REG - ASOS PLC - Interim Results
10/05/2023 07:00
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RNS Number : 9200Y ASOS PLC 10 May 2023
10 May 2023
ASOS plc ("the Company")
Global Online Fashion Destination
Interim Results for the six months to 28 February 2023
Executing on Driving Change agenda, creating strong foundations for a return
to profitability and cash generation in H2 FY23 and beyond
Summary financial results
Six months to 28 February 2023 Six months to 28 February 2022 CCY(2) change CCY change excluding Russia(2,3,4)
£m(1) Change
Headline measures
Group revenue(5) 1,840.6 2,004.1 (8%) (10%) (7%)
Adjusted gross margin(6) 42.9% 43.1% (20bps)
Adjusted EBIT(6) (69.4) 26.2
Adjusted EBIT margin(6) (3.8%) 1.3% (510bps)
Adjusted (loss)/profit before tax(6) (87.4) 14.8
Net debt(6) (431.7) (62.6)
Free cash outflow(6) (262.7) (256.5)
Statutory measures
Gross margin 36.1% 43.1% (700bps)
Operating loss (272.5) (4.4)
Reported loss before tax (290.9) (15.8)
Strategic Update
· Despite the ongoing challenges in the operating environment,
ASOS is on track to deliver full year targets of:
o Over £300m of Driving Change agenda benefits, with over £100m delivered
in H1. Actions already taken will drive more than 95% of c.£200m
profitability benefits expected in H2 FY23;
o Inventory reduction of c.20% year-on-year ('YoY'), with 9% reduction vs
FY22 achieved in H1, slightly ahead of plan;
o Adjusted gross margin improvement of c.100bps, with recent run-rate up
more than 300bps YoY;
o Profitability and cash generation in H2 FY23 and beyond, with £40-60m
adjusted earnings before interest and tax ('EBIT') and over £150m free cash
inflow(7) in H2 FY23;
· Robust and flexible balance sheet with an amendment and
extension of existing £350m revolving credit facility ('RCF') through to
November 2024. The facility steps down over the term, reducing to £220m by
August 2024. The Company had cash and undrawn facilities over £400m at 28
February 2023.
· Refreshed management team, with newly formed Management
Committee now largely complete.
· ASOS remains focused on executing the final stages of its
Driving Change agenda, creating strong foundations for its next phase of
growth.
H1 Results Summary
· Revenue(8) declined by 7% (down 8% on a reported basis) in H1
FY23 and 15% in P2 FY23, reflecting both deliberate actions on capital
allocation to improve profitability and a challenging trading backdrop. The
actions taken account for broadly 50% of the revenue decline since December
but are driving improving order economics.
· Sales momentum in January and February reflected: (1) planned
profitability actions including reduced markdown, discipline on marketing
spend and country-specific proposition changes; (2) reduced width in the
assortment as the Company took decisive action to right-size stock; and (3) a
challenging online retail environment as online penetration declined YoY -
although remaining notably higher than pre-pandemic.
· UK sales were down 10% YoY, Europe flat, US down 7% and Rest of World
down 12%. Variation in performance reflects regional differences in the
economic backdrop as well as country-specific profit actions taken by the
Company in-line with its focus on profitability over top-line growth. The
regional trends in sales growth were reflected in active customer numbers in
the period. However, ASOS has continued to grow its share of its core UK
online retail market among its main 16-35 demographic and has increased its
share of its customers' wallets(9).
· Adjusted gross margin(10) was broadly flat, both YoY and from P1
FY23, at 42.9%. It showed encouraging progress over the period, with February
adjusted gross margin up more than 300bps YoY and sustained through March and
April, supported by lower freight and duty rates.
· Stock has been reduced by 9% from the level reported at FY22,
slightly ahead of the 5% H1 FY23 reduction planned at the time of the P1 FY23
update.
· H1 FY23 adjusted EBIT loss was £69.4m and adjusted loss before
tax was £87.4m. Actions taken under the Driving Change agenda had a positive
profit impact of more than £100m, partially offsetting anticipated headwinds
of c.£180m (predominantly from inflation and normalisation of return rates).
· The reported loss before tax of £290.9m includes £203.5m of
adjusting items, primarily relating to the execution of the Driving Change
agenda. These include £128.2m relating to the previously announced stock
write-off and £49.4m of non-cash property impairments and closure costs
relating to the reduction of the Company's head office and logistics
footprint. The cash outflow relating to adjusting items in the period was
£23.0m. Further detail on the adjusting items is included in note 3 on pages
23-26.
· Free cash outflow(11) for the half was £262.7m mainly driven by
the reported loss in the period, H1-weighted historical committed capex
investment of £115.0m and the phasing of stock receipts and payments, with
the cash benefit associated with the lower H1 intake expected in H2 FY23.
· ASOS ended H1 FY23 with cash and undrawn facilities totalling
£408.6m at what is typically the seasonal trough in its net working capital
cycle.
Current Trading & Outlook
· Sales momentum in P2 FY23 (-15% CCY ex-Russia) has broadly
continued into March and April with approximately half of the sales decline
driven by planned Driving Change initiatives. However, with adjusted gross
margin run rate up more than 300bps YoY, adjusted gross profit was broadly
flat YoY over the same period, reflective of the prioritisation of
profitability over growth.
· ASOS will retain its focus on profitable sales in H2 FY23 and its
commitment to exit the year with a cleaner inventory position. If there is no
improvement to the external trading environment, expectations for H2 FY23 are:
o Sales (CCY ex-Russia) decline of low double-digit YoY;
o Adjusted gross margin up c.200bps YoY;
o Inventory reduction of c.20% YoY;
o Adjusted EBIT of £40-60m, adjusted EBIT margin c.3%;
o Free cash inflow of over £150m, excluding all incremental refinancing
costs (interest, arrangement and advisor fees). This equates to over £125m
free cash inflow including refinancing costs;
o Capex of £60-85m (in-line with FY23 guidance of £175-200m);
o Interest expense of c.£30m, including amortisation of arrangement fees
and related costs;
o EBIT impact of adjusting items in the range of £25m-£30m in H2 FY23, of
which £15m is non-cash (mostly relating to the Driving Change agenda).
· For FY23, free cash outflow (prior to incremental refinancing
costs) will be around £100m (i.e. around the bottom end of the £0 to £100m
outflow guidance provided at FY22).
José Antonio Ramos Calamonte, Chief Executive Officer said:
"Our focus is on improving our core profitability, prioritising order
economics over top-line growth and I am pleased with the strategic and rapid
operational progress the business has made in the first half of the financial
year, against some very challenging trading conditions. Thanks to the hard
work and commitment of our teams, we have accelerated the roll-out of our new
commercial model, delivered more than £100m of profit optimisation and cost
saving initiatives, extended our financing facility and continued to build out
our top team while remaining committed to our Fashion with Integrity agenda.
Taken together, these measures will create a more sustainably profitable and
cash generative business as we reinforce our position as a leading destination
for our fashion-loving customers.
"While some of these changes have impacted short-term sales growth, there are
many causes for optimism as we progress through the second half of the year.
We are improving our gross margin run rate in the face of significant
headwinds, are starting to see the benefits of a repositioned stock profile,
and are taking action to reduce the proportion of our sales which are not
profitable. Initiatives are in place to drive a further c.£200m of benefit in
the second half and I am very confident of our return to sustainable profit
and cash generation in the second half of the year and beyond."
The amendment and extension to Revolving Credit Facility agreed with the
Company's banking syndicate constitutes inside information. This announcement
therefore includes inside information.
The person responsible for arranging the release of this announcement on
behalf of ASOS is Emma Whyte, General Counsel and Company Secretary.
Notes
(1) All numbers subject to rounding throughout this document.
(2) Constant currency is calculated to take account of hedged rate movements
on hedged sales and spot rate movements on unhedged sales.
(3) Calculation of metrics, or movements in metrics, on an ex-Russia basis
involves the removal of Russia from H1 FY22 performance. This adjustment
allows YoY comparisons to be made on a like-for-like basis following the
decision to suspend trade in Russia on 2 March 2022.
(4) Excludes one-off jobber income in relation to the stock write-off program
of £2.1m in H1 FY23. Further detail on the adjusting items can be found in
note 3 on pages 23-26.
(5) Includes retail sales, wholesale and income from other services.
(6) Definitions of the adjusted performance measures used above and throughout
this document can be found on pages 45-46.
(7) Free cashflow guidance is excluding all incremental refinancing costs
(interest, arrangement and advisor fees).
(8) All sales numbers quoted in this document are at constant currency and
exclude Russia from the H1 FY22 comparative base period unless otherwise
stated.
(9 ) Share of UK online retail market based on Kantar | Total Market | Total
Clothing, Footwear and Accessories | 16-35 year olds | Market Shares | 24
w/e 5th March 2023 vs LY, share of customers' wallets based on Kantar | ASOS
Shoppers | Online | Spend % I 24 w/e 5th March 2023 vs LY.
(10) Excluding the gross profit impact of the stock write-off of £119.7m
announced at FY22 and non-underlying sales tax of £4.9m. Reported gross
margin of 36.1% (down 700bps YoY). Further detail on adjusting items can be
found in note 3 on pages 23-26.
1(1) Definition of free cash outflow can be found on pages 45-46.
Investor and analyst meeting:
The Company will be hosting an in-person presentation for analysts and
investors at 9.00am at ASOS HQ, Greater London House, NW1 7FB. For those
unable to attend in person a live webcast will be available, and a recording
of the presentation will be uploaded to the ASOS investor relations website
afterwards.
To access live please dial +44 203 901 7895 and use Meeting ID: 882 4156
1706 and passcode: 747285. 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:
ASOS Tel: 020 7756 1000
Plc
José Antonio Ramos Calamonte, Chief Executive Officer
Katy Mecklenburgh / Sean Glithero, Interim Chief Financial Officer
Michelle Wilson, Senior Director of Strategy and Corporate Development
Holly Cassell, Head of Investor Relations
Website: www.asosplc.com/investors (http://www.asosplc.com/investors)
Headland Consultancy Tel: 020 3805 4822
Susanna Voyle / Stephen Malthouse / Rob Walker
JPMorgan Cazenove Tel: 020 7742 4000
Bill Hutchings / Will Vanderspar
Numis Securities Tel: 020 7260 1000
Alex Ham / Jonathan Wilcox / Tom Jacob
Berenberg Tel: 020 3207 7800
Matthew Armitt / Richard Bootle / Marie Moy
Background note
ASOS is a destination for fashion-loving 20-somethings around the world, with
a purpose to give its customers the confidence to be whoever they want to be.
Through its app and mobile/desktop web experience, available in nine languages
and in over 200 markets, ASOS customers can shop a curated edit of over 60,000
products, sourced from nearly 900 global and local third-party brands
alongside a mix of fashion-led own-brand labels - ASOS Design, ASOS Edition,
ASOS 4505, Collusion, Reclaimed Vintage, Topshop, Topman, Miss Selfridge and
HIIT. ASOS aims to give all of its customers a truly frictionless experience,
with an ever-greater number of different payment methods and hundreds of local
deliveries and 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, the Company undertakes no obligation to publicly revise any
forward-looking statements in this announcement, whether following any change
in its expectations or to reflect events or circumstances after the date of
this announcement.
ASOS plc ("the Company")
Global Online Fashion Destination
Interim Results for the six months to 28 February 2023
( )
CEO Review
In my inaugural ASOS results announcement last October, I set out a frank
assessment of the Company's many strengths, but also some areas where our
performance was lacking. This is an incredible business with a compelling
brand, customer offer and fashion credibility. The opportunity is in improving
the way we operate, including delivering on our Fashion with Integrity
programme on which we have published our second annual progress report. This
diagnosis resulted in our Driving Change agenda, an action plan to accelerate
the changes needed to transform ASOS into a sustainably profitable and cash
generative business, built on four key principles: simplicity, speed to
market, operational excellence; and flexibility and resilience. The economic
environment we are operating in is extremely challenging, but I am delighted
with the commitment and dedication of the ASOS team to deliver on our plan.
The Driving Change initiatives implemented to date have generated more than
£100m of benefit in H1 FY23 and created a strong foundation for ASOS' return
to profitability in H2 FY23 and beyond. Indeed, more than 95% of the c.£200m
of benefits expected in H2 FY23 are based on initiatives already in place.
Revenue declined 7%(1) YoY in H1 FY23 to £1,840.6m (down 8% on a reported
basis(2)). This performance reflects both a challenging trading environment
and the impact of profitability actions taken under the Driving Change agenda,
largely since December. We remain convinced these measures are the right ones
to achieve our ambition to become a sustainably profitable, cash generative
business in the longer term and we have already seen order economics improve
as a result. We are making these changes at the same time as our customers are
feeling the squeeze financially and in the short-term are returning to
physical stores post-pandemic. However, on a three-year view online
penetration has increased substantially, and we remain confident in the
structural drivers underpinning continued growth in the online channel in the
medium term. In the meantime, we have grown our share of the 16 to 35 online
retail market in the UK, maintaining our market leading position as our
proposition continues to resonate with our core consumer. The strength of our
offer is perhaps best reflected by the performance of the Topshop brand, which
has delivered retail sales growth of 12%(3) YoY and a higher margin than the
Company average.
