3 September 2023 28 February 2023
£m £m £m
Net book value
Property, plant and equipment 204.7 245.3 259.2
Computer equipment 6.6 10.9 13.2
Assets under construction 77.7 106.4 95.0
At the end of the period 289.0 362.6 367.4
At 3 March 2024, capital commitments contracted, but not provided for by the
Group, amounted to £83.7m (28 February 2023: £156.8m; 3 September 2023:
£147.5m).
10. Leases
Right-of-use assets
See below for the carrying amounts of right-of-use assets and the movements
during the period:
26 weeks to 3 March 2024 Period to 3 September 2023 Six months to 28 February 2023
£m £m £m
At the beginning of the period 295.2 380.3 380.3
Remeasurements / modifications (1.2) (9.6) (24.1)
Impairment charge (15.2) (20.0) (21.5)
Depreciation charge (12.5) (35.9) (19.1)
Transfers to investment property - (12.8) (12.8)
Foreign exchange differences (0.5) (6.8) (2.9)
At the end of the period 265.8 295.2 299.9
Details of the impairment charges are included in note 3 and relate to the
Group's fulfilment centre in Lichfield.
The Group presents additions to right-of-use assets in line with the
disclosure requirements of IFRS 16 'Leases'. In doing so,
remeasurements/modifications above includes the impact of lease terminations,
modifications and reassessments, and changes to dilapidation estimates.
Right-of-use assets totalling £12.8m were transferred to investment property
during the prior year and relate to sites the Group sublets, or that are
currently vacant with the intention of subletting. The current net book value
of investment property is £9.4m (28 February 2023: £12.8m; 3 September 2023:
£10.9m).
Right of use assets comprise entirely of leases for land and buildings.
Lease Liabilities
Set out below are the carrying amounts of lease liabilities and the movements
during the period:
26 weeks to 3 March 2024 Period to 3 September 2023 Six months to 28 February 2023
£m £m £m
At the beginning of the period 329.0 380.1 380.1
Remeasurements / modifications (12.9) (21.1) (20.5)
Payments (15.0) (28.0) (15.0)
Interest expense 2.5 5.6 2.9
Foreign exchange differences (0.5) (7.6) (1.6)
At the end of the period 303.1 329.0 345.9
Current 34.8 25.3 29.8
Non-current 268.3 303.7 316.1
Total 303.1 329.0 345.9
Remeasurements/modifications to the lease liability balance are primarily
driven by lease term reassessments during the period, as the Group reassessed
its likelihood to exercise certain break options.
Income statement / cash flow disclosures
The following amounts are included in the Group's consolidated financial
statements in respect of its leases:
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Income statement
Depreciation charge for right-of-use assets and investment property (13.0) (19.1)
Interest expense on lease liabilities (2.5) (2.9)
Expense relating to short-term leases (0.5) (0.3)
Expense relating to leases of low value assets that are not shown above as (0.1) (0.2)
short-term leases
Impairment charge for right-of-use assets and investment property (16.3) (21.5)
Sub-let income relating to leases under IFRS 16 0.7 0.7
Cash flow
Total cash outflow for leases comprising interest and capital payments (15.6) (15.5)
11. Impairment of non-financial assets
Impairment is assessed by measuring the recoverable amount of the cash
generating unit (CGU), calculated as the higher of fair value less cost to
dispose and value-in-use. Where the carrying value of the CGU exceeds the
recoverable amount an impairment loss is recognised in the income statement.
The impairment charge is allocated first against goodwill and then pro-rata
over other assets within the CGU by reference to the carrying amount of each
remaining asset in the unit. Impairment losses recognised for goodwill are not
subsequently reversed.
Cash generating units
Cash generating units are deemed the smallest group of assets that
independently generate cash inflows and are independent of the cash flows
generated by other assets. It was determined that the Group only has one CGU
(the Group level), on the basis that the majority of assets within the Group
are shared (i.e. software assets that support the entire Group), therefore
unable to be allocated on a reasonable or consistent basis in any other way.
The exception to this is for property assets that have been agreed to be
vacated, which are then treated as a separate CGU for impairment testing. As a
result the Lichfield assets were treated as a separate CGU following the
decision to vacate the site (refer to note 3 for further detail).
Composition of CGU
For impairment testing purposes, the CGU comprises the following:
As at 3 March 2024
£m
Goodwill and other intangible assets 691.7
Property, plant and equipment 289.0
Right-of-use assets 265.8
1,246.5
Identification of impairment indicator
Given the reported loss during the period, combined with the volatility within
the macro-economic environment and the market capitalisation of the Group
being below the Group's net assets, an indicator of impairment was deemed to
exist during the financial period.
