REG - ASOS PLC - Final results for the period to 1 September 2024
05/11/2024 07:00
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RNS Number : 9063K ASOS PLC 05 November 2024
5 November 2024
ASOS Plc
Global Online Fashion Destination
Final results for the period to 1 September 2024
Back to Fashion targets met, foundations in place to deliver sustainable,
profitable growth
Summary financial results
£m(1) Period to 1 Sep 2024 (FY24) Period to 3 Sep 2023 (FY23) Change LFL Change
Headline measures(2)
Adjusted group revenue(3,4) 2,896.0 3,538.0 (16%)
Adjusted gross margin 43.4% 44.2% (80bps)
Adjusted cost to serve(5) 40.7% 40.8% 10bps
Adjusted EBITDA 80.1 124.5 (44.4)
Adjusted EBIT (81.5) (29.0) (52.5)
Adjusted loss before tax (126.0) (70.3) (55.7)
Net debt (297.1) (319.5) +22.4
Free cash inflow/(outflow) 37.7 (213.0) +250.7
Statutory Measures
Group revenue 2,905.8 3,549.5 (18%)
Gross margin 40.0% 41.1% (110bps)
Operating loss (331.9) (248.5) (83.4)
Loss before tax (379.3) (296.7) (82.6)
Strategic update and results summary
· Back to Fashion targets met: Stock clearance complete, new
commercial model embedded, Test & React scaled above 10% of own brand
sales, flexible fulfilment doubled and unit economics transformed with
variable contribution per order now +28% on FY22. Foundations of more agile
and profitable business now in place.
· Significant cash flow improvement: FY24 adjusted EBITDA of £80.1m,
at the top end of consensus expectations, and £37.7m free cashflow, a
£250.7m improvement year-on-year ('YoY').
· Stock transition complete: inventory down c.50% since FY22 to £520m,
through disciplined stock management and c.£100m write-down to complete
transition to the new commercial model by end of FY24. Stock position now
offers greater newness for customers, with aged stock down c.75% YoY and
>80% of stock under 6 months old.
· Continued optimisation of profit contribution over revenue,
resulting in FY24 revenue decline of 16%(4) YoY, in-line with guidance
provided in our September trading update.
· New commercial model resonating with customers: sales of newness
+24% YoY over the last 3 months (Jul-Sep) with only 6% higher stock,
demonstrating strong demand for full-price product. Offset at group level by
c.30% YoY decline in sales of old inventory from c.60% lower stock levels.
Importantly, this has a sustainable positive impact on gross margin and
profit, despite the near-term revenue headwind.
· Balance sheet strengthened significantly following the year end
through a comprehensive refinancing and proceeds from the formation of the
Topshop and Topman joint venture(6) (TSTM JV).
· Strong foundations now in place, shifting focus in FY25: focus on
taking actions to delight customers, doubling Test & React to 20% of
own-brand sales, further scaling FF models, adding exciting brand partners,
empowering faster innovation through our Technology and Digital Product
transformation, launching loyalty programme, launching Topshop.com, and
further tackling the causes of unnecessary returns.
· In FY25, driven by a significant increase in our full-price sales
mix, we expect at least 300bps increase in gross margin to over 46% and
adjusted EBITDA to increase by at least 60% to £130m to £150m, including the
impact of the TSTM JV. FY25 FCF expected to be broadly neutral, with capex of
c.£130m and cash interest of c.£35m.
· In the mid-term our focus remains sustainable, profitable growth.
We continue to expect revenue growth, gross margin towards c.50% and an
adjusted EBITDA margin of c.8%, sustainably ahead of capex, interest, tax and
leases.
José Antonio Ramos Calamonte, Chief Executive Officer said:
"We achieved our key priorities for the year, significantly reducing our
inventory position, while generating positive adjusted EBITDA and free cash
flow. Following the year end, we further strengthened our balance sheet with
our Topshop Topman joint venture and our refinancing. Our product is now in
the strongest position it has been in years, with the right level of newness
to excite customers, and we have fundamentally improved our profitability
through a relentless focus on operational efficiency. With these solid
foundations in place, we can focus on delivering experiences that delight our
20 million customers. There is much work to do, but we have already seen our
efforts rewarded with new product sales increasing 24% YoY over the last three
months. I am energised by the progress we have made so far and excited for the
next phase of our journey."
CEO Review
Our mission is to be the number one destination for fashion-loving
20-somethings. We know that by having the most exciting product, by focusing
on inspiration over transaction, and by providing an exciting customer
journey, enabled by a fast and agile operation, we can build a sustainable,
profitable business and return to growth. Our business model affords us
competitive advantages in these areas, which has been core to our success.
However, we must continue to relentlessly improve across each of them. Our
goal is to build a business that delights customers so much that they give us
more of their time, love and fashion spend.
To reach our goal, Phase 1 of the journey has been about setting strong
foundations. This meant ensuring that our operations were efficient and
effective, and that all our efforts were creating value for our customers, our
brand partners, ASOSers and our shareholders. We have been clear about the
challenges the business faced and the medicine needed to put ASOS on the right
path - undertaking a disciplined revision of everything we do, bringing a
refreshed level of rigour to each process in our value creation chain. This
has enabled us to build ourselves faster, more agile and better able to serve
our fashion-loving 20-something customers. Ultimately, this meant clearing
through old stock, changing our product model to ensure we can bring our
customers the best, most relevant product and exiting unprofitable activities
to invest into areas that matter most to our core customers.
As we sit at the end of Phase 1 of our journey, I am incredibly proud of what
the team has achieved. We have more than halved our stock position over the
last two years and completely restructured the way that we buy fashion so that
we never find ourselves back in such a heavily overstocked position. We have
developed a new product model in Test & React that brings product from
design to site in less than 3 weeks and scaled this to over 10% of own-brand
sales by year end. We have fundamentally improved our order economics, with
profit per order increasing 19% YoY in Q4 following the end of our elevated
clearance period. We exited certain unprofitable activities, with all
countries now delivering a positive contribution and we have improved the
profit contribution margin from our least profitable customers by 8ppts.
Following the year end we also formed a joint venture for Topshop and Topman,
unlocking opportunities for growth for those brands while also significantly
reducing our net debt position, and re-financing the majority of our
convertible debt out to September 2028.