A detailed update of our progress against our Driving Change agenda is covered
in the following pages.
i. Renewed commercial model
The new commercial model comprises a comprehensive change in ASOS' approach to
buying and merchandising, improved stock management discipline and reduced
complexity in our logistics network to ensure that its fashion-loving
20-something core customer base is exposed to cutting edge fashion curated in
ASOS' own unique way. The benefits of this are twofold: a more engaging
customer experience with exposure to more inspirational, relevant product; and
a higher proportion of more profitable full-price sales.
Current product lead times mean there is a lag between operational change and
visible results. However, over the period ASOS has taken decisive action aimed
at simplifying the product journey, including increasing flexibility in its
buying processes, re-setting its stock profile and closing ancillary warehouse
space. Encouragingly, there was positive progression in underlying gross
margin through the half. While the sales outlook for the year is more
challenging than initially anticipated, the current adjusted gross margin run
rate is up more than 300bps YoY and provides headroom for ASOS to take action
if necessary to ensure it exits the year with a significantly improved stock
profile, thus laying the foundations for FY24.
(1) Total revenue CCY excluding Russia declined by 7% (down 10% CCY including
Russia).
(2) Total reported revenue including Russia declined by 8% (down 5% on a
reported basis excluding Russia).
(3) Topshop brand sales on the ASOS.com platform growth of 12% (excluding
Russia) and 10% (including Russia).
Stock profile
To facilitate the introduction of the new model, ASOS is taking action to
right-size its stock profile in three phases:
1. Stock write-off: At the FY22 results announcement, a
non-underlying stock write-off of up to £130m was announced, taking decisive
action to clear excess stock and deliver more efficient use of the Company's
warehouse network. C.90% of the stock identified for write-off has now been
extracted from the ASOS core network, enabling the implementation of supply
chain efficiency initiatives under the Company's programme of cost saving
measures described under pillar ii) below.
2. Spring / Summer intake: With the new commercial model initiated
part-way through the Spring/Summer '23 buying cycle, the opportunity to reduce
intake was predominantly via a reduction in the number of options. This has
had a negative impact on current trading which is expected to continue through
the remainder of the Spring / Summer season (i.e. the remainder of FY23) but
will drive the planned c.20% reduction in stock by the end of the financial
year.
3. Autumn / Winter intake: Looking ahead to Autumn/Winter '23, the
principles underpinning the new model will be manifested in full. The newly
formed central merchandise planning team is driving a more dynamic approach to
stock management, facilitating a reduction in intake volumes while restoring
width to the assortment. This approach is intended to increase stock turnover
to pre-pandemic levels by the end of FY24.
Flexibility in the assortment
In the longer term, improved relevance and hence full-price sell-through are
achieved by increasing flexibility in the ASOS product assortment. On its
own-brand offer, the Company is currently running a 'Test and React' pilot
using UK suppliers across a small number of product lines. The purpose of this
pilot is to stress test ASOS' ability to reduce product lead times from
concept to site to c.2 weeks in certain circumstances. For partner branded
product, the Partner Fulfils model will play a strategic role by increasing
the range and depth of products for sale without an associated stock risk for
the Company. This will be particularly valuable in product categories with
longer lead times such as sportswear. The Company has continued to build out
the functional capability of the Partner Fulfils platform to enable the
addition of more brands and services in H2 FY23 and beyond. Additional
technology capabilities have also increased automation in the onboarding
process, making for a more streamlined experience for ASOS' partners. 24
Partner Fulfils brands are currently live in the UK and Europe.
ii. Stronger order economics and a lighter cost profile
In parallel with changes to the commercial model, the Company also set out
plans to optimise its cost base, improving order economics and maximising
operating model efficiency to ensure a sustainable level of profitability and
cash generation is achieved in all markets. At P1 FY23, a comprehensive
package of profit optimisation and cost mitigation initiatives was announced
under the Driving Change agenda with an expected full year benefit of more
than £300m. Implementation of these initiatives is in line with plan and the
Company delivered more than £100m in H1 FY23, partially mitigating the
H1-weighted headwinds resulting from inflation, returns normalisation and cost
deleverage to result in a £69.4m adjusted EBIT loss. These headwinds drove
notable adversity in 'other costs' (+260bps YoY as a percentage of sales) and
warehouse costs (+210bps YoY as a percentage of sales, which also reflects
inefficiencies resulting from the high stock position at the start of the
year).
The Company remains on track to deliver Driving Change agenda benefits in
excess of £300m in FY23. Of the c.£200m of benefits guided for H2 FY23, more
than 95% result from initiatives already implemented in the first half of the
year. Against a backdrop of abating headwinds, this underpins expectations of
a return to profitability and cash generation in H2 FY23.
As expected at the P1 FY23 trading update, c.60% of the more than £100m of
benefits delivered in H1 FY23 related to profit optimisation initiatives while
c.40% reflected cost mitigation.
Profit optimisation
As with stock profile, ASOS has taken action in three phases to improve
customer profitability:
1. Brand level: The first phase of action, centred around unprofitable
brands, was undertaken in October 2022. ASOS constantly reviews its brand
portfolio to offer consumers the most exciting and inspiring curated edit of
product. From October, a comprehensive review of brand profitability was
undertaken. Brands can become unprofitable for a number of reasons including
heightened promotional activity or returns, which is often correlated with,
but not entirely dependent on product relevance. Where unprofitable partners
are categorised as 'strategic' brands, remedial action was taken including
reduced discounting with a view to improving their contribution. Those deemed
not to be strategic have been removed from the platform in some or all
geographies depending on local performance. As flagged at P1 FY23 results,
ASOS identified 35 unprofitable brands for removal, and has ceased buying from
these brands.
2. Country level: From November 2022, ASOS undertook a comprehensive
review of country profitability, segmenting countries according to both their
profit contribution and, in cases where profitability was not being maximised,
the reasons behind this. A differentiated approach has been taken to remedy
the issues facing countries in each segment. For example, free standard
delivery was removed in five non-core European countries, delivery charges and
thresholds were introduced or increased in a number of RoW markets and
delivery prices were adjusted across the US. We have seen significant
improvements in the underlying profit contribution from all our key
territories during the period.
3. Customer level: The third, more targeted phase of action is at the
customer level. ASOS has built a base of c.25m highly engaged, young,
fashion-loving customers. However, there are a small number of customers that
have a disproportionately negative impact on ASOS profitability (over £100m).
This group, which in FY22 accounted for 6% of active customers, generated a
loss of c.£6 per order due to a heavy reliance on discounted product and high
return rate, and ordered significantly more frequently than average. This
behaviour may be temporary, part of the lifetime journey of a profitable
customer or simply bad business for ASOS. ASOS is now undertaking more refined
action, using a more personalised approach to incentivise positive behaviours.
The decisive action taken to improve profitability at speed using brand and
country level measures has, as expected, adversely impacted sales and customer
numbers in some cases. Active customers declined by 0.6m YoY to 24.9m(1) as
ASOS churned some of the increase seen during the pandemic and a more
disciplined approach to marketing investment saw new customer acquisition fall
in a weaker consumer environment. The Company also saw a 7% YoY decline in
Premier customers as subscription prices increased and minimum order values
were introduced, or increased, in many territories. However, the average
customer value(2) of both active and Premier customers has increased over the
period, and ASOS' share of its UK customers' wallet has also increased by
50bps YoY(3).
Cost mitigation
ASOS' operational excellence initiatives have impacted cost lines throughout
the P&L. The most significant grouping of cost savings relate to supply
chain (c.£27m), including the cessation of UK split orders being partially
shipped from the Lichfield facility which, (in contrast to Barnsley) is not
fully automated. Other significant categories include savings in overheads
(c.£12m) and marketing (c.£6m). The Company reduced its investment in
customer acquisition as it prioritised optimisation of existing customer
profitability at a time of low growth, with marketing spend declining 8% YoY
(flat YoY at 6% of sales). Within this, spend was curtailed in periods and
geographies where consumer demand was weak and redeployed where it was more
likely to generate value. These decisions are reflected in customer numbers as
well as contributing to the variation in revenue by segment.
iii. Robust, flexible balance sheet
ASOS ended H1 FY23 with cash and undrawn facilities totalling £408.6m at what
is typically the seasonal trough in its net working capital cycle. In May 2023
the Company agreed an amendment and extension of its RCF to November 2024. The
amended facility replaces the current £350m existing RCF and steps down over
the term to £220m by August 2024. The RCF extension secures the Company's
funding beyond FY24, supporting the business as it continues to execute on its
Driving Change agenda and return to profitability and cash generation. The
financing is subject to liquidity, leverage and interest cover covenants.
(1) Active customers declined by 0.6m YoY to 24.9m excluding Russian active
customers (down 1.8m YoY at 24.9m including Russian active customers).
(2) Average customer value calculated as gross billed revenue over last 12
months divided by active or Premier customers respectively.
(3) Kantar | ASOS Shoppers | Online | Spend % I 24 w/e 5(th) March 2023 vs LY.
The free cash outflow of £262.7m reflects the reported loss incurred in the
period, the phasing of stock receipts and payments, with the cash benefit
associated with the lower H1 intake expected in H2 FY23 and capex. Due to
historical commitments, FY23 capex is more heavily weighted to the first half
of the year, with £115.0m invested in support of technology investments into
data services, data science, merchandising, warehouse, web and payments
platforms, as well as contractual payments relating to the deferred Lichfield
and Atlanta automation projects. The Company maintains its guidance for
full-year capex of £175m to £200m. Net debt closed the half at £431.7m (H1
FY22: £62.6m).
iv. Reinforced leadership team and refreshed culture
The final pillar of the Driving Change agenda relates to simplification of
ASOS' decision-making processes, developing a culture of innovation across the
business, and reinforcing the senior leadership team with strategic key hires.
This process is approaching completion. The wider, flatter structure that this
represents acts to bring management closer to the organisation and facilitate
quicker decision-making, breaking down silos.
ASOS is pleased to announce the appointment of Dan Elton as Senior Customer
Director and Michelle Wilson as Senior Director of Strategy and Corporate
Development. Supplementing the internal appointments to the management
committee and previously announced external appointments, Dan and Michelle
bring a wealth of relevant marketing, finance and capital markets experience
to the ASOS leadership. The appointment of Sean Glithero as Interim CFO,
replacing Katy Mecklenburgh who leaves the business following this results
announcement, was also separately announced following the P1 FY23 trading
update. Sean is an experienced CFO with a track record of delivery across a
range of digital and fashion businesses, and will remain with ASOS until such
time as a permanent CFO is appointed, having joined the business in February
to ensure a thorough handover period. ASOS would like to thank Katy for her
significant contribution during her time at ASOS.
On 6 April 2023, ASOS announced that it had further strengthened its Board
with the appointment of Natasja Laheij and Jose Manuel Martínez Gutiérrez
as Independent Non-Executive Directors joining the Board on 11 April 2023.
Natasja and Jose Manuel have extensive experience in international commercial
and financial management, e-commerce, and in the retail and fashion industry
respectively. The Company also announced on 6 April 2023, that Patrick Kennedy
stepped down from the Board with effect from 5 April 2023. The Board would
like to thank Patrick for the important contribution he has made to ASOS. Mai
Fyfield, who joined the Board in November 2019, has succeeded Patrick as
Senior Independent Director of the Company.
Against a challenging backdrop, ASOS has achieved a great deal in this period
of reset and is well positioned to return to profitability in H2 FY23 and
beyond. While there remains much to be delivered in the next few months, I am
confident that the ASOS will exit the year a more resilient and sustainably
profitable business.
José Antonio Ramos
Calamonte
Chief Executive Officer
Financial review
All revenue growth figures are stated at constant currency throughout this
document unless otherwise indicated.
Overview
Six months to 28 February 2023
UK EU US RoW(1) Total reported Adjusting items(4) Total adjusted
£m £m £m £m £m £m £m
Retail sales(2) 775.1 572.7 244.3 172.7 1,764.8 (2.1) 1,762.7
Income from other services(3) 28.6 13.9 24.9 8.4 75.8 - 75.8
Total revenue 803.7 586.6 269.2 181.1 1,840.6 (2.1) 1,838.5
Cost of sales (1,175.9) 126.7 (1,049.2)
Gross profit 664.7 124.6 789.3
Distribution expenses (229.8) - (229.8)
Administrative expenses (708.4) 78.5 (629.9)
Other income 1.0 - 1.0
Operating loss (272.5) 203.1 (69.4)
Finance income 2.5 - 2.5
Finance expense (20.9) 0.4 (20.5)
Loss before tax (290.9) 203.5 (87.4)
ASOS delivered an adjusted loss before tax of £87.4m for the half, and a
reported loss before tax of £290.9m. Adjusting items for the half totalled
£203.5m, including the stock-write off (£128.2m), property impairments
(£49.4m), and other costs associated with implementation of the Driving
Change agenda such as consultancy and restructuring costs (£11.0m). There was
also a non-underlying historic sales tax charge (£9.8m) and amortisation
relating to the Topshop brands (£5.1m). The total cash outflow relating to
adjusting items in the period was £23.0m. Further detail on each of these
items can be found in note 3 on pages 23-26.