Approach and assumptions
The recoverable amount for the CGU has been determined using a value-in-use
calculation which is based upon the cash flows expected to be generated,
derived from the latest budget and forecast data which are reviewed by the
Board. Budget and forecast data reflects both past experience and future
expectations of market conditions. The key assumptions in measuring the
value-in-use are as follows:
Assumption Details
Cash flow years / assumptions · Derived from medium term forecasts reviewed by the Board which
cover a period of five years, then extrapolated to perpetuity with an assumed
growth rate of 2% (3 September 2023: 2.0%; 28 February 2023: 1.5%)
· Whilst the value-in-use excludes lease rentals (a financing cash
flow under IFRS 16 "Leases") an estimated cash outflow for future lease
renewals is assumed from the current lease end dates
Discount rate · A post-tax discount rate representing the Group's weighted
average cost of capital (WACC), subsequently grossed up to a pre-tax rate
using an iterative calculation that yields the same value-in-use when tax cash
flows are excluded.
· The post-tax WACC has been calculated using the capital asset
pricing model, the inputs of which include a long-term risk-free rate based on
government bond rates, an equity risk premium and levered debt premium
benchmarked to externally available data, and an average beta derived from a
comparator group.
· The resulting discount rates are:
At 3 March 2024 At 3 September 2023 At 28 February 2023
Post-tax rate Pre-tax rate Post-tax rate Pre-tax rate Post-tax rate Pre-tax rate
12.5% 14.7% 13.0% 15.6% 10.1% 11.7%
11. Impairment of non-financial assets continued
Outputs
Outside of specific impairments recognised during the period in relation to
the Group's fulfilment centre in Lichfield, or other strategic initiatives as
part of the Group's Driving Change agenda, no further impairments were
identified as a result of the impairment review described above.
Of the above assumptions, the value-in-use calculations are most sensitive to
changes in the discount rate, the long-term growth rate and forecast cash
flows (comprising revenue, gross margin and fixed overheads). The following
table shows the amount by which the assumptions would have to change to make
the recoverable amount equal to the carrying value to show the headroom
sensitivity.
Sensitivity
Discount rate (post-tax) increase of: 0.6%
Long term growth rate decrease of: (0.8%)
A reduction in forecast annual growth rates of: (0.5%)
A reduction in forecast gross margin in each year of: (0.3%)
An increase in forecast fixed overheads of: 3.7%
The reduction in forecast annual growth rates above is equivalent to reducing
revenue in each year of the forecast by (2.0%).
12. Trade and other payables
26 weeks to 3 March 2024 Period to 3 September 2023 Six months to 28 February 2023
£m £m £m
Trade payables 108.7 71.3 110.7
Other payables 113.0 174.7 207.4
Accruals 247.8 238.7 307.1
Returns provision 87.4 108.2 111.9
Deferred revenue 51.5 52.1 81.8
Taxation and social security 24.6 35.4 18.4
633.0 680.4 837.3
13. Provisions
Dilapidations Onerous occupancy Total
£m £m £m
As at 4 September 2023 53.4 16.8 70.2
Recognised 12.2 6.9 19.1
Utilised - (1.0) (1.0)
Unwinding of discount 1.0 0.4 1.4
Foreign Exchange differences (0.1) - (0.1)
As at 3 March 2024 66.5 23.1 89.6
Current - 3.0 3.0
Non-current 66.5 20.1 86.6
As at 3 March 2024 66.5 23.1 89.6
As at 1 September 2022 41.9 - 41.9
Recognised 11.2 18.3 29.5
Utilised - (1.8) (1.8)
Unwinding of discount 1.3 0.3 1.6
Exchange differences (1.0) - (1.0)
As at 3 September 2023 53.4 16.8 70.2
Current - 2.0 2.0
Non-current 53.4 14.8 68.2
As at 3 September 2023 53.4 16.8 70.2
As at 1 September 2022 41.9 - 41.9
Recognised 0.4 17.0 17.4
Utilised - (0.1) (0.1)
Effects of movements in discount rates (4.0) - (4.0)
Unwinding of discount 0.5 0.1 0.6
Exchange differences 0.1 - 0.1
As at 28 February 2023 38.9 17.0 55.9
Current - 1.7 1.7
Non-current 38.9 15.3 54.2
As at 28 February 2023 38.9 17.0 55.9
Dilapidations are recognised where there is a present obligation to repair and
restore leased properties to their preoccupancy state at the end of the lease
term.
Onerous occupancy provisions are recognised where the Group no longer operates
from a leased property, for the least net cost of exiting from the contract.