The medicine we have taken - reducing our intake, discounting to clear old
stock, and rigorously revising our operations - while necessary, has not made
for attractive financial results over the last two years. However, we are
confident we now have the right team, processes and business resilience on
which to drive sustainable, profitable growth. Since the full transition to
our new commercial model, over the last 3 months, we saw evidence of that
progress, with sales of newness up 24% YoY with only 6% more stock, turning
c.30% faster, and with c.4ppts higher variable contribution margin. Against
this, we have seen old and aged sales down c.30% off c.60% lower stock,
providing an offsetting effect as we annualise the end of our stock
transformation. Over the next financial year, we expect a continuation of
these trends: the benefits of our new commercial model - both in terms of
revenue growth and gross margin improvements - will become increasingly
apparent at a Group level as our new stock continues to perform, and the
offsetting decline from lower sales of heavily discounted old and mature stock
will annualise throughout the year. The decisive actions taken over Phase 1 of
our turnaround means we are confident in achieving significant profit
improvements in FY25 regardless of revenue levels.
Understandably, we will be asked by analysts or investors, "when will ASOS
grow again?", and growth remains an important part of our future, so I wanted
to share my framing here. At ASOS we have to focus on the inputs - which for
the last two years have been weighted towards taking the medicine of reducing
stock and exiting unprofitable activities. As we move into Phase 2 of our
journey, the year ahead, and beyond, will be increasingly weighted towards
taking actions that delight our customers to win more of their time, love and
fashion spend. However, from experience we know that exactly when that results
in growth in revenue is not something we should try to manage. We could, for
example, decide to accelerate growth next month by re-engaging promotional
marketing or discounting product, but that would not be in the long-term
interests of the business. We will do things in the right way and we're going
to be patient.
We have already seen the green shoots in the performance of our new stock in
recent months which gives us confidence that our new commercial model is
delivering customers the right product at the right time. This will be the
driving force behind our gross margin improvement back towards 50% in the
medium term. Our relentless focus on operational efficiencies and optimising
our cost to serve have laid the foundations to be able to deliver future
growth without sacrificing margins. This will enable us to rebuild adjusted
EBITDA margins sustainably back to c.8%. And our disciplined capital
allocation means that we will continue to drive capex down to our target
range, and reduce our interest costs over time as we lower our net debt
levels. I am confident that we have something incredibly unique to offer
customers and that in the coming years we can return to growth while
generating meaningful, sustainable free cash flow.
I'd like to describe in a bit more detail the journey we've been on, what
we've achieved over the last 12 months, as well as what's next for ASOS.
What have we achieved?
ASOS is unequivocally a faster, more agile and more efficient business than
when we started our Driving Change transformation two years ago. This has been
made possible by a significant effort from ASOSers to deliver against our
strategic priorities.
1. Product is in a great place, through disciplined stock management and an
obsession with speed
Our mission is to be the world's number one fashion destination for
fashion-loving 20-somethings. Having the best product is at the core of our
flywheel. We want to delight our customers with the hottest and freshest
products and brands, at the right price, delivered in a reliable and
consistent way - great products lead to positive customer experiences and
inspire loyalty. We can drive better unit economics from selling full-price
products, and a better return on marketing investment when directing people to
the best product. The more efficient we get, the better the experience we are
able to deliver.
At the core of this process has been the transformation of our stock model and
the transition to our new commercial model and we can be proud that today our
stock position is in the strongest position it has been for many years. At the
beginning of our transformation, our stock levels had more than doubled to
over £1bn due to Covid-related disruption and poor commercial practices which
led to the build-up of old and aged stock. Over the last two years, we have
reduced stock levels by c.50% to £520m and c.80% of our current fashion
stockholding is in product that has been on site for less than six months.
This hasn't been an easy journey, and we have operated through 'peak pain'
over FY23 and FY24 as we've cleared through high levels of excess aged
inventory built up under our old operating model, reduced our intake of new
and exciting product and shifted to a model of clearing through any
underperforming stock as we go. During H2, we began testing the removal of the
remaining old stock on our site to see how it would affect customer engagement
and sales. The trial was a success: sell through of new stock increased
dramatically, conversion rates improved, and we almost halved discounting on
site. In Q4, we decided to permanently remove the remaining excess stock from
site, which we subsequently wrote-down and will clear through alternative
channels. This write-down mainly relates to stock over 12 months old, and
means that we finished FY24 with a more compelling customer proposition and
the right level of newness to excite our customers again. The results are
clear. Over the last 3 months (July-September), sales of newness increased 24%
year-on-year with only 6% more stock, and turning c.30% faster, with c.4ppts
higher variable contribution profit margin.
Our new commercial model ensures this build-up of old inventory never happens
again. We have significantly improved our speed to market (the lead time
between buying and selling stock), meaning we can make better choices on our
intake. We focus on selling the best fashion at full-price and clearing
through any underperforming stock in-season, improving gross margin, avoiding
deeper discounts, releasing cash to invest in new stock, and ensuring a better
customer experience by presenting more fresh and relevant product.
Our market-leading Test & React model is fundamental to our new commercial
model, bringing product from design to site within three weeks, ensuring our
own brands always offer the most exciting product and set the trends for our
fashion-loving customers. Having developed the model during FY23, we have now
successfully scaled to more than 10% of our own-brand sales mix at the end of
FY24 and remain on track to scale to 30% over the mid-term. We test product
before 'reacting' and committing to volume. When we do commit, given the speed
to market, we typically aim to hold just three weeks of stock, supporting a
cleaner stock profile. Despite the higher sourcing costs that small batch
sizes incur, the high customer demand and full-price mix means the product
generates higher gross margin.
Our obsession with speed spans our entire portfolio, and is indicative of an
evolution in our broader culture. The development of flexible fulfilment
models, Partner Fulfils and ASOS Fulfilment Services ('AFS'), enables us to be
more agile in how we collaborate with our partner brands while bringing our
customers increased width (i.e. expanding the product range available on the
ASOS platform) and depth (i.e. allowing us to continue fulfilling orders on
our bestsellers when our wholesale stock is depleted). As planned, we
successfully doubled the share of third-party gross merchandise value (GMV) to
c.5% and the number of brands using flexible fulfilment to c.100 over FY24.
2. We're faster and more agile, after reducing our cost to serve, removing
waste and improving our use of data
It is critical that we invest in the areas that matter most to our customers.
We have simplified processes and removed wasted time and cost to reinvest into
productive commercial activities. This has laid the foundations for future
growth without sacrificing margins - in other words, to be able to deliver
sustainable, profitable growth.
While there are many initiatives driving improvement, it is worth highlighting
our progress in two particular areas - our logistics operations and customer
returns - which helped improve our distribution and warehousing cost ratios by
a combined c.200bps in FY24, despite volume deleverage.
In logistics, we have undertaken a significant transformation rationalising
excess space and rebuilding our processes with increased visibility and speed
to bring our customers a better experience. This was driven by a range of
initiatives, reflecting our shift in business culture prioritising continuous
improvements, such as:
· Improved customer experience: Through better use of granular and
near-time data to identify trends and patterns in our delivery experience, we
have halved the percentage of orders that were missing our customer delivery
promise over the last eighteen months, significantly improving our customer
experience while reducing our costs.