KPIs excluding Russia(5) Six months to 28 February 2023 Six months to 28 February 2022 Change
Active customers(6) (m) 24.9 25.5 (2%)
Average basket value(7) £40.84 £37.97 8%
Average basket value CCY(8) £39.86 £37.97 5%
Average order frequency(9) 3.73 3.75 (1%)
Total shipped orders (m) 43.2 48.8 (11%)
Total visits (m) 1,384.6 1,463.7 (5%)
Conversion(10) 3.1% 3.3% (20bps)
( )
( )
( )
(1) Rest of World.
(2) Retail sales are internet sales recorded net of an appropriate deduction
for actual and expected returns, relevant vouchers, discounts and sales taxes.
(3) Income from other services comprises of delivery receipt payments,
marketing services, commission on partner-fulfilled sales and revenue from
wholesale sales.
(4) The adjusting items and the adjusted performance measures used by ASOS are
explained and defined on pages 23-26 and 45-46 respectively.
(5) Calculation of metrics, or movements in metrics, on an ex-Russia basis
involves the removal of Russia from H1 FY22 performance. This adjustment
allows YoY comparisons to be made on a like-for-like basis following the
decision to suspend trade in Russia on 2 March 2022. The exception to this is
visits, where ASOS have also excluded any visits from Russia in H1 FY23, in
addition to H1 FY22.
(6) Defined as having shopped in the last 12 months as at 28 February.
(7) Average basket value is defined as net retail sales divided by shipped
orders.
(8) Average basket value CCY is calculated as constant currency net retail
sales / shipped orders.
(9) Calculated as last 12 months' total shipped orders divided by active
customers.
(10) Calculated as total shipped orders divided by total visits.
KPIs including Russia Six months to 28 February 2023 Six months to 28 February 2022 Change
Active customers(1) (m) 24.9 26.7 (7%)
Average basket value(2) £40.84 £38.47 6%
Average basket value CCY(3) £39.86 £38.47 4%
Average order frequency(4) 3.73 3.70 1%
Total shipped orders (m) 43.2 50.1 (14%)
Total visits (m) 1,389.5 1,587.2 (12%)
Conversion(5) 3.1% 3.2% (10bps)
( )
( )
( )
(1) Rest of World.
(2) Retail sales are internet sales recorded net of an appropriate deduction
for actual and expected returns, relevant vouchers, discounts and sales taxes.
(3) Income from other services comprises of delivery receipt payments,
marketing services, commission on partner-fulfilled sales and revenue from
wholesale sales.
(4) The adjusting items and the adjusted performance measures used by ASOS are
explained and defined on pages 23-26 and 45-46 respectively.
(5) Calculation of metrics, or movements in metrics, on an ex-Russia basis
involves the removal of Russia from H1 FY22 performance. This adjustment
allows YoY comparisons to be made on a like-for-like basis following the
decision to suspend trade in Russia on 2 March 2022. The exception to this is
visits, where ASOS have also excluded any visits from Russia in H1 FY23, in
addition to H1 FY22.
(6) Defined as having shopped in the last 12 months as at 28 February.
(7) Average basket value is defined as net retail sales divided by shipped
orders.
(8) Average basket value CCY is calculated as constant currency net retail
sales / shipped orders.
(9) Calculated as last 12 months' total shipped orders divided by active
customers.
(10) Calculated as total shipped orders divided by total visits.
KPIs including Russia
Six months to 28 February 2023
Six months to 28 February 2022
Change
Active customers(1) (m)
24.9
26.7
(7%)
Average basket value(2)
£40.84
£38.47
6%
Average basket value CCY(3)
£39.86
£38.47
4%
Average order frequency(4)
3.73
3.70
1%
Total shipped orders (m)
43.2
50.1
(14%)
Total visits (m)
1,389.5
1,587.2
(12%)
Conversion(5)
3.1%
3.2%
(10bps)
Total sales declined by 7%(6) (and (8%) on a reported basis), with challenging
trading conditions affecting sales performance in P1 FY23 (September to
December) continuing into P2 FY23 (January and February). In addition to
widespread cost of living concerns and their impact on discretionary spend,
consumers have returned to stores post-pandemic causing online penetration to
step back in the short-term (albeit remaining notably higher on a three-year
view). Sales declined further in P2 FY23 in part due to deliberate actions
taken by the Company reflecting the prioritisation of structural profitability
improvements and cash generation over top line growth. These actions included
a reduction of Spring/Summer '23 intake (resulting in reduced assortment
width), country-specific changes to pricing and delivery proposition, reduced
investment in markdown and optimisation of marketing spend. Driving Change
initiatives accounted for broadly half of the sales decline since December but
have driven strengthening order economics and an improving adjusted gross
margin as demonstrated by a recent run rate up more than 300bps YoY continuing
beyond the period end into March and April.
These deliberate profitability actions also contributed to a 2% YoY decline in
active customers(7). Premier customers declined by 7% YoY, reflecting
increases to subscription prices and the introduction of, or the increase in,
minimum order thresholds for free delivery in some geographies. However, the
average customer value(8) of both active and Premier customers has increased
over the period. In the UK, ASOS has increased its share of its customers'
wallet by 50bps YoY(9) and taken share in online retail among the target 16 to
35 demographic(10). Average basket value ('ABV') increased by 5%(11), a
positive outcome from the planned profitability initiatives supported by
average selling price increases ('ASP'). Order frequency remained firm, down
1% YoY against a backdrop of steeper declines in visits, orders and
conversion.
(1) Defined as having shopped in the last 12 months as at 28 February.
(2) Average basket value is defined as net retail sales divided by shipped
orders.
(3) Average basket value CCY is calculated as constant currency net retail
sales / shipped orders.
(4) Calculated as last 12 months' total shipped orders divided by active
customers.
(5) Calculated as total shipped orders divided by total visits.
(6) Total sales CCY excluding Russia declined by 7% (down 10% CCY including
Russia); total reported sales excluding Russia declined by 5% (down 8% on a
reported basis including Russia).
7 Active customers declined by 0.6m YoY to 24.9m excluding Russian active
customers (down 1.8m YoY at 24.9m including Russian active customers).
8 Average customer value calculated as gross billed revenue over last 12
months divided by active or Premier customers respectively.
9 Kantar | ASOS Shoppers | Online | Spend % I 24 w/e 5th March 2023 vs LY.
(10) Kantar Total Market | Total Clothing, Footwear and Accessories | Top
Retailers | Total , Online | 24 w/e 5th March 2023 vs LY.
(11) Group ABV CCY increased by 5% excluding Russia and increased by 4% CCY
including Russia.
Performance by market
UK
UK KPIs Six months to 28 February 2023
Total Sales -10%
Visits -8%
Orders -14%
Conversion -30bps
ABV +4%
Active Customers 8.6m (-2%)
Sales in the UK declined by 10% against a backdrop of weak consumer sentiment
and a challenging online retail environment. However UK sales remain c.35%
above pre-pandemic levels (c.10% CAGR since February 2020). Trading was
volatile from month to month, with notable weakness in September (negative
news flow relating to the cost of living) and December (postal strikes).
UK performance was also affected by planned profitability actions, including
more targeted marketing spend, a change in markdown approach and changes to
the Premier proposition. As ASOS prioritised order profitability ahead of
growth, marketing spend was curtailed in periods of softer demand caused by
both weak consumer sentiment and by challenges in the delivery market around
Christmas and New Year. Markdown spend was deliberately weighted towards the
peak period to accelerate the sell through of aged stock and facilitate the
movement towards the renewed commercial model. With an increased focus on
full-price sales, markdown was substantially reduced YoY in January and
February, resulting in markdown spend back on the year. Premier subscription
prices were increased from £9.95 to £11.95 in November 2022 and minimum
order threshold for free delivery were increased in January 2023 from £10 to
£15. However, ASOS continued to grow its share of the UK online retail market
amongst its core 16 to 35 year-old demographic and increased its share of UK
customers' wallet in the period (1,2).
As a result of the factors outlined above, ABV increased 4%, underpinned by a
higher ASP (supported by pricing increases and lower markdown). Visits (-8%),
conversion (-30bps), orders (-14%) and Active Customers (-2%) all fell,
reflective of ASOS' focus on sustainable, profitable growth.
EU
EU KPIs Six months to 28 February 2023
Total Sales +2% (flat CCY)
Visits Flat
Orders -5%
Conversion -10bps
ABV +7%
ABV (CCY)(3) +6%
Active Customers 10.6m (+1%)
Constant currency sales in the EU were flat in the period, which was
encouraging in the context of the wider macroeconomic backdrop and
profitability measures taken in the region. EU sales remain 17% above
pre-pandemic levels (c.6% CAGR since February 2020). As in the UK, markdown
was reduced significantly in January and February with an adverse impact on
sales in these months. Country-specific changes to delivery propositions and
order thresholds were also implemented across the region.
Active customers grew 1% YoY, despite new customer acquisition being impacted
by lower performance marketing spend and reduced promotional activity in
certain EU territories. Encouragingly, Premier customers have grown strongly,
up 13% YoY. Whilst visits were flat, orders and conversion were down 5% and
10bps respectively. However, the region saw strong growth in ASP and
consequently growth in ABV. The Netherlands, Ireland and Southern Europe
outperformed, offset by a weaker performance in Northern Europe.
(1) Kantar Total Market | Total Clothing, Footwear and Accessories | 16-35
year olds | Market Shares | 24 w/e 5th March 2023 vs LY.
(2) Kantar ASOS Shoppers | Online | Spend % I 24 w/e 5(th) March 2023 vs LY.
(3) ABV (CCY) is calculated as constant currency net retail sales / shipped
orders.
US
US KPIs Six months to 28 February 2023
Total Sales +7% (-7% CCY)
Visits -1%
Orders -12%
Conversion -20bps
ABV +22%
ABV (CCY)(1) +6%
Active Customers 3.2m (-9%)
US sales fell by 7% in the period at constant currency, against a backdrop of
weak consumer sentiment and planned profitability initiatives. US sales remain
28% above pre-pandemic levels (c.9% CAGR since February 2020).
As reported in October 2022, return on investment in the US market in recent
years has been particularly disappointing. During the period, ASOS reallocated
capital away from the market, including reducing marketing spend and took
action to improve the profitability of US orders including the removal of
unprofitable brands and changes to the delivery proposition. While this
resulted in a fall in visits (-1%), conversion (-20bps), orders (-12%) and
active customers (-9%), with ABV +6% in constant currency (supported by price
increases and reduced markdown), the profitability of the market was
substantially improved.
As indicated at P1 FY23, ASOS' wholesale revenue in the US has slowed due to
Topshop and Topman re-stocking in the prior year and reduced intake in
reflection of the weaker consumer backdrop. Nordstrom remains a critical
strategic partner for ASOS in the US and Topshop and Topman remain core brands
in the Nordstrom portfolio. Sales of Topshop brands through the ASOS platform
in the US were up over 50% in the period.
RoW
RoW KPIs Six months to 28 February 2023 excluding Russia(2) Six months to 28 February 2023 including Russia
Total Sales -10% (-12% CCY) -35% (-36% CCY)
Visits -18% -48%
Orders -21% -45%
Conversion -10bps +10bps
ABV +13% +17%
ABV (CCY)(1) +11% +15%
Active Customers 2.5m (-7%) 2.5m (-36%)
Sales in the RoW segment fell by 12%(3) at constant currency and excluding
Russia, having seen some of the most substantial changes under the country
profitability review undertaken in P1 FY23 alongside a sharp reduction in
marketing spend YoY. Delivery prices were increased across the segment
alongside widespread changes to delivery thresholds. Visits, orders and
conversion all stepped back, but ABV increased by 11% supported by pricing.
Active customers declined by 7% YoY. This is largely due to new customer
acquisition remaining challenging, and a more competitive e-commerce market,
in key territories. Premier customers have increased by 78% YoY, albeit from a
low base.
On a territory basis, Saudi Arabia delivered double-digit sales growth and
grew active customers, performing well throughout the half except during
highly competitive key promotional events. Performance in Australia was
challenging in the face of reduced investment in markdown.
(1) ABV (CCY) is calculated as constant currency net retail sales / shipped
orders.
(2) Calculation of metrics, or movements in metrics, on an ex-Russia basis
involves the removal of Russia from H1 FY22 performance. This adjustment
allows YoY comparisons to be made on a like-for-like basis following the
decision to suspend trade in Russia on 2 March 2022. The exception to this is
visits, where ASOS have also excluded any visits from Russia in H1 FY23, in
addition to H1 FY22.