14. Financial instruments
Financial instruments by category
Set out below are the accounting classifications of each class of financial
assets and liabilities:
Amortised cost Fair value through profit or loss Total
£m £m £m
As at 3 March 2024
Derivative financial assets - 13.3 13.3
Cash and cash equivalents 332.3 - 332.3
Trade and other receivables(1) 52.9 - 52.9
Derivative financial liabilities - (3.8) (3.8)
Lease liabilities (303.1) - (303.1)
Trade and other payables(2) (543.2) - (543.2)
Borrowings (679.1) (2.0) (681.1)
(1,140.2) 7.5 (1,132.7)
Amortised cost Fair value through profit or loss Total
£m £m £m
At at 3 September 2023
Derivative financial assets - 26.5 26.5
Cash and cash equivalents 353.3 - 353.3
Trade and other receivables(1) 68.5 - 68.5
Derivative financial liabilities - (6.5) (6.5)
Lease liabilities (329.0) - (329.0)
Trade and other payables(2) (578.5) - (578.5)
Borrowings (672.8) - (672.8)
(1,158.5) 20.0 (1,138.5)
Amortised cost Fair value through profit or loss Total
£m £m £m
At at 28 February 2023
Derivative financial assets - 34.9 34.9
Cash and cash equivalents 308.6 - 308.6
Trade and other receivables(1) 38.7 - 38.7
Derivative financial liabilities - (15.0) (15.0)
Lease liabilities (345.9) - (345.9)
Trade and other payables(2) (720.1) - (720.1)
Borrowings (740.3) - (740.3)
(1,459.0) 19.9 (1,439.1)
(1)Excludes prepayments and VAT receivables
(2)Excludes deferred income and any amounts in relation to taxation
Derivative financial instruments are currently held at fair value on the
balance sheet - all are within level 2 of the fair value hierarchy. During the
period, the put option liability relating to own share repurchases (refer to
note 15) was moved from amortised cost to fair value through profit and loss.
Comparatives have not been restated on the grounds of materiality. The option
is within level 3 of the fair value hierarchy, however detailed level 3
disclosures are not provided as the liability is not material.
Carrying amount versus fair value
Set out below is a comparison of the carrying amount and the fair value of
financial instruments that are carried in the financial statements at a value
other than fair value. The fair value of financial assets and liabilities are
based on prices available from the market on which the instruments are traded.
Where market values are not available, the fair values of financial assets and
liabilities have been calculated by discounting expected future cash flows at
prevailing interest rates. The fair values of cash and cash equivalents, trade
receivables, and trade payables are assumed to approximate to their book
values. This also applies to the old revolving credit facility that was drawn
down as at 28 February 2023.
Fair value hierarchy Carrying amount Fair value
£m £m
As at 3 March 2024
Term loan 2 (187.7) (245.3)
Convertible bond 1 (471.1) (311.4)
Nordstrom loan 2 (20.3) (23.8)
Total (679.1) (580.5)
Fair value hierarchy Carrying amount Fair value
£m £m
As at 3 September 2023
Term loan 2 (184.8) (248.7)
Convertible bond 1 (464.4) (344.9)
Nordstrom loan(1) 2 (20.4) (23.1)
Total (669.6) (616.7)
Fair value hierarchy Carrying amount Fair value
£m £m
As at 28 February 2023
Convertible bond 1 (457.3) (347.2)
Nordstrom loan(1) 2 (22.0) (26.2)
Total (479.3) (373.4)
(1)The methodology for calculating the fair value of the Nordstrom loan has
been refined during the period. Prior period comparatives have been updated to
allow for meaningful comparison.
Fair value hierarchy is defined as:
· Level 1 fair value measurements are derived from quoted market
prices (unadjusted) in active markets for identical assets or liabilities at
the balance sheet date. This level includes listed equity securities and debt
instruments on public exchanges;
· Level 2 fair value measurements are derived from inputs other
than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices). The fair value of financial instruments is determined by
discounting expected cash flows at prevailing interest rates;
· Level 3 fair value measurements are derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data (unobservable inputs)
15. Borrowings
3 March 2024 3 September 2023 28 February 2023
£m £m £m
Convertible bond (471.1) (464.4) (457.3)
Term Loan (187.7) (184.8) -
Nordstrom loan (20.3) (20.4) (22.0)
Put option liability (2.0) (3.2) (3.0)
Revolving credit facility (including accrued interest) - - (258.0)
Total (681.1) (672.8) (740.3)
Current (2.3) (1.5) (9.3)
Non-current (678.8) (671.3) (731.0)
Total (681.1) (672.8) (740.3)
Convertible debt
On 16 April 2021 the Group issued £500m of convertible bonds. The unsecured
instruments pay a coupon of 0.75% until April 2026, or the conversion date, if
earlier. The initial conversion price was set at £79.65 per share. The fair
value of the debt component was determined using the market interest rate for
an equivalent non-convertible bond, deemed to be 3.4%. As a result, £440.1m
was recognised as a liability in the balance sheet on issue and the remainder
of the proceeds, £59.9m, which represents the equity component, was credited
to reserves. Issue costs of £9.0m were allocated between equity (£1.0m) and
debt (£8.0m).