· Warehouse optimisation: We lowered our variable warehousing costs
through increased automation, reducing our labour cost per unit by c.10%,
whilst the reduction in stock levels has enabled the consolidation of our
warehouse infrastructure, reducing fixed costs by c.25%.
· Delivery cost efficiencies: Through optimising our delivery
partners and renegotiating contracted rates, we have lowered our variable
delivery costs. The cessation of split orders from our two UK distribution
centres in H1 FY23, alongside improved rates from carriers, has further
reduced our distribution costs.
Minimising unnecessary returns remains a central focus for ASOS. During our
rapid expansion period, we focused on reducing the friction in the returns
process to maximise the customer experience. More recently, we have turned our
attention to lowering the returns rate and eliminating needless pain points
for our customers. This has involved making improvements to our size and fit
and how clothing and accessories are displayed on product pages, including
greater use of videos and 360 imagery as well as introducing AI to better
understand and address reasons for returns, creating a feedback loop for
improvement. As an e-commerce business, we understand that there is such a
thing as 'good returns' that enhance the customer experience, and we continue
to offer free returns to all customers in our core markets. For customers with
an exceptionally high returns rate, this is now subject to keeping to a
minimum net order threshold.
There is still work to do in this area, but we have been pleased to see these
initiatives begin to have a positive impact for our customers, reducing our
underlying returns rate by more than 1ppt YoY.
3. We're better placed to deliver great customer experiences
In the past, ASOS built its growth through an ambitious geographic expansion.
This created a wide base of customers globally, but with a relatively small
share of wallet. The growth engine of the coming years will be our core
customers in our core markets. This means strengthening our relationship with
customers, bringing more engagement and excitement to take a greater share of
wallet and greater penetration of our core demographic.
In the UK, we have our highest brand awareness, our greatest penetration of
our core demographic and our highest share of wallet. On average our UK
customers spend £214 per annum at ASOS and our returning customers (i.e.
excluding customers acquired during the year) shop on average seven times per
annum. In the initial stages of our transformation, we saw two clear headwinds
to order frequency and churn: i) reduction in intake to clear through excess
stock carried forward, meaning less new and exciting product; ii) heightened
levels of clearance which detracted from the overall experience and attracted
non-core ASOS shoppers making one-off purchases to take advantage of discounts
being offered.
Outside the UK, our brand awareness is significantly lower as is our order
frequency and average customer spend. In these markets we have also undertaken
a more significant rebalancing of the customer proposition to invest in the
areas that really matter to our customers. This has meant a shift away from
differentiating through our delivery and returns proposition and into product
and inspiration. This journey will take time to bear fruit, but we believe by
creating win-win relationships with our customers we can both improve our
profitability and grow.
These headwinds also made our marketing investment less efficient during this
transition, driving traffic towards a sub-optimal customer experience.
However, we made significant optimisations in our performance media model,
allowing us to reduce investment year-on-year while delivering a net positive
impact on variable contribution generated through performance channels. We
were able to identify and remove inefficient spend from paid search, social
and affiliate channels leading to an increase in media return on advertising
spend (ROAS) at Group level of +18% in Q4.
Concurrently, we have rebalanced our marketing investment towards brand
marketing. In order to build lasting, engaged relationships with our core
customers we need to deliver consistent brand messaging both on-and-off-site.
Having tested a variety of marketing approaches earlier in the year, including
full funnel campaigns, we found our always-on influencer programme to be the
most effective and efficient, which following successful testing, we scaled to
working with c.1,500 influencers per month by the end of the year. This meant
we spent less than the £30m incremental brand budget initially planned.
In recent months, we have also seen improved customer engagement. As we have
removed clearance stock from our site, increased newness and rolled out our
social media and influencer marketing programme, we have seen improving
customer reactivations and retention. As we have improved the reliability of
our delivery proposition, we have also seen improvements in our corresponding
Net Promoter Scores (NPS) which demonstrates the focus on strengthening our
core customer proposition.
Underpinned by efficient and disciplined capital allocation
Our strategy is underpinned by efficient capital allocation, allowing us to
invest behind our strengths in a disciplined way, and relentlessly removing
waste to invest into opportunity. At the beginning of FY25 we announced three
key updates which significantly increased our balance sheet strength and
financial flexibility:
i) TSTM JV: In October 2024, we formed a joint venture (JV) with
Heartland A/S that purchased the Topshop and Topman brands, with Heartland A/S
taking a 75% stake for £135m cash consideration. Through the JV, we continue
to be part of the brands' future potential while improving the efficiency of
our capital allocation today. We will explore new opportunities, both online
and offline, to bring the best of TSTM to customers globally, providing an
exciting growth avenue. Within the next six months, we will re-launch
Topshop.com, giving the brand an opportunity to further expand its customer
base.
ii) Convertible bond re-financing: We successfully extended our
maturity profile while reducing our net debt through the placement of
convertible bonds due 2028 and concurrent repurchase of outstanding
convertible bonds due 2026 at a discount to par. This was funded, in part, by
the sale of a majority stake in TSTM, demonstrating our focus on efficient
capital allocation.
iii) Bantry Bay re-financing: We also announced an amendment and
extension of our existing facilities agreement with Bantry Bay Capital to May
2027, with an option for a 12 month extension. As part of the amendment, we
switched £50m of term loan into a flexible facility to effectively reduce our
blended interest rate as we improve our financial flexibility.
During the year we also continued the evolution of our leadership team to
prepare for the next Phase of our journey. We welcomed Anthony Ben Sadoun as
our first EVP Digital Product in February, Dave Murray as CFO in April, and
Ras Vaghjiani as EVP of People Experience in July. We also welcomed Rishi
Sharma as Interim General Counsel and Company Secretary in May (Emma Whyte is
on maternity leave), and Hugh Williams as Interim EVP Technology in June.
Where are we going?
The last two years have necessarily been focused on putting the right
foundations in place. As we enter FY25, we now feel that the major blocks of
our foundations are largely in place. While we will maintain our obsession
with operational efficiency and speed, our focus is increasingly weighted
towards relentlessly improving on the pillars of our Right to Win - the best
& most relevant product, being a destination for style, delivering an
engaging customer journey, and competitive convenience - in order to delight
our customers so much that they give us more of their time, love, and fashion
spend.
We believe that delighting our customers is the best way to build a good
economic business. Delighting customers is not delivered through a solitary
action, but by putting customers at the heart of everything we do. Internally,
we now talk about our growth strategy by planting seeds. We want to model
bamboo, with strong roots that first grow deep and allow the plant to then
grow sustainably for many years, staying strong. These 'seeds' can be
something as small as a new feature on our site such as 'Buy the Look' (which
14m customers engaged with last year) or the addition of an exciting new
brand. We have also begun to cultivate a culture of innovation, instilling in
our teams the desire to plant seeds, minimising risk by testing before
committing. We have already begun to plant many of the seeds across our four
pillars that will underpin the next chapter of our transformation:
1. Best & most relevant product: While Test & React has been pivotal
to improving inventory management, it also transforms our fashion offering,
ensuring we are the first place that customers can access the best product.