(3) RoW revenue CCY excluding Russia declined by 12% (down 36% CCY including
Russia).
Gross margin
Adjusted gross margin(1) remained flat from P1 FY23 at 42.9% (-20bps YoY),
demonstrating resilience in the face of headwinds, including input cost
inflation. This was achieved primarily due to pricing on ASOS own-brands and
improving freight rates (both from improved contract terms and reduced use of
air freight).
Reported gross margin was back 700bps to 36.1%. This reflects the gross profit
impact of the stock write-off (of £119.7m(1)) announced alongside ASOS' FY22
results, facilitating the Company's transition to its new commercial model and
the cost of sales element of the non-underlying sales tax charge of £4.9m(2).
Operating expenses
£m Six months to 28 February 2023 % of sales Six months to 28 February 2022 % of sales Change
Distribution costs (229.8) 12.5%(3) (255.6) 12.8% 10%
Warehousing (227.9) 12.4%(3) (207.2) 10.3% (10%)
Marketing (109.9) 6.0%(3) (119.7) 6.0% 8%
Other operating costs (218.1) 11.9%(3) (186.1) 9.3% (17%)
Depreciation and amortisation (74.0) 4.0%(3) (68.4) 3.4% (8%)
Total operating costs (excl. adjusting items) (859.7) (837.0) (3%)
46.8%(3) 41.8%
Adjusting items(4) (78.5) 4.2% (30.6) 1.5% (157%)
Total operating costs (938.2) 51.0% (867.6) 43.3% (8%)
Total operating costs excluding adjusting items increased by 3% YoY and by
500bps as a percentage of sales, reflecting the impact of inflationary
pressures, increased return rates and deleverage on fixed costs.
Distribution costs as a percentage of sales decreased by 30bps YoY to 12.5%,
with the impact of cost saving measures under the Driving Change agenda more
than offsetting increased fuel surcharges. In November 2021, ASOS began
fulfilling "split orders" after the opening of the Lichfield fulfilment
centre. Split orders involved parcels being shipped from both Lichfield and
Barnsley to fulfil a single order, and whilst split orders benefitted the
customer proposition by ensuring maximum stock availability, they also
increased fulfilment costs. As part of the Driving Change agenda, split orders
were discontinued in January 2023, with Barnsley now holding all SKUs
available for sale at any point in time, reducing distribution costs. Other
measures taken include bringing more of the sortation process in-house,
reducing costs.
Warehouse costs as a percentage of sales have increased by 210bps YoY to 12.4%
due to increased labour inflation across all fulfilment centres, in addition
to inflation in consumables and utilities and return rates normalisation. The
high levels of stock reported at FY22 results created inefficiencies in the
first few months of the year, that diminished as excess stock was cleared.
Driving Change agenda initiatives designed to mitigate warehouse inflation
include the winding down of ancillary storage, facilitated by the exceptional
stock write-off, alongside simplification of UK returns infrastructure.
Marketing costs decreased by 8% YoY and remained flat at 6.0% of sales,
despite increase in cost per click, as ASOS showed greater restraint on
spending and focused on optimising investment to generate greater returns, in
some cases reallocating spend between geographies based on underlying market
conditions. Marketing investments were made ahead of peak trading in P1 FY23,
but spend has since been scaled back, in-line with the Company's
prioritisation of profitability over top-line growth.
( )
Other operating costs as a percentage of sales increased by 260bps YoY
(excluding adjusting items) due to the annualisation impact of headcount added
in FY22 as well as wage inflation and contractual increases in third party
technology services and overhead costs (including electricity, insurance,
rates and waste management costs).
(1) Excluding the gross profit impact of the stock write-off £119.7m
announced at FY22 and the non-underlying sales tax of £4.9m (see more detail
in note 3 on pages 23-26). Total P&L impact of the stock write-off was
£128.2m at H1 FY23 of which £119.7m related to gross profit, £7.8m
warehousing costs and £0.7m depreciation costs. An additional c.£3.0m net
P&L impact is expected to be booked in H2 FY23.
(2) Further detail in note 3 on pages 23-26.
(3) As a percentage of adjusted revenue
(4) Further detail on adjusting items can be found on pages 23-26
Depreciation and amortisation costs as a percentage of sales increased by
60bps YoY (excluding Topshop brands amortisation). The increase in
depreciation was driven by increased warehouse capitalisation costs (including
relating to Lichfield fulfilment centre) and employee tech upgrades. The
increase in amortisation relates to growth in intangible assets including data
services, operations systems and web and payments platforms.
Interest
Net interest costs were £18.4m in the period, an increase of £7.0m YoY
primarily resulting from the drawdown of £250m on the Revolving Credit
Facility on 8(th) September 2022.
Taxation
The reported effective tax rate ('ETR') is 25.0% based on the reported loss
before tax of £290.9m. The H1 FY23 reported tax rate is different from the
full year forecast rate of 21.1% due to a loss being incurred in H1 FY23,
which is forecast to significantly reduce in H2 FY23. This loss creates a
deferred tax asset, recognised at the higher rate of 25.0%, compared with the
current year rate of 21.5%. This asset reduces in H2 FY23, and so the rate
differential has a smaller impact on the overall ETR.
Going forward, ASOS expects the effective tax rate to be slightly higher than
the prevailing rate of UK corporation tax due to permanently disallowable
items and the higher tax rate paid in some of the non-UK based entities.
Earnings per share
Both basic and diluted loss per share were 218.7p (H1 FY22: basic and diluted
loss per share of 13.5p). The decrease was driven by the reported loss before
tax of £290.9m, down from a reported loss before tax of £15.8m last year.
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 six months ended 28
February 2023.
Free Cash flow
There was a free cash outflow(1) for the half of £262.7m excluding the
drawdown of £250.0m RCF on 8 September 2022, and ASOS ended the period with a
net debt position of £431.7m. This was mainly driven by the reported EBITDA
loss of £189.2m and capex investment weighted towards the first half.
The working capital outflow of £13.3m reflects the decrease of trade and
other payables largely offset by the lower stock position versus FY22 as ASOS
ended the period with stock of £978.4m (FY22: £1,078.4m, H1 FY22: £986.4m).
This is resulting from the previously announced stock write-off(2) in line
with the new commercial model and the phasing of stock receipts and payments,
with the cash benefit associated with the lower H1 intake expected in H2 FY23.
Capital expenditure totalled £115.0m in support of technology investments
into data services, operations systems and web and payments platforms, as well
as contractual payments relating to the deferred Lichfield and Atlanta
automation projects.
Katy Mecklenburgh
Interim Chief Financial Officer
(1) Definition of free cash outflow can be found on pages 45-46.
(2) Total stock impact on the balance sheet was £121.8m at H1 FY23.
CONSOLIDATED INCOME STATEMENT (unaudited)
for the six months to 28 February 2023
Six months to 28 February 2023 (unaudited) Six months to 28 February 2022 (unaudited)
Adjusted Adjusting items (note 3) Reported Adjusted Adjusting items Reported
Note (note 3)
£m £m £m £m £m £m
Revenue 1,838.5 2.1 1,840.6 2,004.1 - 2,004.1
Cost of sales (1,049.2) (126.7) (1,175.9) (1,140.9) - (1,140.9)
Gross profit 789.3 (124.6) 664.7 863.2 - 863.2
Distribution expenses (229.8) - (229.8) (255.6) - (255.6)
Administrative expenses (629.9) (78.5) (708.4) (581.4) (30.6) (612.0)
Other income 1.0 - 1.0 - - -
Operating (loss)/profit (69.4) (203.1) (272.5) 26.2 (30.6) (4.4)
Finance income 5 2.5 - 2.5 0.1 - 0.1
Finance expense 5 (20.5) (0.4) (20.9) (11.5) - (11.5)
(Loss)/profit before tax (87.4) (203.5) (290.9) 14.8 (30.6) (15.8)
Income tax credit 6 22.2 50.5 72.7 (3.8) 6.1 2.3
(Loss)/Profit for the financial period (65.2) (153.0) (218.2) 11.0 (24.5) (13.5)
Loss per share
Basic per share 7 (218.7p) (13.5p)
Diluted per share 7 (218.7p) (13.5p)
All activities are continuing.
The notes on pages 20 to 42 form part of this condensed consolidated financial
information.
CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS)/INCOME (UNAUDITED)
for the six months to 28 February 2023
Six months to 28 February 2023 Six months to 28 February 2022
(unaudited) (unaudited)
£m £m
Loss for the financial period (218.2) (13.5)
Items that will not be reclassified to Group income statement
Fair value (losses)/gains on cash flow hedges (13.3) 7.1
Tax on items that will not be reclassified 2.4 (0.3)
(10.9) 6.8
Items that may be subsequently reclassified to Group income statement
Net translation movements offset in reserves - 0.1
Fair value gains on cash flow hedges 13.7 30.5
Fair value movements reclassified from cash flow hedge reserve to Group income 1.1 (6.6)
statement
Income tax charge relating to these items (0.2) (5.2)
14.6 18.8
Other comprehensive income for the financial period 3.7 25.6
Total comprehensive (loss)/income for the financial period attributable to (214.5) 12.1
owners of the parent company
( )
The notes on pages 20 to 42 form part of this condensed consolidated financial
information.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
at 28 February 2023
Note 28 February 2023 28 February 2022* 31 August 2022*
(unaudited) (unaudited) (audited)
£m £m £m
Non-current assets
Goodwill and other intangibles 8 703.6 664.3 683.9
Property, plant and equipment 9 367.4 324.7 351.7
Right-of-use assets 10 299.9 354.7 380.3
Investment properties 2 12.8 - -
Deferred tax assets 15.2 - -
Derivative financial assets 13 9.7 14.7 27.0
1,408.6 1,358.4 1,442.9
Current assets
Inventories 978.4 986.4 1,078.4
Trade and other receivables 63.4 87.4 88.2
Derivative financial assets 13 25.2 40.8 41.4
Cash and cash equivalents 308.6 406.7 323.0
Current tax asset 3.9 8.7 23.0
1,379.5 1,530.0 1,554.0
Current liabilities
Trade and other payables 11 (837.3) (927.0) (993.3)
Borrowings 14 (9.3) (1.4) (1.4)
Lease liabilities 10 (29.8) (24.9) (24.3)
Derivative financial liabilities 13 (11.2) (6.5) (21.0)
Provisions 12 (1.7) - -
(889.3) (959.8) (1,040.0)
Net current assets 490.2 570.2 514.0
Non-current liabilities
Lease liabilities 10 (316.1) (320.2) (355.8)
Deferred tax liability - (45.6) (58.2)
Provisions 12 (54.2) (45.9) (41.9)
Derivative financial liabilities 13 (3.8) (1.8) (11.6)
Borrowings 14 (731.0) (467.9) (474.5)
(1,105.1) (881.4) (942.0)
Net assets 793.7 1,047.2 1,014.9
Equity attributable to owners of the parent
Called up share capital 3.5 3.5 3.5
Share premium 245.7 245.7 245.7
Employee Benefit Trust reserve 2.1 2.1 2.1
Hedging reserve 18.9 39.8 26.2
Translation reserve (2.7) (2.3) (2.7)
Equity portion of convertible debt 58.9 58.9 58.9
Retained earnings 467.3 699.5 681.2
Total equity 793.7 1,047.2 1,014.9
*See note 2 for detail on presentational changes
The notes on pages 20 to 42 form part of this condensed consolidated financial
information.
These unaudited condensed consolidated interim financial statements for the
six months ended 28 February 2023 were approved by the Board on 9 May 2023.
CONSOLIDATED Statement of Changes in EquitY (UNAUDITED)
for the six months to 28 February 2023
( )
( )
Employee Benefit Trust reserve(1)
£m
Called up Equity portion of convertible debt
share
capital Share Hedging reserve Translation reserve £m Retained Total
£m
premium
£m
£m
earnings(2)
equity
£m
£m
£m
At 1 September 2022 3.5 245.7 2.1 26.2 (2.7) 58.9 681.2 1,014.9
Loss for the period - - - - - - (218.2) (218.2)
Other comprehensive income for the period - - - 3.7 - - - 3.7
Total comprehensive - - - 3.7 - - (218.2) (214.5)
income/(loss) for the period
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 2.1 18.9 (2.7) 58.9 467.3 793.7
At 1 September 2021 3.5 245.7 2.1 14.3 (2.4) 58.9 711.9 1,034.0
Loss for the period - - - - - - (13.5) (13.5)
Other comprehensive income for the period - - - 25.5 0.1 - - 25.6
Total comprehensive income/(loss) for the period - - - 25.5 0.1 - (13.5) 12.1
Share-based payments charge - - - - - - 1.9 1.9
Tax relating to share option scheme - - - - - - (0.8) (0.8)
Balance as at 28 February 2022 3.5 245.7 2.1 39.8 (2.3) 58.9 699.5 1,047.2
At 1 September 2021 3.5 245.7 2.1 14.3 (2.4) 58.9 711.9 1,034.0
Loss for the year - - - - - - (30.8) (30.8)
Other comprehensive income/(loss) for the year - - - 6.4 (0.3) - - 6.1
Total comprehensive income/(loss) for the year - - - 6.4 (0.3) - (30.8) (24.7)
Cash flow hedges gains and losses transferred to non-financial assets - - - 5.5 - - - 5.5
Share-based payments charge - - - - - - 0.8 0.8
Tax relating to share option scheme - - - - - - (0.7) (0.7)
Balance as at 31 August 2022 3.5 245.7 2.1 26.2 (2.7) 58.9 681.2 1,014.9
(1)Employee Benefit Trust and Link Trust
(2)Retained earnings includes the share-based payments reserve
The notes on pages 20 to 42 form part of this condensed consolidated financial
information.