Term loan
In May 2023, the Group entered into a £200m senior term loan and a £75m
super senior revolving facility ("RCF") (together the "Facilities") with
specialist lender Bantry Bay Capital Limited through to April 2026, with the
optionality to further extend to May 2028 subject to meeting lender
requirements. Both the senior term loan and RCF (when drawn) bear interest at
a margin above SONIA. The amount available in relation to the RCF at the
period end was £28.9m. The RCF incurs commitment fees at a market rate and is
currently undrawn.
The Facilities are subject only to a minimum liquidity covenant defined as
cash and cash equivalents plus amounts undrawn under the RCF. The Facilities
carry a fixed and floating charge over all assets of the following chargors in
the Group - ASOS Plc, ASOS.com Limited, ASOS Intermediate Holdings Limited,
Mornington & Co (No. 1) Limited and Mornington & Co (No. 2) Limited.
Nordstrom loan/put option liability
On 12 July 2021 the Group announced a strategic partnership with Nordstrom, a
US-based multi-channel retailer, to drive growth in North America. As part of
this venture, Nordstrom purchased a minority interest in ASOS Holdings Limited
which holds the Topshop, Topman, Miss Selfridge and HIIT brands in exchange
for £10 as well as providing a £21.9m loan, which was partially repaid
during the period ended 3 September 2023. The loan attracts interest at a
market rate of 6.5% per annum. As part of this agreement a written put option
was provided to Nordstrom over their shares in ASOS Holdings Limited, valued
at £2.0m as at 3 March 2024. This option is exercisable on the third, the
fifth and the tenth anniversaries of the partnership.
16. Analysis of net debt
Group net debt comprises cash and cash equivalents less any borrowings drawn
down at period-end (including accrued interest), but excluding outstanding
lease liabilities.
Lease liabilities Borrowings Cash and cash equivalents Total
£m £m £m £m
As at 4 September 2023 (329.0) (672.8) 353.3 (648.5)
Cash flow movements 15.0 18.6 (26.5) 7.1
Cash flow excluding interest payments 12.5 - (21.1) (8.6)
Net interest paid/(received) 2.5 18.6 (5.4) 15.7
Non-cash movements 10.9 (26.9) 5.5 (10.5)
Movement in lease liabilities 12.9 - - 12.9
Foreign exchange impacts 0.5 - 0.1 0.6
Other non-cash movements (2.5) (26.9) 5.4 (24.0)
As at 3 March 2024 (303.1) (681.1) 332.3 (651.9)
Net debt (excluding leases) (348.8)
As at 1 September 2022 (380.1) (475.9) 323.0 (533.0)
Cash flow movements 28.0 (154.5) 27.6 (98.9)
Cash flow excluding interest 22.4 (198.3) 32.1 (143.8)
Net interest paid/(received) 5.6 28.0 (4.5) 29.1
Financing fees paid - 15.8 - 15.8
Non-cash movements 23.1 (42.4) 2.7 (16.6)
Movement in lease liabilities 21.1 - - 21.1
Foreign exchange impacts 7.6 - (1.8) 5.8
Other non-cash movements (5.6) (42.4) 4.5 (43.5)
At 3 September 2023 (329.0) (672.8) 353.3 (648.5)
Net debt (excluding leases) (319.5)
As at 1 September 2022 (380.1) (475.9) 323.0 (533.0)
Cash flow movements 15.0 (246.9) (15.2) (247.1)
Cash flow excluding interest 12.1 (250.0) (12.7) (250.6)
Net interest paid/(received) 2.9 3.1 (2.5) 3.5
Non-cash movements 19.2 (17.5) 0.8 2.5
Movement in lease liabilities 20.5 - - 20.5
Foreign exchange impacts 1.6 - (1.7) (0.1)
Other non-cash movements (2.9) (17.5) 2.5 (17.9)
At 28 February 2023 (345.9) (740.3) 308.6 (777.6)
Net debt (excluding leases) (431.7)
Other non-cash movements include accrued interest and fair value movements.
The cash and cash equivalents balance includes uncleared payment provider
receipts of £57.7m, which are typically due within 3 business days (28
February 2023: £44.6m; 3 September 2023: £63.3m).
Included within cash and cash equivalents is £7.9m (28 February 2023: £1.7m;
3 September 2023: £4.1m) of cash collected on behalf of partners of the
Direct to Consumer fulfilment proposition 'Partner Fulfils'. ASOS Payments
Limited and the Group are entitled to interest amounts earned on the deposits.