With the support of AI, we will further scale Test & React from 10% to 20%
of own-brand sales over FY25. We successfully tested AFS with our first brand
over FY24 and will expand further in FY25. We recently appointed a new Partner
Brands Director, Shazmeen Malik, to lead our partner brand team and we will
create a brand acquisition team to focus on bringing exciting new partners to
our platform following the launch of Arket, Veja and Mango Man.
2. Destination for style: Following the appointment of Anthony Ben Sadoun as
our first EVP of Digital Product, we have begun to transform our Technology
and Digital Product models, reorganising into smaller, autonomous units
aligned to customer focus areas. We're adding 100 software engineers,
increasing our capacity by 25% to empower faster innovation of our on-site
customer experience with the cost off-set through the simplification of our
structure.
3. Engaging customer journey: We have improved the efficiency of our
marketing activity through the optimisation of our performance marketing model
and have already begun deploying these savings into our social media and
influencer marketing to communicate our fashion message efficiently and
consistently off-site as well as on-site. Over Q4, we have seen a 14% increase
in our earned media value and will continue to scale our programme over the
next 12 months. We will also test incentives to improve customer loyalty,
including the launch of a new loyalty programme in H2 FY25. Finally, the
launch of Topshop.com will provide customers a destination for the brand
beyond the current ASOS ecosystem.
4. Competitive convenience: Our work on size and fit and the use of AI to
learn from our customer experience has had a positive impact on our underlying
returns rate. We will continue to improve the convenience of our customer
experience by tackling the causes of unnecessary returns.
Outlook and guidance
In FY25, the benefits of our new commercial model will become increasingly
apparent. As such, we expect FY25 gross margin improvement of at least 300 bps
to more than 46%, and adjusted EBITDA growth of at least 60% to £130m to
£150m. While the TSTM JV is expected to have a £10m to £20m negative
adjusted EBITDA impact in its first year of operation, it will be increasingly
EBITDA accretive over time. We expect FY25 free cash flow to be broadly
neutral, with capex of c.£130m and cash interest of c.£35m.
We will continue to focus on managing the inputs that will drive sustainably
profitable revenue growth. Over H1 FY25, we expect a continuation of current
revenue trends - strong performance of new intake offset by decline in sales
of older stock from significantly lower stockholding, resulting in an overall
sales decline. For FY25, we expect revenue to be within consensus range(7). As
a result of the significantly higher mix of full-price sales and the decisive
actions taken to improve order economics, we are confident in achieving
significant profit improvements in H1 FY25 and the full year regardless of
revenue levels.
Our core focus remains sustainable, profitable growth. In the mid-term we
continue to expect to generate adjusted EBITDA sustainably ahead of capex,
interest, tax and leases, with revenue growth and an adjusted EBITDA margin of
c.8%. Our new commercial model can drive materially higher gross margin
towards c.50% through higher full-price sales mix and flexible stock models,
which also benefit our inventory days. Our focus on efficient capital
allocation will bring our capex down to 3% to 4% of sales, over time, we
anticipate that our improving profitability and cash flow will also reduce our
net debt and interest levels.
Notes
1. Numbers throughout this section are subject to rounding.
2. The alternative performance measures used by ASOS are explained, defined
and reconciled to statutory measures in the Alternative Performance Measures
note at the end of the Financial Statements.
3. Adjusted revenue includes retail sales and income from other services,
excluding non-underlying jobber income.
4. Like-for-like ('LfL') adjusted revenue are adjusted for the impact of
foreign exchange translation (constant currency sales) and the impact of four
additional trading days in FY23
5. Cost to serve defined as operating expenses (excluding depreciation,
amortisation, impairments and adjusting items) as a percentage of adjusted
revenue.
6. The arrangement with Heartland, whilst referred to as a joint venture
throughout this report, will be accounted for as an associate, as detailed in
note 20 of the Financial Statements.
7. Company compiled consensus range for FY25 revenue growth of -9% to +6%,
as of 31 October 2024.
Financial review
Revenue growth figures are expressed on a constant currency (CCY) or
like-for-like (LFL) basis unless otherwise indicated. (1,2)
Period to 1 September 2024
£m UK EU US Rest of World Total reported Adjusting items(3) Total adjusted
Retail sales(4) 1,270.4 977.8 298.2 214.1 2,760.5 - 2,760.5
Income from other services(5) 63.2 30.6 40.6 10.9 145.3 (9.8) 135.5
Total revenue 1,333.6 1,008.4 338.8 225.0 2,905.8 (9.8) 2,896.0
Cost of sales (1,743.3) 104.6 (1,638.7)
Gross profit 1,162.5 94.8 1,257.3
Distribution expenses (326.1) - (326.1)
Administrative expenses (878.1) 25.0 (853.1)
Other income 2.0 - 2.0
EBITDA (39.7) 119.8 80.1
Depreciation, amortisation (292.2) 130.6 (161.6)
and impairments
Operating loss (331.9) 250.4 (81.5)
Finance income 12.0 - 12.0
Finance expense (59.4) 2.9 (56.5)
Loss before tax (379.3) 253.3 (126.0)
During the 52 weeks to 1 September 2024 ("the period") the Group realised an
adjusted loss before tax of £126.0m as sales were impacted by continued
challenges in the market, including higher cost of living pressures, and the
volume impact of profit initiatives taken in FY23 under our Driving Change
agenda, alongside new programmes implemented in the current financial period.
As in the first half of the period, the focus of these changes continued to be
on improving stock-health and clearing aged inventory to improve cash flow and
provide an efficient, sustainable operating model into future periods. While
impacting top-line growth, these initiatives simultaneously provided material,
ongoing savings throughout our cost base.
The reported loss before tax of £379.3m for the period includes adjusting
items totalling £253.3m. Property-related initiatives account for £144.4m,
including the mothballing of our Lichfield fulfilment centre, as announced in
our FY23 results. The majority of the expenditure under this programme is the
non-cash impairments of tangible, intangible and right-of-use assets.
Outside of the Lichfield programme, other adjusting items include £94.8m
relating to exceptional stock write-off programmes. The remaining £14.1m
primarily relates to the amortisation of intangibles associated with the
Arcadia brands.
During the previous financial year we aligned our internal and external
reporting periods to increase reporting efficiency. As a result of this change
the previous reporting period had four additional trading days compared to the
current financial year. The impact of this on Group sales growth was c.1.4%
and the associated profit and cash flow impact is immaterial.