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
for the six months to 28 February 2023
( )
Six months to Six months to
28 February 2023 28 February 2022*
(unaudited) (unaudited)
£m £m
Operating loss (272.5) (4.4)
Adjusted for:
Depreciation of property, plant and equipment and right-of-use assets 34.5 30.0
Amortisation of other intangible assets 48.8 43.7
Impairment loss on property, plant and equipment, intangible assets and 28.9 18.9
right-of-use assets
Share-based payments charge 3.3 1.5
Other non-cash items 4.6 0.3
Decrease/(Increase) in inventories 99.9 (181.3)
Decrease/(increase) in trade and other receivables 28.8 (30.2)
Decrease in trade and other payables (142.0) (34.4)
Increase in provisions 14.0 2.7
Cash used in operating activities (151.7) (153.2)
Income tax received 23.5 2.0
Net cash used in operating activities (128.2) (151.2)
Investing activities
Purchase of other intangible assets (68.8) (53.4)
Purchase of property, plant and equipment (46.2) (33.1)
Interest received 2.5 0.1
Net cash used in investing activities (112.5) (86.4)
Financing activities
Drawdown of Revolving Credit Facility (RCF) 250.0 -
Refinancing amendment fees paid (3.9) -
Repayment of principal portion of lease liabilities (12.1) (13.4)
Interest paid (6.0) (5.5)
Net cash generated from/(used in) financing activities 228.0 (18.9)
Net decrease in cash and cash equivalents (12.7) (256.5)
Opening cash and cash equivalents 323.0 662.7
Effect of exchange rates on cash and cash equivalents (1.7) 0.5
Closing cash and cash equivalents 308.6 406.7
*See note 2 for detail on presentational changes
The notes on pages 20 to 42 form part of this condensed consolidated financial
information.
( )
Notes to the Condensed Consolidated Interim Financial Statements (unaudited)
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 six months to 28 February 2023
(comparative financial period six months to 28 February 2022; prior financial
year 12 months to 31 August 2022). The financial information comprises the
results of the Company and its subsidiaries.
2. Basis of preparation
The interim financial statements for the six months to 28 February 2023 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
year to 31 August 2022, 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 have been reviewed, not audited, and do not
constitute statutory accounts within the meaning of section 434 of the
Companies Act 2006. The Annual Report and Accounts for the year to 31 August
2022 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. 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. In assessing the
Group's going concern position, the Directors considered the Group's business
activities and principal risks, reviewing the Group's forecasted cash flows,
liquidity positions and borrowing facilities for the 18-month period to August
2024.
In assessing the Group's going concern position, the Directors have considered
the Group's detailed forecasting process which considers 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
trading performance and costs implications in the market based on current
agreements, market experience and consumer demand expectations. In conjunction
with this, the Directors considered the Group's business activities and
principal risks, reviewing the Group's cash flows, liquidity positions and
borrowing facilities for the going concern period. The review included the
recent amendment and extension (which extends the maturity of the facility to
November 2024) to the Group's Revolving Credit Facility (RCF) agreement that
was obtained in May 2023, further detail is included within Note 18. At 28
February 2023, the Group had £250m of the £350m RCF drawn (plus £50m
ancillary facilities following exercise of a £50m accordion option in
December 2022) and £500m convertible bonds with a maturity of April 2026.
2. Basis of preparation continued
As part of the assessment, the Group has considered various severe but
plausible downside scenarios comprising a combination of scenarios. The
downside scenarios include assumed reductions in forecast sales during the
period under review of between 8% and 11%, and gross margin reductions of
between 1% to 2%. Working capital shocks in excess of £100m and interest rate
rises were modelled over the period, varying by month, with applied
mitigations over and above the base case also being reflected in the
projections. In both the base case and the severe but plausible downside
scenario, the forecasts indicated that there was sufficient covenant headroom
and liquidity for the business to continue based on the facilities available
to the Group as described above.
Reverse stress tests have also been performed on both the Group's revenue and
gross margin to see how far these would need to decline to cause a liquidity
event. To test sales, the working capital shock used in the plausible downside
scenario, and a gross margin decline of 2% were overlaid on the base case and
then sales reduced until there was a covenant breach; sales could decline by a
further 15% over the base case before there was a breach. To test gross
margin, the working capital shock used in the plausible downside scenario and
an average sales decline of 4% were overlaid on the base case allowing a gross
margin decline of 4% before there was a breach. Both scenarios are considered
remote based on results of previous significant economic shock events,
particularly on the basis that the Group is annualising the softer market
growth and global supply chain crisis experienced this year.
Based on the above, the Directors considered it appropriate to adopt the going
concern basis of accounting in the preparation of the Group's financial
statements.
2.2. Changes in presentation
Other comprehensive income
In accordance with IAS 1 'Presentation of Financial Statements', within the
Consolidated Statement of Comprehensive (Loss)/Income, the Group presents
items that may be and will not be subsequently reclassified to the income
statement, which includes the fair value movements on effective cash flow
hedges. In accordance with IFRS 9 'Financial Instruments', cash flow hedge
gains and losses in relation to purchases of non-financial assets are
recognised as part of the cost of the non-financial asset (a basis
adjustment). For the Group this relates to foreign currency denominated
purchases of inventory and property plant and equipment. The carrying value of
the asset is adjusted for the accumulated gains or losses recognised directly
in other comprehensive income, and then recognised in the income statement
when sold (for inventory) or as depreciated (for property, plant and
equipment).
This basis adjustment is not part of other comprehensive income. The Group has
therefore separately presented effective fair value movements on hedges
relating to inventory and property, plant and equipment, and those relating to
effective hedges of foreign currency denominated sales, within the
Consolidated Statement of Comprehensive (Loss)/Income, and shown the basis
adjustments as a separate line within the Consolidated Statement of Changes in
Equity. Comparative period amounts have not been adjusted on the grounds of
materiality.
Consolidated balance sheet
The presentation of the Consolidated balance sheet has been updated as
follows:
· Goodwill and other intangible assets are now disclosed as one
line item
· Right-of-use assets are now presented separately from property,
plant and equipment
The comparatives have also been updated to reflect these changes.
Consolidated cash flow statement
The presentation of the Consolidated cashflow statement has been updated so
that movements in provisions are shown separately. These were previously
included within movements in trade and other payables.
2. Basis of preparation continued
Reclassification of right-of-use assets as investment property
The Group has been subletting unused office space within its Leavesden
property since November 2021, and as disclosed in note 3, further space has
been vacated during the year with a view to ultimately sub-letting. As a
result, the related space has been assessed to meet the definition of
investment property under IAS 40 "Investment Properties". Right-of-use assets
with a net book value of £12.8m have therefore been transferred from
right-of-use assets to investment property during the year.
Comparative period amounts as at 28 February 2022 of £14.8m (and 31 August
2022: £13.5m) are not considered material, therefore have not been adjusted.
The accounting policy for investment property is disclosed below, and is in
line with that for the respective right-of-use assets. As a result, there is
no change on profit and loss, net assets nor earnings per share.
Investment properties accounting policy
Investment property assets are carried at cost less accumulated depreciation
and any recognised impairment in value. The depreciation policies for
investment property are consistent with those described for right-of-use
assets.
2.3. Accounting policies
The Group has considered the following amendments to published standards that
are effective for the Group for the financial year beginning 1 September 2022
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.
· Onerous Contracts - Cost of Fulfilling a Contract - Amendments to
IAS 37
· Annual Improvements to IFRS Standards 2018-2020
· Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16)
· Reference to the Conceptual Framework - Amendments to IFRS 3
The interim financial statements have been prepared in accordance with the
accounting policies set out in the Annual Report and Accounts for the year to
31 August 2022, with the exception of the items noted in note 2.2 above.
2.4. Significant accounting judgements and key sources of estimation
uncertainty
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets and liabilities, income and
expense. Actual results might differ from these estimates.
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 year ended 31 August
2022, with the exception of the following items, which are concluded to no
longer be significant judgements for the Group:
· Legal contingencies - the Group has no material contingent
liabilities to disclose, therefore this is no longer considered a significant
judgement
· Post balance sheet events - the prior year judgement was
specifically in relation to the Group's commercial model change, therefore is
no longer a post balance sheet event.
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 45-46, 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 profit/(loss) before tax
In order to support shareholders' reviews of the year-on-year performance of
the business, an adjusted measure of profit is provided to supplement the
reported IFRS numbers. This aligns to how the business measures performance
internally.
Judgement is required when determining which items are to be adjusted. In
doing so, the Group considers items which are significant, either in size
and/or nature, the inclusion of which could distort comparability between
periods. The same assessment is applied consistently to any reversals of
prior-period adjusting items. Adjusted profit/(loss) before tax (and similarly
adjusted EBIT) is not an IFRS measure and therefore not directly comparable to
other companies - refer to "Alternative Performance Measures" in the appendix
for further detail.
More details on each adjusting item are included further below:
Six months to 28 February 2023 (unaudited)
Revenue Cost of sales Administrative expenses Finance expenses Total
£m £m £m £m £m
Driving Change agenda
Commercial operating model 2.1 (121.8) (8.5) - (128.2)
Property-related costs - - (49.4) - (49.4)
Other strategic initiatives - - (10.6) (0.4) (11.0)
Non-underlying sales tax - (4.9) (4.9) - (9.8)
Amortisation of acquired intangible assets - - (5.1) - (5.1)
2.1 (126.7) (78.5) (0.4) (203.5)
Six months to 28 February 2022 (unaudited)
Revenue Cost of sales Administrative expenses Finance expenses Total
£m £m £m £m £m
ASOS Re-imagined - - (7.9) - (7.9)
Main Market transition costs - - (5.5) - (5.5)
Impairment of Leavesden assets - - (18.3) - (18.3)
Employee and other liabilities relating to Topshop brands acquisition - - 6.4 - 6.4
Amortisation of acquired intangible assets - - (5.3) - (5.3)
- - (30.6) - (30.6)
3. Adjusted profit/(loss) before tax continued
Driving Change agenda
In October 2022, the Group announced a change agenda to strengthen ASOS over
the next 12 months and reorient the business towards the future, underpinned
by four key actions:
a) A Renewed commercial model: Acceleration of changes in ASOS' approach
to merchandising and buying in support of a more competitive proposition and
tighter stock turnover.
b) Stronger order economics and a lighter cost profile: Actions to improve
order economics and ensure a sustainable level of profitability in all
markets, whilst focusing efforts on key markets in conjunction with a focus on
optimising the Group's cost base, improving supply chain efficiencies, and
eliminating excess costs through increased controls. This includes optimising
the Group's space requirements through a mix of repurposing existing capacity
and vacating any excess capacity.
c) Robust, flexible balance sheet: Aligning future investment with
capacity requirements to ensure a more efficient allocation of capital, while
maintaining planned strategic investment in technology in support of an
improved customer experience. In addition, maintaining sufficient headroom on
facilities, ensuring flexibility in the short term.
d) Enabled by a reinforced leadership team and refreshed culture:
Simplifying decision-making processes to encourage a culture of innovation and
creativity across the business, while reinforcing the senior leadership team
with strategic key hires.
Various items of income and expenditure have been incurred during the period
in relation to this, as outlined below.
3. Adjusted profit/(loss) before tax continued
Commercial operating model
As outlined in the FY22 results on 19th October 2022, a key focus for ASOS in
FY23 is the renewal of the commercial operating model. The updated model aims
to operate a shorter buying cycle with an accelerated speed to market,
facilitating an enhanced customer proposition that offers new products, more
regularly. To achieve this, ASOS is utilising off-site clearance routes that
will enable the Group to clear inventory earlier in its lifecycle than
previously, therefore reducing the overall breadth of inventory held in
fulfilment centres, which in turn will reduce the volume that is sold on
promotion via the ASOS site.
To transition to the new model, a reshaping of the inventory portfolio is
required, and as a result additional costs have been recognised in relation to
stock cleared during the period, as well as provisions for stock held that
will be sold through alternative clearance channels.
£m
Losses on the sale of stock sold cleared during the period (12.7)
Associated holding and extraction costs incurred during the period (8.5)
Inventory provisions on stock remaining to be cleared (107.0)
(128.2)
Losses on the sale of stock during the period are net of income received of
£2.1m.