Amounts are held in a segregated bank account and are settled on a monthly
basis.
17. 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 period ended 3 September 2023.
Transactions with other related parties
During the period, the Group made purchases of inventory, net of VAT,
totalling £27.8m (28 February 2023: £38.9m; 3 September 2023: £65.9m) and
earned commission income from Partner Fulfils sales totalling £0.1m (28
February 2023: £0.1m; 3 September 2023: £0.2m). All were from Aktieselskabet
af 5.5.2010, a company which has a significant shareholding in the Group.
At 3 March 2024, the amount due to Aktieselskabet af 5.5.2010 was £8.7m (28
February 2023: £8.1m; 3 September 2023: £6.8m). In addition, a rebate of
£nil (28 February 2023: £0.1m; 3 September 2023: £0.1m) was received during
the period from Aktieselskabet af 5.5.2010.
There have been no other material changes to the Group's related party
transactions during the 26 weeks to 3 March 2024.
18. 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 e-commerce 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.
As previously reported, ASOS is currently party to legal proceedings in
overseas territories which the Group is robustly defending. The claim
considers the laws applicable to the sale of goods in the relevant territory,
under which the claimants are seeking a financial remedy for alleged breaches
by ASOS of local laws. The claim remains in its early stages, and will be
heard in two phases. Completion of such a claim can be a lengthy process, with
a final court decision of the first phase potentially taking up to two years
after the initial hearing. The claim and its defence are relatively complex,
there are multiple factual and legal defences to the claims and the Group
intends to defend them vigorously. The Group therefore cannot make an
assessment of the likely outcome of the litigation, or the potential quantum
of any liability were it to arise or the potential impact on the Group at this
stage. Furthermore, management are of the opinion that, given the early stages
of the claim, disclosure of any potential quantification could be prejudicial
to the Group at this time.
As disclosed in the FY23 annual accounts, the Group has made a voluntary
disclosure to an overseas tax authority in relation to potentially overclaimed
VAT. As explained, whether or not the VAT was overclaimed was ultimately
dependent on the relevant tax authority's view. The overseas tax authority
has now concluded that the VAT was correctly charged to ASOS, hence ASOS was
correct in recovering the VAT and no repayment or multi-party non-cash
agreement is necessary. This issue is therefore considered successfully
resolved without the liability crystalising. The Group notes that there are a
small number of suppliers who should likely have historically charged VAT on
services but have not. The Group will notify the relevant suppliers of
this and any amount payable will not be material and will be able to be
reclaimed by ASOS from the overseas tax authority in the normal course of
business.
Principal risks and uncertainties
The Board have reviewed the Group's risk environment including in relation to
the ongoing macroeconomic situation and global financial instability and
conflicts. Following their review they have concluded that the principal risks
and uncertainties which could impact the Group over the remaining 26 weeks of
the financial period 4 September 2023 to 1 September 2024 remain materially
unchanged from those set out in our Annual Report and Accounts for the period
ended 3 September 2023.
The Group's principal risks are listed below and set out in more detail on
pages 46 to 51 of the Group's FY23 Annual Report and Accounts, a copy of which
is available on the Group's website, www.asosplc.com.
(http://www.asosplc.com/)
· Macroeconomic changes
· Supply Chain disruption
· Strategic programmes fail to deliver required outcome
· Data breach
· Foreign exchange rate exposure
· Sustainability & climate change
· Cyber security incidents
· Market dynamics and impact on our business
· Availability of technology services
· Ethical trade issues
· Failure to comply with legislation or regulation
· Engagement, capability & retention of talent
Statement of Directors' responsibilities
The Directors confirm that this set of Condensed Consolidated Interim
Financial Statements has been prepared in accordance with UK adopted IAS 34
'Interim Financial Reporting' and the Disclosure and Transparency Rules of the
UK's Financial Conduct Authority, and that the Interim Management Report
herein includes a true and fair review of the information required by DTR
4.2.7R and DTR 4.2.8R, namely:
• that the report contains a fair review of
important events that have occurred during the first 26 weeks of the financial
year, and their impact on the condensed set of financial statements, and of
the principal risks and uncertainties for the remaining 26 weeks of the
financial year; and
• material related-party transactions in the first
26 weeks and any material changes in the related-party transactions described
in the last annual report.