Adjusted EBITDA in FY24 is £80.1m, a reduction of £44.4m vs the £124.5m
achieved in FY23, primarily a product of the lower revenues and increased
discounting to clear aged stock, mitigated in part by the strong progress made
on reducing our cost to serve.
Revenue
Period to Period to Change
1 September 2024
3 September 2023
Active customers (m)(6) 19.6 23.3 (16%)
Average basket value (£)(7) 41.07 40.33 2%
Average basket value CCY (£)(8) 41.21 40.33 2%
Average order frequency(9) 3.43 3.59 (4%)
Total shipped orders (m) 67.2 83.7 (20%)
Total visits (m) 2,252.4 2,661.3 (15%)
Conversion(10) 3.0% 3.1% (10bps)
Total LFL sales declined by 16%(2) as a result of the continued impact from
annualising the actions taken during FY23 to improve profitability, combined
with challenging conditions across our key markets and the impact of a number
of new initiatives focused on driving improved profitability.
Active customers declined 16% year-on-year (YoY), continuing trends seen in
previous periods as we focus on improving the profitability of our customers.
This changing dynamic is in part evidenced by the increase in Average Basket
Value (ABV) which rose 2% on a full-year basis.
In addition to the impact of lower active customers and general market
factors, visits performance was also impacted by changes to our performance
marketing approach in H2 FY24, with optimisations made to the model allowing
us to reduce investment whilst delivering a net positive impact on variable
contribution.
During H2 FY24 we introduced a net order threshold on free returns for
customers with excessive returns in France, Germany and the US. This programme
aims to improve profitability within a small group of customers; it does
however provide a small headwind in revenue, as we make fewer, more profitable
sales.
Performance by market
United Kingdom
Period to
1 September 2024
Total Sales -14% (-12% LFL)
Visits -14%
Orders -18%
Conversion -30bps
ABV +4% (+4% CCY)
Active Customers 7.0m (-13%)
Sales in the UK declined by 12% YoY(2) against a difficult consumer backdrop
as a result of the cost of living challenges which particularly impacted the
fashion retail sector.
Active customers were down 13% YoY, broadly tracking sales trends based on the
same factors. The lower demand in the market also impacted visits throughout
the period which were down 14% YoY. When combined with a step-back on
conversion this led to an 18% decline in orders. In contrast ABV performed
well, +4% YoY, indicating that profit actions are positively influencing
customer behaviour to underpin basket economics.
At the beginning of H2 FY24 we saw similar YoY trends as during H1 however as
stock health improved, Q4 FY24 began to show a more promising trajectory on
revenue, demonstrating clear demand for our full-price stock.
Europe
Period to
1 September 2024
Total Sales -14% (-13% LFL)
Visits -16%
Orders -17%
Conversion flat
ABV +4% (+5% CCY)
Active Customers 9.0m (-11%)
Visits were challenging in our European markets, down (16%) YoY with weaker
consumer demand, combined with tough competition and continued promotional
aggression in these markets.
Despite the impact on conversion from actions taken as part of our Driving
Change agenda as well as the new initiatives in FY24, conversion remained
resilient, flat YoY. This, combined with the improved ABV, +5% YoY, led to
some mitigation to the visit performance, with sales declining by 13% YoY(2).
United States
Period to
1 September 2024
Total Sales -32% (-28% LFL)
Visits -23%
Orders -31%
Conversion -20bps
ABV -3% (+1% CCY)
Active Customers 2.1m (-27%)
Total US sales fell by 28% YoY(2), with H2 FY24 back by 33%, reflecting the
more restrained approach to paid media spend alongside the continued market
weakness and the strong competition bolstered by high levels of promotional
aggression, which combined led to a 23% decline in visits.
Conversion declined 20bps YoY as a result of the wide-ranging actions taken
throughout FY23 to improve the region's profitability, alongside the
introduction of a free returns threshold for some customers towards the end of
FY24.
Rest of World
Period to
1 September 2024
Total Sales -29% (-30% LFL)
Visits -13%
Orders -38%
Conversion -40bps
ABV +7% (+5% CCY)
Active Customers 1.4m (-36%)
Rest of World ('RoW') sales fell by 30% YoY(2) reflecting the annualisation of
the widespread profitability measures outside our core geographies which were
implemented during FY23, including price increases and changes to our delivery
proposition. This has primarily manifested in reduced conversion, 40bps back
YoY, leading to a reduction in orders of 38%.
ABV has continued to be strong in the period, up 7%, building on the
double-digit ABV increase already achieved last financial year.
Gross margin
Adjusted gross margin(3) fell 80bps YoY to 43.4%. Strong H2 performance
(+120bps YoY) mitigated some of the declines reported in H1, where increased
discounting as part of our planned activities to accelerate clearance of old
and aged stock led to a 260bps decline vs H1 FY23.
Building on the strategic trading decisions taken in H1 FY24 to improve
profitability we further optimised our discounting through H2, improving the
profitability of our best performing stock, whilst continuing to clear through
old and aged stock. As in H1 we have achieved this in part through increased
use of promo exclusions, ensuring we protect fast-selling full price stock. At
the beginning of Q4 we began testing suppression of some of our oldest stock;
increasing the full price mix and ensuring that we continued to target on-site
discounting to clearance lines that remained seasonally relevant and
interesting to our consumers.
These tests demonstrated the significant gross-margin gains we anticipate as
part of our new operating model with H2 FY24 adjusted gross margin c.640bps
higher than H1.
Based on the success of these tests, a decision was taken at the end of the
period to recognise an exceptional stock-provision against this stock. This
will allow us to operate fully on the new operating model from FY25 onwards -
with the provision for stock cleared through off-site channels established
during the previous financial year.
Reported gross margin was 40.0% (110bps lower than FY23) with the key
difference vs adjusted gross margin being the impact of the stock write-off
programmes.
Operating expenses
Despite an overall volume decline, adjusted cost to serve fell to 40.7% of
sales demonstrating the significant progress in improving our operating
efficiencies and reducing fixed costs.
£m Period to % of Period to % of Change in £ Value
1 September 2024
sales(11)
3 September 2023
sales(11)
Distribution costs (326.1) (11.3%) (429.7) (12.1%) 24.1%
Warehousing (311.1) (10.7%) (416.4) (11.8%) 25.3%
Marketing (190.5) (6.6%) (195.0) (5.5%) 2.3%
Other operating costs (351.5) (12.1%) (400.4) (11.3%) 12.2%
Adj. Cost to serve (1,179.2) (40.7%) (1,441.5) (40.8%) 18.2%
(excl. D&A)
Depreciation and amortisation (161.6) (5.6%) (152.9) (4.3%) (5.7%)
Adj. operating costs (1,340.8) (46.2%) (1,594.4) (45.1%) 15.9%
Adjusting Items (155.6) (5.3%) (115.1) (3.2%) (35.2%)
Total operating costs (1,496.4) (51.5%) (1,709.5) (48.1%) 12.5%
Distribution costs at 11.3% of sales decreased by 80bps YoY. Lower volumes
provided a headwind, reducing the benefit from volume-based rebates. However
as a result of the optimisation of our UK fulfilment operations in FY23 to
avoid split orders and improved rates from carriers, secured through
consolidating volume into key strategic partners in each region, we were
successful in not only mitigating these costs, but delivering a saving versus
the previous year.