Property related costs
During the period it was agreed to vacate a number of Group-occupied sites,
including office and warehouse space. As a result, costs of £49.4m have been
incurred, comprising the following:
£m
Impairment of property, plant and equipment (a) (5.7)
Impairment of intangible assets (a) (1.7)
Impairment of right of use assets (a) (21.5)
Accelerated depreciation (b) (3.5)
Exit provisions (c) (17.0)
(49.4)
a) Impairment of assets for sites vacated during the financial period
b) Where sites are to be vacated during the second half of the year, the
remaining useful economic lives of corresponding sites have been 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.
c) Exit provisions relate to onerous contract costs on leased sites that
have been identified for closure. Upon initial recognition of exit 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.
Whilst the properties remain vacant, ongoing expenses relating to lease
interest, onerous provision unwinds and business rates (totalling
approximately £2m per year) will be reported outside adjusted profit given
they do not relate to operational sites of the Group.
3. Adjusted profit/(loss) before tax continued
Other strategic initiatives
Other priorities for FY23 communicated at the FY22 results included; (i)
stronger order economics and a lighter cost profile, (ii) a robust, flexible
balance sheet, and, (iii) a reinforced leadership team and refreshed culture.
ASOS has progressed with each of these priorities during the period, with
non-underlying costs of £11.0m incurred, relating to external consultancy
costs to support the launch of the programme and the identification of
initiatives, business restructuring costs including severance, and costs
incurred associated with the revolving credit facility covenant waiver as
disclosed at year-end. The Driving Change agenda has replaced the Group's ASOS
Reimagined programme that commenced in the prior year.
Costs incurred last year in relation to ASOS Reimagined totalled £25.4m,
bringing cumulative change agenda costs incurred to date to £214.0m, of which
£32.6m is cash (inclusive of the commercial operating model update).
Non-underlying sales tax
During the period, a historic overstatement of recoverable sales tax
receivables was identified. The balance had built up over a number of years,
predominantly prior to 2020. As at the year-end 31 August 2022, the cumulative
amount on the balance sheet totalled £9.8m. Sales tax recognised on the
balance sheet of £9.8m has therefore been written off this year. Furthermore,
the adjustment is not considered to have a material impact on the prior year
balance sheet nor income statement, therefore the comparative results have not
been restated. Given this is an out of period cost and could distort
comparability between reporting periods, this has been included as an
adjusting item.
Amortisation of acquired intangible assets
Amortisation of acquired intangible assets is adjusted for as the acquisition
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.
Classification as adjusting items
Given a number of the costs incurred as part of the above programmes
facilitate future ongoing cost savings, it was considered whether it was
appropriate to report these costs within adjusted profit/(loss). Whilst they
arise from changes in the Group's underlying operations, they can be
separately identified, are significant in size / nature and their inclusion
within adjusted profit/(loss) does not facilitate meaningful comparison
between financial years. Furthermore the costs incurred arise as a result of
implementing changes for the future to evolve and reshape the business and are
therefore not reflective of ordinary, in-year trading activity, and for areas
being closed or restructured, these operations no longer relate to the Group's
trading operations. Exclusion from adjusted profit/(loss) is therefore
considered appropriate.
Cash flow impact of adjusting items
The total cash flow impact of adjusting items is as follows:
Six months to Six months to
28 February 2023 (unaudited) 28 February 2022 (unaudited)
£m £m
Commercial operating model change (0.9) -
Other strategic initiatives (including ASOS Reimagined) (22.1) (6.1)
Main Market transition costs - (1.7)
Total adjusting items within operating cash flow (23.0) (7.8)
Of the £23.0m paid in the current year, £11.4m relates to expenditure
incurred in the prior year.
4. Segmental analysis
IFRS 8 'Operating Segments' requires operating segments to be determined based
on the Group's internal reporting to the Chief Operating Decision Maker. The
Chief Operating Decision Maker has been determined to be the Management
Committee (renamed from the Executive Committee as part of the Group's Driving
Change agenda) which receives information on the basis of the Group's
operations in key geographical territories. Management monitors and makes
decisions considering the entire Group. The Group has reviewed its assessment
of reportable segments under IFRS 8, "Operating Segments" and concluded that
the Group continues to have one reportable segment.
Six months to 28 February 2023 (unaudited)
UK EU US RoW(1) Total
£m £m £m £m £m
Retail sales 775.1 572.7 244.3 172.7 1,764.8
Income from other services (2) 28.6 13.9 24.9 8.4 75.8
Total revenue 803.7 586.6 269.2 181.1 1,840.6
(1,175.9)
Cost of sales
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(3) 1,013.7 183.4 151.4 - 1,348.5
1 Rest of World.
2 Income from other services comprises of delivery receipt payments, marketing
services, commission on partner-fulfilled sales and revenue from wholesale
sales.
3 Excluding goodwill, derivative financial assets and deferred tax assets.
Six months to 28 February 2022 (unaudited)
UK EU US RoW(1) Total
£m £m £m £m £m
Retail sales 867.2 564.1 226.0 270.1 1,927.4
Income from other services (2) 28.3 13.3 26.7 8.4 76.7
Total revenue 895.5 577.4 252.7 278.5 2,004.1
Cost of sales (1,140.9)
Gross profit 863.2
Distribution expenses (255.6)
Administrative expenses (612.0)
Operating loss (4.4)
Finance income 0.1
Finance expense (11.5)
Loss before tax (15.8)
4. Segmental analysis continued
Six months to 28 February 2022 (unaudited)
UK EU US RoW(1) Total
£m £m £m £m £m
Non-current assets (as at 28 February 2022)(3) 986.0 188.3 134.2 - 1,308.5
Non-current assets (as at 31 August 2022)(3) 1,006.7 188.8 185.2 - 1,380.7
1 Rest of World
2 Income from other services comprises of delivery receipt payments, marketing
services, commission on partner-fulfilled sales and revenue from wholesale
sales
3 Excluding goodwill, derivative financial assets and deferred tax assets.
Due to the nature of its activities, the Group is not reliant on any
individual major customers.
5. Finance income and finance costs
Six months to 28 February 2023 Six months to February 2022
(unaudited) (unaudited)
£m £m
Interest income on cash and cash equivalents 2.5 0.1
Interest on borrowings (19.1) (9.6)
Interest on lease liabilities (2.9) (2.6)
Provisions - unwinding of discount (0.6) (0.1)
Interest capitalised 1.7 0.8
Total finance costs (20.9) (11.5)
6. Taxation
Six months to 28 February 2023 Six months to February 2022
(unaudited) (unaudited)
£m £m
Current year UK tax - (5.3)
Current year overseas tax 0.6 -
Adjustment in respect of prior year corporation tax (2.9) (0.3)
Total current tax credit (2.3) (5.6)
Origination and reversal of temporary differences (71.1) 4.7
Adjustment in respect of prior years 0.7 (1.4)
Total deferred tax (credit)/expense (70.4) 3.3
Total income tax credit in income statement (72.7) (2.3)
Analysed as: (22.2) 3.8
Underlying tax (50.5) (6.1)
Non-underlying tax
Total income tax credit in income statement (72.7) (2.3)
Effective tax rate 25.0% 14.6%
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 (refer note
3 for adjusting items) but excluding all other 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 six months
to 28 February 2023 is 20.8% compared to 22.0% for the six months to 28
February 2022.
The reported effective tax rate is 25.0% based on the reported loss before tax
of £290.9m. The H1 FY23 reported tax rate is different from the full year
forecast rate due to expected disallowances in H2 FY23. The reported tax rate
is above the prior year comparative of 14.6% due to the losses carried forward
at the deferred tax rate of 25%, the ending of the super deduction on capital
allowances relief from 1 April 2023 and the fall in share price impacting the
tax on share based payments. In addition, prior year adjustments reduced the
prior period ETR by c.10%.
7. (Loss)/Earnings per Share
Basic earnings/(loss) per share is calculated by dividing the profit/(loss)
attributable to the owners of the parent company by the weighted average
number of ordinary shares in issue during the period. Own shares held by the
Employee Benefit Trust and Link Trust are eliminated from the weighted average
number of ordinary shares.
Diluted earnings/(loss) per share is calculated by dividing the profit/(loss)
attributable to the owners of the parent company by the weighted average
number of ordinary shares in issue during the period, adjusted for the effects
of potentially dilutive ordinary shares.
Six months to Six months to
28 February 2023 28 February 2022
(unaudited) (unaudited)
Weighted average share capital
Weighted average shares in issue (no. of shares) 99,775,925 99,675,829
Weighted average effect of dilutive share options (no. of shares)(1) - -
Weighted average effect of convertible bond (no. of shares) (1) - -
Weighted average shares in issue for diluted earnings/(loss) per share (no. of 99,775,925 99,675,829
shares)
Losses (£m)
Loss attributable to owners of the parent company (218.2) (13.5)
Interest expense on convertible bonds(1) - -
Diluted loss attributable to owners of the parent company for diluted loss per (218.2) (13.5)
share
Basic loss per share (218.7p) (13.5p)
Diluted loss per share (218.7p) (13.5p)
( )
(1) Dilutive shares and interest not included where their effect is
anti-dilutive.
8. Intangible assets
Six months to 28 February 2023 Six months to 28 February 2022 Year to
(unaudited) (unaudited) 31 August 2022
£m £m (audited)
£m
Net book value
At the beginning of the period 683.9 652.2 652.2
Additions 70.2 55.8 120.5
Amortisation charge (48.8) (43.7) (88.8)
Impairment charge (1.7) - -
At the end of the period 703.6 664.3 683.9
Details of the impairment charges are included within note 3.
The net book value comprises:
Six months to 28 February 2023 Six months to 28 February 2022 Year to
(unaudited) (unaudited) 31 August 2022
£m £m (audited)
£m
Net book value
Goodwill 35.2 35.2 35.2
Software 443.6 393.1 417.8
Customer relationships 18.2 21.2 19.7
Brands and domain names 203.8 211.5 207.6
Assets under construction 2.8 3.3 3.6
At the end of the period 703.6 664.3 683.9
Goodwill is not amortised, but tested annually for impairment, or when an
indicator of impairment exists. For the purpose of impairment testing,
goodwill is monitored on an entity wide basis at the reporting segment level
as a singular cash-generating unit (CGU), the ASOS Group CGU. The carrying
value of the CGU containing the goodwill is compared to the recoverable
amount, which is the higher of value in use and the fair value less costs to
dispose. If the recoverable amount of the cash-generating unit is less than
the carrying amount of the unit, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the CGU and then to
the other assets of the unit pro-rata on the basis of the carrying amount of
each asset in the unit. Impairment losses recognised for goodwill are not
subsequently reversed.
Given the reported loss recognised during the period, an indicator was deemed
to exist. The recoverable amount of the ASOS Group CGU was therefore
determined using a value in use calculation, using key assumptions as follows:
· Cash flow years / assumptions: Cash flow projections for five
years, derived from the Group's latest results and financial forecasts
approved by the Board. Thereafter, a terminal value is calculated, based on
estimated long-term growth rates.
· Pre-tax discount rate: 11.7%
· Post-tax discount rate: 10.1%
· Long term growth rate: 1.5%
No impairment charge in respect of goodwill has been recognised during the
period (2022: £nil). No reasonably possible change in the assumptions used in
the value-in-use calculations could result in a material impairment of
goodwill.
9. Property, plant and equipment
Six months to Six months to Year to 31 August 2022
28 February 2023 28 February 2022 (audited)
(unaudited) (unaudited)
£m £m £m
Net book value
At the beginning of the period 351.7 314.0 314.0
Additions 36.8 35.1 78.3
Depreciation charge (15.4) (14.6) (30.7)
Impairment charge (5.7) (9.8) (9.9)
At the end of the period 367.4 324.7 351.7
Details of the impairment charges are included in note 3.
The net book value of property, plant and equipment comprises fixtures
fittings, plant and machinery of £259.2 million (28 February 2022: £275.9m;
31 August 2022: £273.7m); computer equipment of £13.2m (28 February 2022:
£12.3m; 31 August 2022: £15.1m) and assets under construction of £95.0m (28
February 2022: £36.5m; 31 August 2022: £62.9m).
At 28 February 2023, capital commitments contracted, but not provided for by
the Group, amounted to £156.8m (28 February 2022: £166.4m; 31 August 2022:
£206.0m).
10. Leases
Right-of-use assets
See below for the carrying amounts of right-of-use assets and the movements
during the period:
Six months to 28 February 2023 Six months to 28 February 2022 Year to
(unaudited) (unaudited) 31 August 2022
£m £m (audited)
£m
At the beginning of the period 380.3 345.2 345.2
New leases and modifications / reassessments(1) (24.1) 32.9 72.6
Impairment charge (21.5) (9.1) (9.3)
Depreciation charge (19.1) (15.4) (30.3)
Transfers to investment property(2) (12.8) - -
Disposals - - (3.4)
Exchange differences (2.9) 1.1 5.5
At the end of the period 299.9 354.7 380.3
(1) The Group presents additions to right-of-use assets in line with the
disclosure requirements of IFRS 16 'Leases'. In doing so, additions to
right-of-use assets above include the net impact of new leases and
modifications/reassessments. This incorporates re-measurements of any
associated dilapidation provisions.