The Directors of ASOS plc are listed on the Group's website:
https://www.asosplc.com/this-is-asos/our-
(https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.asosplc.com%2Fthis-is-asos%2Four-leadership%2Fboard-directors%2F&data=05%7C01%7Cathanasia.spanou%40asos.com%7Ca9c6838a68a348babd2608db4d6189c2%7C4af8322c80ee4819a9ce863d5afbea1c%7C0%7C0%7C638188853545142721%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=lij78aG%2BqGr4VONPrIhXhS6%2Bpwl%2Bws7k1MBchvB6LJA%3D&reserved=0)
leadership/board-directors/
(https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.asosplc.com%2Fthis-is-asos%2Four-leadership%2Fboard-directors%2F&data=05%7C01%7Cathanasia.spanou%40asos.com%7Ca9c6838a68a348babd2608db4d6189c2%7C4af8322c80ee4819a9ce863d5afbea1c%7C0%7C0%7C638188853545142721%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=lij78aG%2BqGr4VONPrIhXhS6%2Bpwl%2Bws7k1MBchvB6LJA%3D&reserved=0)
By order of the Board
José Antonio Ramos Calamonte
Chief Executive Officer
INDEPENDENT REVIEW REPORT TO ASOS PLC
REPORT ON THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Our conclusion
We have reviewed ASOS Plc's condensed consolidated interim financial
statements (the "interim financial statements") in the interim results of ASOS
Plc for the 26 week period ended 3 March 2024 (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 UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the consolidated balance sheet as at 3 March 2024;
· the consolidated income statement and consolidated statement of
comprehensive income for the period then ended;
· the consolidated cash flow statement for the period then ended;
· the consolidated statement of changes in equity for the period
then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results of ASOS Plc
have been prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). 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.
We have read the other information contained in the interim results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
INDEPENDENT REVIEW REPORT TO ASOS PLC CONTINUED
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The interim results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the interim results, including the
interim financial statements, the directors are responsible for assessing the
group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the interim results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority 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.
PricewaterhouseCoopers LLP
Chartered Accountants
London
16 April 2024
Alternative Performance Measures (APMs)
The Group uses the below non-IFRS performance measures to allow shareholders
to better understand underlying financial performance and position. These
should not be seen as substitutes for IFRS measures of performance and may not
allow a direct comparison to other companies.
Performance measure Closest IFRS measure Definition How ASOS uses this measure
Revenue growth at constant currency None ASOS calculates constant currency (CCY) growth by adjusting the current year This measure is presented as a means of eliminating the effects of exchange
adjusted revenue number for the impact of year-on-year changes in the hedge rate fluctuations on the period-on-period reported results.
rate on hedged sales and year-on-year spot rate movement on unhedged sales.
This provides revenue growth on a like-for-like basis vs. last year, giving
users of the accounts a better view of underlying sales performance that is
26 weeks to 3 March 2024 Six months to 28 February 2023 % growth
not impacted by exchange rate fluctuations. The current year also adjusts £m £m %
for the impact of one additional trading day in H1 FY24. Group revenue 1,505.8 1,840.6 (18%)
Adjusted items (8.3) (2.1)
Impact of foreign exchange translation and LFL financial periods(1) 4.3
Revenue at constant currency 1,501.8 1,838.5 (18%)
1 Removing the impact of the one extra trading day in HY24
Six months to 28 Feb 2023 Six months to 28 February 2022 % growth
£m £m %
Group revenue 1,840.6 2,004.1 (8%)
Impact of foreign exchange translation (46.0) - -
Revenue at constant currency 1,794.6 2,004.1 (10%)
Retails sales Revenue Internet sales recorded net of an appropriate deduction for actual and A measure of the Group's trading performance focusing on the sale of products
expected returns, relevant vouchers, discounts and sales taxes. to end customers. Used by management to monitor overall performance across
markets, and the basis of key internal KPIs such as ABV.
Retail sales exclude income from delivery receipt payments, marketing
services, commission on partner-fulfilled sales and revenue from wholesale
sales
The measure is reconciled in note 4.
Adjusted revenue Revenue Revenue excluding the impact of adjusting items. A measure of Group's revenue and gross profitability, excluding the impact of
any adjusting items.
Reconciliation is shown below:
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Revenue 1,505.8 1,840.6
Adjusting items (8.3) (2.1)
Adjusted revenue 1,497.5 1,838.5
Gross profit 602.3 664.7
Adjusting items 1.9 124.6
Adjusted gross profit 604.2 789.3
Gross margin 40.0% 36.1%
Adjusted gross margin % 40.3% 42.9%
Adjusted gross margin None Gross profit divided by revenue
and excluding the impact of
adjusting items.
1 Removing the impact of the one extra trading day in HY24
Six months to 28 Feb 2023 Six months to 28 February 2022 % growth
£m £m %
Group revenue 1,840.6 2,004.1 (8%)
Impact of foreign exchange translation (46.0) - -
Revenue at constant currency 1,794.6 2,004.1 (10%)
Retails sales
Revenue
Internet sales recorded net of an appropriate deduction for actual and
expected returns, relevant vouchers, discounts and sales taxes.