Warehouse costs as a percentage of sales decreased by 110bps YoY to 10.7%
despite the deleveraging of fixed costs from reduced volumes. Initiatives from
our Driving Change agenda in FY23 annualised in the first half providing a
strong start to the year and further improvements in the efficiency across our
fulfilment network, combined with the benefits from reduced fixed costs
following the closure of the Lichfield fulfilment centre and the Selby returns
centre, supported us to deliver cost reductions that outpaced the volume
decline.
Marketing costs decreased by 2.3% YoY. However, as a result of increased
full-funnel marketing, the impact of volume deleverage and an increase in the
paid-visit mix, as a percentage of revenue, it increased 110bps YoY to 6.6%.
Towards the end of the year we made significant optimisations in our
performance media model which enables us to reduce investment while delivering
an increased variable contribution and supports further investment in our
full-funnel strategy. As part of this strategy, we have scaled our influencer
programme, working with an average of c.1,500 influencers per month by the end
of the year.
Other operating costs fell by £48.9m or 12.2% YoY. The reduction represents
the continued benefits from right-sizing our fixed cost base throughout FY23,
alongside continued management focus on driving profitability supported by
controlling costs. Headcount was 3.5% lower at the end of the period compared
to FY23, and has now fallen by c.14% vs the FY22 closing position. Transaction
costs have reduced by £17.3m both as a result of lower volumes as well as
improved terms with key payment providers. Technology spend reduced by £4.9m
despite inflationary pressure as a result of continued focus on driving
efficiency in this spend area.
Depreciation and amortisation costs (excluding adjusting items) as a
percentage of sales increased by 130bps YoY. In addition to the deleveraging
impact of lower revenue, the absolute depreciation and amortisation charge
increased, primarily as a result of the growth in intangible assets including
data services, operations systems and improvements to web and payments
platforms.
Interest
A finance expense (excluding adjusting items) of £56.5m was incurred compared
to £46.3m in FY23. This reflected rising interest rates (SONIA remained at
c.5.2% throughout the period, vs an average of c.3.7% in FY23) as well as a
higher margin payable post the May 2023 refinancing.
Finance income of £12.0m includes interest earned on deposits at financial
institutions, an increase of £5.0m YoY. This increase was primarily a result
of the rising global interest rate environment, seen in finance expenses;
alongside improved efficiency in investing excess cash deposits.
Taxation
The reported effective tax rate is 10.7% based on the reported loss before tax
of £379.3m. This is lower than the FY23 effective tax rate of 24.8% due to
the effect of unrecognised deferred tax assets on losses in the current
period.
Earnings per share
Both basic and diluted loss per share were 284.4p (FY23: basic and diluted
loss per share of 213.0p). The higher loss per share is a function of
increased loss for the period of £338.7m (FY23: £223.1m). The potentially
convertible shares related to both the convertible bond and ASOS' employee
share schemes have been excluded from the calculation of diluted loss per
share as they are anti-dilutive for the period ended 1 September 2024.
Free cash flow
£m Period to Period to
1 September 2024
3 September 2023
AEBITDA 80.1 124.5
Share-based payments and other non-cash items included in AEBITDA 2.6 7.0
Cash impacting adjusting items (20.2) (53.4)
Income tax received 10.3 18.3
Decrease in inventory (excl. swo)(12) 143.1 180.4
Decrease/(increase) in other working capital(13) 12.1 (260.4)
Operating cash flow 228.0 16.4
Purchase of property, plant & equipment and intangible assets (133.5) (177.9)
Payment of lease liabilities (principal) (25.5) (22.4)
Interest received 11.3 4.5
Interest paid (42.6) (33.6)
Free cash flow 37.7 (213.0)
Issuance of equity - 77.6
Proceeds from borrowings & RCF drawdown - 450.0
Repayment of borrowings (0.5) (251.7)
Refinancing fees - (30.8)
Cash flow 37.2 32.1
There was a free cash inflow(14) (before items relating to financing) of
£37.7m for the period, an improvement of £250.7m YoY with a further
reduction in inventory (excluding the impact of the exceptional stock
write-off) driving a £143.1m inflow (FY23: £180.4m) during the period.
Cash was used to fund capital investments of £133.5m, a reduction of £44.4m
(25.1%) YoY with spend lower across both intangible assets and property, plant
and equipment. This figure includes £17.1m of spend in the period relating to
the Lichfield fulfilment centre which has subsequently been impaired;
excluding this, capital investment would total £116.4m for the period.
Net debt, refinancing and liquidity
£m Period to Period to
1 September 2024
3 September 2023
Convertible bond (fair value of debt component) 478.1 464.4
Term loan & RCF, including accrued interest 190.2 184.8
Nordstrom loan 19.8 20.4
Put option liability(15) - 3.2
Borrowings 688.1 672.8
Cash & cash equivalents (391.0) (353.3)
Net debt (excluding lease liabilities) 297.1 319.5
Excluding lease liabilities, net debt at 1 September 2024 was £297.1m, a
reduction of £22.4m in the period, with the free cash inflow of £37.7m
partially offset by debt movements relating to the non-cash unwind of the
effective interest rate on the convertible bond, and the unwind of capitalised
fees on the term loan.
Cash and undrawn facilities totalled £408.2m at 1 September 2024 (FY23:
£428.3m) and included cash and cash equivalents of £391.0m (FY23: £353.3m).
The strong progress on inventory in the period has continued to reduce the
available RCF under the Bantry Bay facility to £17.2m which remains undrawn
(FY23: £75.0m).
Post balance sheet events
On the 5 September 2024 we announced the sale of the Topshop and Topman brands
to a subsidiary of Heartland A/S, as well as a refinancing programme resulting
in the repurchase of £173.4m of convertible bonds due 2026 and the exchange
of £253.0m into new convertible bonds due 2028. As a result of these
transactions ASOS' net debt position will reduce by c.£130m. Refer to note 20
of the financial statements for more information.
Dave Murray
Chief Financial Officer
Notes
1. Numbers throughout this section are subject to rounding.
2. Constant currency (CCY) sales includes retail sales, and income from
other services, adjusted for the impact of foreign exchange translation.