(2) The Group now sublets unused office space within its Leavesden property,
and as disclosed in note 3, further space has been vacated during the year
with a view to ultimately sub-letting. As a result, the related space has been
assessed to meet the definition of investment property under IAS 40
"Investment Properties". Right-of-use assets with a net book value of £12.8m
have therefore been transferred from right-of-use assets to investment
property during the year. Further detail is included within note 2.
Right of use assets comprise entirely leases for land and buildings.
Details of impairment charges are included in note 3.
Lease Liabilities
Set out below are the carrying amounts of lease liabilities and the movements
during the period:
Six months to 28 February 2023 Six months to 28 February 2022 Year to
(unaudited) (unaudited) 31 August 2022
£m £m (audited)
£m
At the beginning of the period 380.1 328.9 328.9
New leases and modifications / reassessments (20.5) 30.1 75.2
Payments (15.0) (16.0) (31.7)
Interest expense 2.9 2.6 5.4
Disposals - - (3.9)
Exchange differences (1.6) (0.5) 6.2
At the end of the period 345.9 345.1 380.1
Current 29.8 24.9 24.3
Non-current 316.1 320.2 355.8
Total 345.9 345.1 380.1
10. Leases continued
Income statement / cash flow disclosures
The following amounts are included in the Group's consolidated financial
statements in respect of its leases:
Six months to 28 February 2023 Six months to 28 February 2022
(unaudited) (unaudited)
£m £m
Income statement
Depreciation charge for right-of-use assets (excluding impairment) (19.1) (15.4)
Interest expense on lease liabilities (2.9) (2.6)
Expense relating to short-term leases (0.3) (0.2)
Expense relating to leases of low value assets that are not shown above as (0.2) (0.3)
short-term leases
Cash flow
Total cash outflow for leases comprising interest and capital payments (15.5) (16.5)
Sub-let income relating to leases under IFRS 16 0.7 0.2
11. Trade and other payables
Six months to 28 February 2023 Six months to 28 February 2022 Year to
(unaudited) (unaudited) 31 August 2022
£m £m (audited)
£m
Trade payables 110.7 107.8 94.0
Other payables 319.3 320.6 402.8
Accruals 307.1 411.5 401.8
Deferred revenue 81.8 56.0 54.4
Taxation and social security 18.4 31.1 40.3
837.3 927.0 993.3
Trade and other payables have been presented in more detail than previously in
order to provide more useful information to users of the financial statements.
In doing so, the allocation between some categories has changed. Prior periods
have been represented where relevant.
12. Provisions
Dilapidations Onerous occupancy Total
£m £m £m
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
At 28 February 2023 (unaudited) 38.9 17.0 55.9
Current - 1.7 1.7
Non-current 38.9 15.3 54.2
At 28 February 2023 (unaudited) 38.9 17.0 55.9
At 1 September 2021 43.2 - 43.2
Recognised 2.8 - 2.8
Unwinding of discount 0.1 - 0.1
Exchange differences (0.2) - (0.2)
At 28 February 2022 (unaudited) 45.9 - 45.9
Current - - -
Non-current 45.9 - 45.9
At 28 February 2022 (unaudited) 45.9 - 45.9
At 1 September 2021 43.2 - 43.2
Recognised 10.8 - 10.8
Effects of movements in discount rates (13.2) - (13.2)
Unwinding of discount 0.2 - 0.2
Exchange differences 0.9 - 0.9
At 31 August 2022 (audited) 41.9 - 41.9
Current - - -
Non-current 41.9 - 41.9
At 31 August 2022 (audited) 41.9 - 41.9
Refer to note 3 for details of onerous occupancy provisions recognised during
the financial period.
13. 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 (unaudited)
£m
As 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)
Amortised cost Fair value through profit or loss Total
£m £m (unaudited)
£m
As at 28 February 2022
Derivative financial assets - 55.5 55.5
Cash and cash equivalents 406.7 - 406.7
Trade and other receivables(1) 68.0 - 68.0
Derivative financial liabilities - (8.3) (8.3)
Lease liabilities (345.1) - (345.1)
Trade and other payables(2) (819.2) - (819.2)
Borrowings (469.3) - (469.3)
(1,158.9) 47.2 (1,111.7)
Amortised cost Fair value through profit or loss Total
£m £m (audited)
£m
As at 31 August 2022
Derivative financial assets - 68.4 68.4
Cash and cash equivalents 323.0 - 323.0
Trade and other receivables(1) 63.4 - 63.4
Derivative financial liabilities - (32.6) (32.6)
Lease liabilities (380.1) - (380.1)
Trade and other payables(2) (880.9) - (880.9)
Borrowings (475.9) - (475.9)
(1,350.5) 35.8 (1,314.7)
( ) (1)Excludes prepayments and VAT receivables
( 2)Excludes deferred income and any amounts in relation to taxation
13. Financial instruments continued
The prior year interim balance for financial assets and liabilities measured
at amortised cost has been amended to exclude certain assets and liabilities
totalling £3.8m and £153.7m respectively that do not meet the definition of
a financial instrument.
The Group operates internationally and is therefore exposed to foreign
currency transaction risk, primarily on sales denominated in Euros, US
dollars, Australian Dollars. The Group's policy is to mitigate foreign
currency transaction exposures where possible and the Group uses financial
instruments in the form of forward foreign exchange contracts to hedge future
highly probable foreign currency cash flows.
These forward foreign exchange contracts are classified above as derivative
financial assets/liabilities and are classified as Level 2 financial
instruments under IFRS 13, "Fair Value Measurement." They have been fair
valued at 28 February 2023 with reference to forward exchange rates that are
quoted in an active market, with the resulting value discounted back to
present value. All forward foreign exchange contracts were assessed to be
highly effective during the financial period. All derivative financial
liabilities at 28 February 2023 mature within three years based on the related
contractual arrangements.
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 short-term deposits, trade
receivables, payables and the revolving credit facility are assumed to
approximate to their book values.
The fair values of cash and cash equivalents, trade receivables, overdrafts
and payables are assumed to approximate to their book values.
Carrying amount Fair value
£m £m
As at 28 February 2023
Convertible bond (457.3) (347.2)
Nordstrom loan (22.0) (21.9)
(479.3) (369.1)
Carrying amount Fair value
£m £m
As at 28 February 2022
Convertible bond (444.4) (425.8)
Nordstrom loan (22.0) (21.9)
(466.4) (447.7)
Carrying amount Fair value
£m £m
As at 31 August 2022
Convertible bond (451.0) (371.7)
Nordstrom loan (22.0) (21.9)
(473.0) (393.6)
14. Borrowings
28 February 2023 28 February 2022 31 August 2022
(unaudited) (unaudited) (audited)
£m £m £m
Convertible bond (457.3) (444.4) (451.0)
Nordstrom loan (22.0) (22.0) (22.0)
Obligation to repurchase own shares (3.0) (2.9) (2.9)
Revolving credit facility (including accrued interest) (258.0) - -
(740.3) (469.3) (475.9)
Current (9.3) (1.4) (1.4)
Non-current (731.0) (467.9) (474.5)
(740.3) (469.3) (475.9)
The convertible bond represents the liability component of £500m convertible
bonds issued on 16 April 2021, and pays a coupon of 0.75% until April 2026, or
the conversion date, if earlier. The bonds are unsecured.
The Nordstrom loan attracts interest at 6.5% per annum, and was recognised as
part of a strategic partnership with Nordstrom who purchased a minority
interest in ASOS Holdings Limited in July 2021. As part of this agreement a
written put option was provided to Nordstrom over their shares in ASOS
Holdings Limited.
At the balance sheet date, the Group had in place a £350m Revolving Credit
Facility (RCF) (plus £50m ancillary facilities following exercise of a £50m
accordion option in December 2022), of which £250m was drawn down (HY22
£nil). In May 2023 the Group successfully negotiated an amendment and
extension to the terms of the RCF - refer to Note 18 for further information.
15. 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 Net borrowings
£m £m £m £m
At 1 September 2022 (380.1) (475.9) 323.0 (533.0)
Cash flow movements 15.0 (246.9) (15.2) (247.1)
Net cash movement - (250.0) (12.7) (262.7)
Net interest paid/(received) 2.9 3.1 (2.5) 3.5
Lease liability payments 12.1 - - 12.1
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)
Accrued interest (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)
At 1 September 2021 (328.9) (463.2) 662.7 (129.4)
Cash flow movements 16.0 2.9 (256.6) (237.7)
Net cash movement - - (256.5) (256.5)
Net interest paid/(received) 2.6 2.9 (0.1) 5.4
Lease liability payments 13.4 - - 13.4
Non-cash movements (32.2) (9.0) 0.6 (40.6)
Movement in lease liabilities (30.1) - - (30.1)
Foreign exchange impacts 0.5 - 0.5 1.0
Accrued interest (2.6) (9.0) 0.1 (11.5)
At 28 February 2022 (345.1) (469.3) 406.7 (407.7)
Net debt (excluding leases) (62.6)
At 1 September 2021 (328.9) (463.2) 662.7 (129.4)
Cash flow movements 31.7 5.7 (340.7) (303.3)
Net cash movement - - (339.8) (339.8)
Net interest paid/(received) 5.4 5.7 (0.9) 10.2
Lease liability payments 26.3 - - 26.3
Non-cash movements (82.9) (18.4) 1.0 (100.3)
Movement in lease liabilities (71.3) - - (71.3)
Foreign exchange impacts (6.2) - 0.1 (6.1)
Accrued interest (5.4) (18.4) 0.9 (22.9)
At 31 August 2022 (380.1) (475.9) 323.0 (533.0)
Net debt (excluding leases) (152.9)
The cash and cash equivalents balance includes uncleared payment provider
receipts of £44.6m (31 August 2022: £32.3m and 28 February 2022: £36.0m)
that are generally receivable within 72 hours.
15. Analysis of net debt continued
Included within cash and cash equivalents is £1.7m (28 February 2022: £nil;
31 August 2022: £0.8m) 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.
16. Related parties
The Group's related party transactions are with the Employee Benefit Trust,
Link Trust, key management personnel and other related parties as disclosed in
the Group's Annual Report and Accounts for the year to 31 August 2022.
Transactions with other related parties
During the period, the Group made purchases of inventory, net of VAT,
totalling £38.9m (six months to 28 February 2022: £39.8m) from
Aktieselskabet af 5.5.2010, a company which has a significant shareholding in
the Group. At 28 February 2023, the amount due to Aktieselskabet af 5.5.2010
was £8.1m (28 February 2022: £5.8m). In addition, a rebate £0.1m (28
February 2022: £0.2m) was received during the period from Aktieselskabet af.
There have been no other material changes to the Group's related party
transactions during the six months to 28 February 2023.
17. 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.
At 28 February 2023, the Group had contingent liabilities of £nil (28
February 2022: £nil).
18. Post balance sheet events
Post the balance sheet date, the Group successfully amended and extended its
existing £350m Revolving Credit Facility (plus £50m ancillary facilities
following exercise of a £50m accordion option in December 2022) to November
2024. The facility continues to have minimum liquidity, leverage and interest
cover covenants and is subject to a floating and fixed charge over certain
group assets. The minimum liquidity covenant will continue to apply for the
duration of the facility, with the interest cover and leverage covenants being
applicable from 31st August 2023. The facility steps down over the term,
reducing to £220m by August 2024. The RCF extension secures the Company's
funding beyond FY24, supporting the business as it continues to execute on its
Driving Change agenda and return to profitability and cash generation. As a
result of the extension our current expectation of H2 FY23 interest expenses
is c.£30m including amortisation of arrangement fees and related costs.
Principal risks and uncertainties
The Board have concluded that the principal risks and uncertainties which
could impact the Group over the remaining six months of the financial year to
31 August 2023 remain relatively unchanged from those set out in the Annual
Report and Accounts for the year to 31 August 2022. The applicable risks are
summarised as follows:
· Data breach
· Cyber security incidents
· Availability of technology services
· Macro-economic changes, including Russia/Ukraine conflict
· Foreign exchange rate exposure
· Supply Chain disruption
· E-commerce market dynamics and impact on our business
· Ethical trade issues in our supply chain
· Failure to comply with legislation or regulation
· Sustainability & climate change
· Engagement, capability & retention of talent
· Transformation fails to delivery required outcome
These are set out in detail on pages 48 to 53 of the Group's Annual Report and
Accounts for the year to 31 August 2022, a copy of which is available on the
Group's website, www.asosplc.com.
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 28 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 six months of the
financial year; and
• that the report contains a fair review of
related party transactions.
The Directors of ASOS plc are listed on the Group's website:
https://www.asosplc.com/this-is-asos/our-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 6 month period ended 28 February 2023 (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 (unaudited) as at 28 February
2023;
· the consolidated income statement (unaudited) for the period then
ended;
· the consolidated statement of total comprehensive (loss) / income
(unaudited) for the period then ended;
· the consolidated cash flow statement (unaudited) for the period
then ended;
· the consolidated statement of changes in equity (unaudited) 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.