Retail sales exclude income from delivery receipt payments, marketing
services, commission on partner-fulfilled sales and revenue from wholesale
sales
A measure of the Group's trading performance focusing on the sale of products
to end customers. Used by management to monitor overall performance across
markets, and the basis of key internal KPIs such as ABV.
The measure is reconciled in note 4.
Adjusted revenue
Revenue
Revenue excluding the impact of adjusting items.
A measure of Group's revenue and gross profitability, excluding the impact of
any adjusting items.
Reconciliation is shown below:
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Revenue 1,505.8 1,840.6
Adjusting items (8.3) (2.1)
Adjusted revenue 1,497.5 1,838.5
Gross profit 602.3 664.7
Adjusting items 1.9 124.6
Adjusted gross profit 604.2 789.3
Gross margin 40.0% 36.1%
Adjusted gross margin % 40.3% 42.9%
Adjusted gross margin
None
Gross profit divided by revenue
and excluding the impact of
adjusting items.
Alternative Performance Measures (APMs) continued
Performance measure Closest IFRS measure Definition How ASOS uses this measure
Adjusted EBIT Operating loss Profit before tax, interest, and any adjusting items excluded from adjusted A measure of the Group's underlying profitability for the period, excluding
profit before tax (see below). the impact of any transactions outside of the ordinary course of business and
not considered to be part of ASOS' usual cost / income base. Used by
management to monitor the performance of the business each month.
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Operating loss (246.8) (272.5)
Adjusting items excluding finance costs (note 3) 148.7 203.1
Adjusted EBIT (98.1) (69.4)
Net finance costs (note 5) (23.2) (18.4)
Add back adjusting finance costs (note 3) 1.3 0.4
Adjusted loss before tax (120.0) (87.4)
Group revenue 1,505.8 1,840.6
Adjusting items (8.3) (2.1)
Adjusted Group revenue 1,497.5 1,838.5
Adjusted EBIT margin (6.6%) (3.8%)
Details of adjusting items are included within note 3.
Adjusted loss before tax Loss before tax Adjusted (loss)/profit before tax excludes items recognised in reported profit
or loss before tax which, if included, could distort comparability between
periods. In determining which items to exclude, the Group considers items
which are significant either by virtue of their size and/or nature, or that
are non-recurring.
Adjusted EBITDA No direct equivalent Adjusted EBIT above, adjusted for depreciation, amortisation and Adjusted EBITDA is used to review the Group's profit generation and the
impairments. sustainability of ongoing capital reinvestment and finance costs.
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Adjusted EBIT (98.1) (69.4)
Add back depreciation and amortisation (per cash flow) 87.2 83.3
Add back impairment (per cash flow) 115.8 28.9
Less depreciation and amortisation excluded from adjusted profit(1) (5.4) (9.3)
Less impairment excluded from adjusted profit (115.8) (28.9)
Adjusted EBITDA (16.3) 4.6
1 The prior year comparative includes £0.7m depreciation costs
included within the costs incurred for the commercial operating model
Net cash/(debt) No direct equivalent Cash and cash equivalents less the carrying value of borrowings (including A measure of the Group's liquidity. Information is included in note 16.
accrued interest) drawn down at period-end, but excluding outstanding lease
liabilities A reconciliation is included below:
3March 2024 28 February 2023
£m £m
Cash and cash equivalents 332.3 308.6
Borrowings (681.1) (740.3)
Lease liabilities (303.1) (345.9)
Net borrowings (651.9) (777.6)
Add back lease liabilities 303.1 345.9
Group net debt (348.8) (431.7)
Details of adjusting items are included within note 3.
Adjusted loss before tax
Loss before tax
Adjusted (loss)/profit before tax excludes items recognised in reported profit
or loss before tax which, if included, could distort comparability between
periods. In determining which items to exclude, the Group considers items
which are significant either by virtue of their size and/or nature, or that
are non-recurring.
Adjusted EBITDA
No direct equivalent
Adjusted EBIT above, adjusted for depreciation, amortisation and
impairments.
Adjusted EBITDA is used to review the Group's profit generation and the
sustainability of ongoing capital reinvestment and finance costs.
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Adjusted EBIT (98.1) (69.4)
Add back depreciation and amortisation (per cash flow) 87.2 83.3
Add back impairment (per cash flow) 115.8 28.9
Less depreciation and amortisation excluded from adjusted profit(1) (5.4) (9.3)
Less impairment excluded from adjusted profit (115.8) (28.9)
Adjusted EBITDA (16.3) 4.6
1 The prior year comparative includes £0.7m depreciation costs
included within the costs incurred for the commercial operating model
Net cash/(debt)
No direct equivalent
Cash and cash equivalents less the carrying value of borrowings (including
accrued interest) drawn down at period-end, but excluding outstanding lease
liabilities
A measure of the Group's liquidity. Information is included in note 16.