Like-for-like (LFL) sales reflect constant currency sales adjusted for the
impact of four additional trading days in FY23.
3. The adjusting items are explained in note 3 of the financial statements.
Reconciliations between statutory measures and their associated APMs can be
found below.
4. Retail sales are internet sales recorded net of an appropriate deduction
for actual and expected returns, relevant vouchers, discounts and sales taxes.
5. Income from other services comprises of delivery receipt payments,
marketing services, commission on partner-fulfilled sales, revenue from
wholesale sales, and income from jobber and other clearance channels.
6. Active customers defined as having shopped in the last 12 financial
months.
7. Average basket value is defined as adjusted net retail sales divided by
shipped orders.
8. Average basket value CCY is calculated as adjusted constant currency net
retail sales divided by shipped orders.
9. Average order frequency is calculated as total shipped orders in the
last 12 financial months divided by active customers.
10. Conversion is calculated as total shipped orders divided by total visits.
11. As a percentage of adjusted revenue for all lines other than 'Total
operating costs' which is expressed as a percentage of reported revenue.
12. Stock-write-offs associated with our Driving Change agenda, accounted for
a £130.0m reduction in inventory during FY23 and £104.6m in FY24.
13. Includes working capital movements associated with adjusting items; a
breakdown is included below.
14. Free cash flow is net cash generated from operating activities, less
payments to acquire intangible and tangible assets, payment of the principal
portion of lease liabilities and net finance expenses.
15. Reclassified to other payables during FY24.
Investor and analyst meeting:
The group will be hosting an in-person presentation for analysts at 10.30am at
ASOS HQ, Greater London House, NW1 7FB. A live webcast will also be available,
and a recording of the presentation will be uploaded to the ASOS investor
relations website afterwards.
To access live please dial +44208 080 6591 and use Meeting ID: 810 1611 2586
followed by a #. A live stream of the event will be available here
(http://www.asosfy.live/) .
A recording of this webcast will be available on the ASOS Plc investor centre
website after the event: https://www.asosplc.com/investor-relations/
(https://www.asosplc.com/investor-relations/)
For further information:
Investors:
Emily MacLeod, ASOS Head of Strategy and Investor Relations Tel: 020 7756 1000
Media:
Jonathan Sibun / Will Palfreyman, Teneo Tel: 020 7353 4200
Background note
ASOS is a destination for fashion-loving 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 nearly
50,000 products, sourced from over 600 global and local third-party brands
alongside a mix of fashion-led own brand labels - including ASOS Design, ASOS
Edition, ASOS 4505, Collusion, Reclaimed Vintage, Topshop, Topman, and Miss
Selfridge. ASOS aims to give all its customers a truly frictionless
experience, with an ever-greater number of different payment methods and
hundreds of local deliveries and return options, dispatched from
state-of-the-art fulfilment centres in the UK, US, and Germany.
Forward looking statements:
This announcement may include statements that are, or may be deemed to be,
"forward-looking statements" (including words such as "believe", "expect",
"estimate", "intend", "anticipate" and words of similar meaning). By their
nature, forward-looking statements involve risk and uncertainty since they
relate to future events and circumstances, and actual results may, and often
do, differ materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with respect to
future events as at the date of this announcement. Save as required by
applicable law, ASOS plc undertakes no obligation to publicly revise any
forward-looking statements in this announcement, whether following any change
in its expectations or to reflect events or circumstances after the date of
this announcement.
CONSOLIDATED INCOME STATEMENT
52 weeks to 1 September 2024 1 September 2022 to 3 September 2023
Adjusting items Adjusting items
Note Adjusted (Note 3) Total Adjusted (Note 3) Total
£m £m
£m £m £m £m
Revenue 2,896.0 9.8 2,905.8 3,538.0 11.5 3,549.5
Cost of sales (1,638.7) (104.6) (1,743.3) (1,974.6) (115.9) (2,090.5)
Gross profit 1,257.3 (94.8) 1,162.5 1,563.4 (104.4) 1,459.0
Distribution expenses (326.1) - (326.1) (429.7) - (429.7)
Administrative expenses (1,014.7) (155.6) (1,170.3) (1,164.7) (115.1) (1,279.8)
Other income 2.0 - 2.0 2.0 - 2.0
Operating loss (81.5) (250.4) (331.9) (29.0) (219.5) (248.5)
Finance income 5 12.0 - 12.0 5.0 - 5.0
Finance expenses 5 (56.5) (2.9) (59.4) (46.3) (6.9) (53.2)
Loss before tax (126.0) (253.3) (379.3) (70.3) (226.4) (296.7)
Income tax credit 6 2.6 38.0 40.6 17.4 56.2 73.6
Loss for the financial period (123.4) (215.3) (338.7) (52.9) (170.2) (223.1)
Loss per share 7 pence per share pence per share
Basic per share (284.4) (213.0)
Diluted per share (284.4) (213.0)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
52 weeks to 1 September 2024 1 September 2022 to 3 September 2023
£m £m
Loss for the financial period (338.7) (223.1)
Items that will not be reclassified to Group income statement
Net fair value losses on cash flow hedges (5.2) (60.1)
Tax on items that will not be reclassified 0.3 9.7
(4.9) (50.4)
Items that may be subsequently reclassified to Group income statement
Net translation movements - (0.3)
Net fair value gains on cash flow hedges 6.7 30.5
Fair value movements reclassified from cash flow hedge reserve to Group income (13.9) 1.7
statement
Tax on items that may be reclassified 3.7 (7.7)
(3.5) 24.2
Other comprehensive loss for the period (8.4) (26.2)
Total comprehensive loss for the period attributable to owners of the parent (347.1) (249.3)
company
CONSOLIDATED BALANCE SHEET
1 September 3 September
Note 2024 2023
£m £m
Non-current assets
Goodwill and other intangible assets 8 514.0 700.5
Property, plant and equipment 9 283.2 362.6
Right-of-use assets 10 254.0 295.2
Investment properties 7.1 10.9
Other receivables 3.7 -
Derivative financial assets 0.3 4.1
Deferred tax assets 62.5 17.8
1,124.8 1,391.1
Current assets
Inventories 12 520.3 768.0
Assets held for sale 13 165.5 -
Trade and other receivables 53.4 81.4
Derivative financial assets 9.5 22.4
Cash and cash equivalents 14 391.0 353.3
Current tax assets 6.7 9.4
1,146.4 1,234.5
Current liabilities
Trade and other payables 15 (671.7) (680.4)
Borrowings 16 (1.6) (1.5)
Lease liabilities 10 (27.2) (25.3)
Derivative financial liabilities (6.6) (6.0)
Provisions 17 (2.7) (2.0)
Current tax liability (4.2) -
(714.0) (715.2)
Net current assets 432.4 519.3
Non-current liabilities
Borrowings 16 (686.5) (671.3)
Lease liabilities 10 (262.4) (303.7)
Derivative financial liabilities (0.5) (0.5)
Provisions 17 (86.5) (68.2)
(1,035.9) (1,043.7)
Net assets 521.3 866.7
Equity attributable to owners of the parent
Called up share capital 4.2 4.2
Share premium 322.6 322.6
Other reserves 61.9 73.1
Retained earnings 132.6 466.8
Total equity 521.3 866.7
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Called up share capital Share premium Other reserves Retained earnings Total equity
£m £m £m £m £m
As at 4 September 2023 4.2 322.6 73.1 466.8 866.7
Loss for the period - - - (338.7) (338.7)
Other comprehensive loss for the period - - (8.4) - (8.4)
Total comprehensive loss for the period - - (8.4) (338.7) (347.1)
Cash flow hedges gains and losses transferred to non-financial assets - - (2.8) - (2.8)
Share-based payments charge - - - 4.6 4.6
Tax relating to share option scheme - - - (0.1) (0.1)
Balance as at 1 September 2024 4.2 322.6 61.9 132.6 521.3
As at 1 September 2022 3.5 245.7 82.4 683.3 1,014.9
Loss for the period - - - (223.1) (223.1)
Other comprehensive loss for the period - - (26.2) - (26.2)
Total comprehensive loss for the period - - (26.2) (223.1) (249.3)
Cash flow hedges gains and losses transferred to non-financial assets - - 16.9 - 16.9
Share issue 0.7 76.9 - - 77.6
Share-based payments charge - - - 6.4 6.4
Tax relating to share option scheme - - - 0.2 0.2
Balance as at 3 September 2023 4.2 322.6 73.1 466.8 866.7
Retained earnings includes the share-based payments reserve, and employee
benefit trust reserve.