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.
INDEPENDENT REVIEW REPORT TO ASOS PLC CONTINUED
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
10 May 2023
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
reported 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 movements 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
Six months to 28 February 2023 Six months to 28 February 2022 % growth
not impacted by exchange rate fluctuations. £m £m %
Revenue at constant currency 1,794.6 2,004.1 (10%)
Impact of foreign exchange translation 46.0 - -
Group revenue 1,840.6 2,004.1 (8%)
Six months to 28 February 2022 Six months to 28 February 2021 % growth
£m £m %
Revenue at constant currency 2,045.9 1,975.9 4%
Impact of foreign exchange translation (41.8) - -
Group revenue 2,004.1 1,975.9 1%
Retail 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 A reconciliation of this measure is included in note 4.
sales
Adjusted revenue Revenue Revenue excluding the impact of adjusting items. A measure of the Group's revenue and gross profitability, excluding the impact
of any adjusting items.
Reconciliation is shown below:
Adjusted gross margin None Gross profit divided by revenue and excluding the impact of adjusting items. Six months to 28 February 2023 Six months to 28 February 2022
£m £m
Revenue 1,840.6 2,004.1
Adjusting items (2.1) -
Adjusted revenue 1,838.5 2,004.1
Gross profit 664.7 863.2
Adjusting items 124.6 -
Adjusted gross profit 789.3 863.2
Adjusted gross margin % 42.9% 43.1%
Retail 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.
A reconciliation of this measure is included in note 4.
Adjusted revenue
Revenue
Revenue excluding the impact of adjusting items.
A measure of the Group's revenue and gross profitability, excluding the impact
of any adjusting items.
Reconciliation is shown below:
Adjusted gross margin
None
Gross profit divided by revenue and excluding the impact of adjusting items.
Six months to 28 February 2023 Six months to 28 February 2022
£m £m
Revenue 1,840.6 2,004.1
Adjusting items (2.1) -
Adjusted revenue 1,838.5 2,004.1
Gross profit 664.7 863.2
Adjusting items 124.6 -
Adjusted gross profit 789.3 863.2
Adjusted gross margin % 42.9% 43.1%
Alternative performance measures (APMs) continued
Performance measure Closest IFRS measure Definition How ASOS uses this measure
Adjusted EBIT Operating (loss)/profit 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 base. Used by management to
monitor the performance of the business each month.
Six months to 28 February 2023 Six months to 28 February 2022
£m £m
Operating loss (272.5) (4.4)
Adjusting items excluding finance costs (note 3) 203.1 30.6
Adjusted EBIT (69.4) 26.2
Net finance costs (note 5) (18.4) (11.4)
Add back adjusting finance costs (note 3) 0.4 -
Adjusted (loss)/profit before tax (87.4) 14.8
Group revenue 1,840.6 2,004.1
Adjusting items (2.1) -
Adjusted Group revenue 1,838.5 2,004.1
Adjusted EBIT margin (3.8%) 1.3%
Details of adjusting items are included within note 3.
Adjusted (loss)/profit before tax (Loss)/profit 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.
Net cash/(debt) No direct equivalent Cash and cash equivalents less the carrying value of borrowings (including A measure of the Group's liquidity.
accrued interest) drawn down at period-end, but excluding outstanding lease
liabilities.
Information is included in note 15. A reconciliation is included below:
Six months to 28 February 2023 Six months to 28 February 2022 (unaudited)
(unaudited) £m
£m
Cash and cash equivalents 308.6 406.7
Borrowings (740.3) (469.3)
Lease liabilities (345.9) (345.1)
Net borrowings (777.6) (407.7)
Add-back lease liabilities 345.9 345.1
Group net debt (431.7) (62.6)
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 M&A and financing transactions, which allows management to better assess
principal portion of lease liabilities, net finance expenses and fees in the cash being generated by the business.
relation to any financing transactions carried out by the Group where
relevant.
A reconciliation to the Group cash flow is shown below:
Six months to 28 February 2023 Six months to 28 February 2022
£m £m
Cash used in operations (128.2) (151.2)
(per cash flow)
Purchase of tangible and intangible assets (115.0) (86.5)
Repayment of principal portion of lease liabilities (12.1) (13.4)
Net interest paid (3.5) (5.4)
Refinancing amendment fees (3.9) -
Free cash flow (262.7) (256.5)
Details of adjusting items are included within note 3.
Adjusted (loss)/profit before tax
(Loss)/profit 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.
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 15. A reconciliation is included below:
Six months to 28 February 2023 Six months to 28 February 2022 (unaudited)
(unaudited) £m
£m
Cash and cash equivalents 308.6 406.7
Borrowings (740.3) (469.3)
Lease liabilities (345.9) (345.1)
Net borrowings (777.6) (407.7)
Add-back lease liabilities 345.9 345.1
Group net debt (431.7) (62.6)
Free cash flow
No direct equivalent
Free cash flow is net cash generated from operating activities, adjusted for
payments to acquire intangible and tangible assets, the payment of the
principal portion of lease liabilities, net finance expenses and fees in
relation to any financing transactions carried out by the Group where
relevant.
A measure of the cash generated by the Group outside cash flows relating to
M&A and financing transactions, which allows management to better assess
the cash being generated by the business.
A reconciliation to the Group cash flow is shown below:
Six months to 28 February 2023 Six months to 28 February 2022
£m £m
Cash used in operations (128.2) (151.2)
(per cash flow)
Purchase of tangible and intangible assets (115.0) (86.5)
Repayment of principal portion of lease liabilities (12.1) (13.4)
Net interest paid (3.5) (5.4)
Refinancing amendment fees (3.9) -
Free cash flow (262.7) (256.5)
Appendix 1 - Total sales growth by period in sterling, including Russia
Year ending 31 August 2023
£m P1(1) YOY% P2(1) YOY% P3(1) YOY% P4(1) YOY% 2022/23 YTD YOY%
UK total sales 591.3 (8%) 212.4 (15%) 803.7 (10%)
EU total sales 417.3 7% 169.3 (10%) 586.6 2%
US total sales 198.1 15% 71.1 (11%) 269.2 7%
ROW total sales 129.8 (30%) 51.3 (45%) 181.1 (35%)
Total sales(3) 1,336.5 (4%) 504.1 (17%) 1,840.6 (8%)
Year ended 31 August 2022 ( )
P1(1) YOY% P2(1) YOY% P3(1) YOY% P4(1) YOY% 2021/22 YOY%
£m
UK total sales 645.2 13% 250.3 (2%) 431.8 4% 435.5 6% 1,762.8 7%
EU total sales 390.2 (3%) 187.2 (3%) 294.0 (5%) 298.6 6% 1,170.0 (1%)
US total sales 172.6 7% 80.1 13% 141.9 21% 136.8 18% 531.4 14%
ROW total sales 185.1 (20%) 93.4 1% 96.4(2) (33%) 97.4 (30%) 472.3 (22%)
Total sales(3) 1,393.1 2% 611.0 -% 964.1(2) (2%) 968.3 2% 3,936.5 1%
Year ended 31 August 2021
P1(1) YOY% P2(1) YOY% P3(1,4) YOY% P4(1,4) YOY% 2020/21 YOY%
£m
UK total sales 571.3 35% 254.5 46% 415.9 85% 410.3 5% 1,652.0 36%
EU total sales 400.6 18% 193.8 22% 310.1 33% 280.8 (6%) 1,185.3 15%
US total sales 161.7 12% 71.2 8% 117.5 25% 115.8 4% 466.2 12%
ROW total sales 230.5 16% 92.3 1% 144.5 2% 139.7 (19%) 607.0 1%
Total sales(3) 1,364.1 23% 611.8 25% 988.0 43% 946.6 (3%) 3,910.5 20%
(1)Periods are as follows:
P1: four months to 31 December
P2: two months to 28/29 February
P3: three months to 31 May
P4: three months to 31 August
(2)In the tables above RoW and Group total sales for P3 have been restated.
This restatement relates to the removal of the £19.3m gain on RUB hedges,
which was reported as revenue at P3 but subsequently reallocated to other
income at year-end 2022.
(3)Includes retail sales, wholesale and income from other services comprising
delivery receipt payments, marketing services and commission on
partner-fulfilled sales
(4)P3 is restated to reflect only March, April, and May. P4 has been restated
to include June.
Appendix 2 - Total sales growth by period at constant currency, including
Russia
Year ending 31 August 2023
£m P1(1) P2 (1) P3 (1) P4 (1) 2022/23
YOY% YOY% YOY% YOY% YOY%
UK total sales (8%) (15%) (10%)
EU total sales 6% (12%) -%
US total sales (2%) (20%) (7%)
ROW total sales (31%) (46%) (36%)
Total sales(3) (6%) (20%) (10%)
Year ended 31 August 2022
P1(1) P2 (1) P3 (1) P4 (1) 2021/22
£m YOY% YOY% YOY% YOY% YOY%
UK total sales 13% (2%) 4% 6% 7%
EU total sales 2% 1% (2%) 9% 2%
US total sales 11% 12% 15% 4% 10%
ROW total sales (15%) 2% (33%)(2) (31%) (20%)
Total sales(3) 5% 1% (2%)(2) 1% 2%
Year ended 31 August 2021
P1(1) P2 (1) P3 (1,4) P4 (1,4) 2020/21
£m YOY% YOY% YOY% YOY% YOY%
UK total sales 35% 46% 85% 5% 36%
EU total sales 17% 20% 34% (7%) 15%
US total sales 16% 13% 40% 15% 21%
ROW total sales 20% 9% 10% (14%) 6%
Total sales(3) 24% 26% 47% (1%) 22%
( )
(1)Periods are as follows:
P1: four months to 31 December
P2: two months to 28/29 February
P3: three months to 31 May
P4: three months to 31 August
(2)In the tables above RoW and Group total sales for P3 have been restated.
This restatement relates to the removal of the £19.3m gain on RUB hedges,
which was reported as revenue at P3 but subsequently reallocated to other
income at year-end 2022.
(3)Includes retail sales, wholesale and income from other services comprising
delivery receipt payments, marketing services and commission on
partner-fulfilled sales
(4)P3 is restated to reflect only March, April, and May. P4 has been restated
to include June.
Appendix 3
Total sales growth by period in sterling, excluding Russia
Year ending 31 August 2023
£m P1(1) YOY% P2(1) YOY% P3(1) YOY% P4(1) YOY% 2022/23 YTD YOY%
UK total sales 591.3 (8%) 212.4 (15%) 803.7 (10%)
EU total sales 417.3 7% 169.3 (10%) 586.6 2%
US total sales 198.1 15% 71.1 (11%) 269.2 7%
ROW total sales 129.8 (9%) 51.3 (14%) 181.1 (10%)
Total sales(3) 1,336.5 (1%) 504.1 (13%) 1,840.6 (5%)
Year ended 31 August 2022 ( )
P1(1) YOY% P2(1) YOY% P3(1) YOY% P4(1) YOY% 2021/22 YOY%
£m
UK total sales 645.2 13% 250.3 (2%) 431.8 4% 435.5 6% 1,762.8 7%
EU total sales 390.2 (3%) 187.2 (3%) 294.0 (5%) 298.6 6% 1,170.0 (1%)
US total sales 172.6 7% 80.1 13% 141.9 21% 136.8 18% 531.4 14%
ROW total sales 142.0 59.7 96.4(2) (7%) 97.4 (3%) 395.5
Total sales(3) 1,350.0 577.3 964.1(2) 2% 968.3 7% 3,859.7
Total sales growth by period at constant currency, excluding Russia
Year ending 31 August 2023
£m P1(1) P2 (1) P3 (1) P4 (1) 2022/23
YOY% YOY% YOY% YOY% YOY%
UK total sales (8%) (15%) (10%)
EU total sales 6% (12%) -%
US total sales (2%) (20%) (7%)
ROW total sales (10%) (16%) (12%)
Total sales(3) (3%) (15%) (7%)
Year ended 31 August 2022
P1(1) P2 (1) P3 (1) P4 (1) 2021/22
£m YOY% YOY% YOY% YOY% YOY%
UK total sales 13% (2%) 4% 6% 7%
EU total sales 2% 1% (2%) 9% 2%
US total sales 11% 12% 15% 4% 10%
ROW total sales (7%)(2) (4%)
Total sales(3) 2%(2) 6%
(1)Periods are as follows:
P1: four months to 31 December
P2: two months to 28/29 February
P3: three months to 31 May
P4: three months to 31 August
(2)In the tables above RoW and Group total sales for P3 have been restated.
This restatement relates to the removal of the £19.3m gain on RUB hedges,
which was reported as revenue at P3 but subsequently reallocated to other
income at year-end 2022.
(3)Includes retail sales, wholesale and income from other services comprising
delivery receipt payments, marketing services and commission on
partner-fulfilled sales
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