A reconciliation is included below:
3 March 2024 28 February 2023
£m £m
Cash and cash equivalents 332.3 308.6
Borrowings (681.1) (740.3)
Lease liabilities (303.1) (345.9)
Net borrowings (651.9) (777.6)
Add back lease liabilities 303.1 345.9
Group net debt (348.8) (431.7)
Alternative Performance Measures (APMs) continued
Performance measure Closest IFRS measure Definition How ASOS uses this measure
Free cash flow No direct equivalent Free cash flow is net cash generated from operating activities, adjusted for A measure of the cash generated by the Group outside cash flows relating to
payments to acquire intangible and tangible assets, the payment of the financing, which allows management to better assess the cash being generated
principal portion of lease liabilities and net finance expenses. by the business.
A reconciliation to the Group cash flow is shown below:
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Cash used generated from/(used in) operations (per cash flow) 93.2 (128.2)
Purchase of tangible and intangible assets (86.1) (115.0)
Repayment of principal portion of lease liabilities (12.5) (12.1)
Net interest paid (15.7) (3.5)
Free cash flow(1) (21.1) (258.8)
1 The Group has updated its definition to remove fees in relation
to any financing transactions carried out by the Group to enable meaningful
comparison of financial information as the fees were one-off and the inclusion
would not be reflective of the normal operations of the Group.
Cost to serve No direct equivalent Operating expenses (excluding depreciation and amortisation and excluding Cost to serve reflects the underlying profitability of the business and
adjusting items) as a percentage of adjusted revenue. demonstrates discipline on cost structure.
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Operating expenses 850.2 938.2
Less depreciation and amortisation (87.2) (83.3)
Less adjusted operating expenses (146.8) (78.5)
Add back adjusted depreciation and amortisation(1) 5.4 9.3
621.6 785.7
Adjusted revenue 1,497.5 1,838.5
Cost to serve 41.5% 42.7%
1 The prior year comparative includes £0.7m depreciation costs
included within the costs incurred for the commercial operating model
1 The Group has updated its definition to remove fees in relation
to any financing transactions carried out by the Group to enable meaningful
comparison of financial information as the fees were one-off and the inclusion
would not be reflective of the normal operations of the Group.
Cost to serve
No direct equivalent
Operating expenses (excluding depreciation and amortisation and excluding
adjusting items) as a percentage of adjusted revenue.
Cost to serve reflects the underlying profitability of the business and
demonstrates discipline on cost structure.
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
Operating expenses 850.2 938.2
Less depreciation and amortisation (87.2) (83.3)
Less adjusted operating expenses (146.8) (78.5)
Add back adjusted depreciation and amortisation(1) 5.4 9.3
621.6 785.7
Adjusted revenue 1,497.5 1,838.5
Cost to serve 41.5% 42.7%
1 The prior year comparative includes £0.7m depreciation costs
included within the costs incurred for the commercial operating model
Alternative Performance Measures (APMs) continued
Performance measure Closest IFRS measure Definition How ASOS uses this measure
Other working capital movements (per Financial Review) No direct equivalent Removes working capital and cash movements relating to adjusted items. To provide a reconciliation of the working capital movement in the Financial
Statements to the other working capital movement in the Financial Review.
26 weeks to 3 March 2024 Six months to 28 February 2023
£m £m
(Increase)/decrease in other working capital (per Financial Review) (66.7) (113.6)
Comprises:
Working capital per cash flow (excluding inventory) (46.9) (99.2)
Working capital relating to adjusted items (19.8) (14.4)
(66.7) (113.6)
Working capital relating to adjusting items:
Adjusted items (note 3) (150.0) (203.5)
Add back adjusted impairment (note 3) 115.8 28.9
Add back adjusted depreciation (note 3)(1) 5.4 9.3
Add back commercial model change (note 3)(2) - 127.5
Add back adjusted finance costs (note 3) 1.3 0.4
Adjusted working capital before cash impacts (27.5) (37.4)
Cash impact of adjusted items 7.7 23.0
Working capital relating to adjusted items (19.8) (14.4)
1 The prior year comparative includes £0.7m depreciation costs
included within the costs incurred for the commercial operating model.
2 Prior year excludes £0.7m of depreciation already added back.
1 The prior year comparative includes £0.7m depreciation costs
included within the costs incurred for the commercial operating model.
2 Prior year excludes £0.7m of depreciation already added back.
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