Consolidated Cash Flow Statement
52 weeks to 1 September 2024 1 September 2022 to 3 September
£m 2023
£m
Cash flows from operating activities
Operating loss (331.9) (248.5)
Adjusted for:
Depreciation of property, plant and equipment, right-of-use assets and 55.0 67.8
investment property
Amortisation of other intangible assets 117.3 104.7
Impairment charges on non-financial assets 119.9 32.1
Share-based payments charge (net of amounts capitalised) 3.4 5.2
Other non-cash items (0.8) 1.8
Decrease in inventories 247.7 310.4
Decrease in trade and other receivables 22.9 12.7
Decrease in trade and other payables (18.2) (304.9)
Increase in provisions 2.4 16.8
Cash generated from/(used in) operating activities 217.7 (1.9)
Net income tax received 10.3 18.3
Net cash generated from operating activities 228.0 16.4
Cash flows from investing activities
Purchase of other intangible assets (97.1) (136.2)
Purchase of property, plant and equipment (36.4) (41.7)
Interest received 11.3 4.5
Net cash used in investing activities (122.2) (173.4)
Cash flows from financing activities
Proceeds from issue of ordinary shares - 77.6
Proceeds from borrowings - 200.0
Drawdown of revolving credit facility - 250.0
Repayment of borrowings (0.5) (251.7)
Refinancing amendment fees paid - (30.8)
Repayment of principal portion of lease liabilities (25.5) (22.4)
Interest paid (42.6) (33.6)
Net cash (used in)/generated from financing activities (68.6) 189.1
Net increase in cash and cash equivalents 37.2 32.1
Opening cash and cash equivalents 353.3 323.0
Effect of exchange rates on cash and cash equivalents 0.5 (1.8)
Closing cash and cash equivalents 391.0 353.3
1 GENERAL INFORMATION
The financial information contained within this preliminary announcement for
the periods from 4 September 2023 to 1 September 2024 and 1 September 2022 to
3 September 2023 do not comprise statutory financial statements within the
meaning of section 434 of the Companies Act 2006. Statutory accounts for the
period to 3 September 2023 have been filed with the Registrar of Companies and
those for the period to 1 September 2024 will be filed following the Company's
annual general meeting. The auditors have reported on the 2024 accounts: their
report was (i) unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
ASOS Plc ("the Company") and its subsidiaries (together, "the Group") is a
global fashion retailer. 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 52 weeks to 1 September 2024 (prior
financial period: 1 September 2022 to 3 September 2023). The financial
information comprises the results of the Company and its subsidiaries.
Within these preliminary financial statements, "2024" refers to the 52 weeks
to 1 September 2024, or as at 1 September 2024; and "2023" refers to the
financial period 1 September 2022 to 3 September 2023, or as at 3 September
2023.
2 MATERIAL ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATES
2.1 Basis of preparation
The consolidated financial statements have been prepared in accordance with
UK-adopted International Financial Reporting Standards (IFRS) and with the
requirements of the Companies Act 2006 and the Listing Rules as applicable to
companies reporting under those standards.
The financial statements have been prepared under the historical cost basis of
accounting, excluding derivative financial instruments which are held at fair
value. The financial statements are presented in sterling and all values are
rounded to the nearest million pounds except where otherwise indicated.
2.2 Going concern
The Directors are satisfied that the Group has sufficient resources to
continue in operation for a period of at least 12 months from the date of
approval of the financial statements, and therefore continue to adopt the
going concern basis in preparing the financial statements. To support this
assessment, detailed cash flow forecasts were prepared for the 18-month period
to February 2026.
In assessing the Group's going concern position, the Directors have considered
the Group's detailed budgeting and forecasting process which reflects the
Group's financial performance, position, and cash flows over the going concern
period (the base case). These cash flow forecasts represent the Directors'
best estimate of trading performance and cost 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.
At 1 September 2024, the Group was fully drawn on the £200m term loan with
Bantry Bay, and had an undrawn Revolving Credit Facility ("RCF") of £17m,
with a maturity of April 2026, along with £500m convertible bonds with a
maturity of April 2026. The review included the continued availability of
borrowings following the post balance sheet repurchase, amendment and
extension of both the convertible bond and Bantry Bay debt facilities, details
of which can be found in Note 20. Following the partial term loan repayment
and changes to the Bantry Bay agreement, the assessment included an opening
balance of drawn Bantry Bay debt facility of £150m (with equivalent undrawn
RCF of £29m) and £327m of convertible bonds (of which £74m held a maturity
date of April 2026) within the liquidity forecast.
The Group has previously been subject to a minimum liquidity threshold of
£90m, which has been removed as part of the new agreement and therefore the
only covenant applicable, and primary test in the assessment, is that the
Group must remain in a positive liquidity position.
Key assumptions - forecasting business cash flows
The assessment of the Group's going concern position required significant
management judgement, including in determining the key assumptions that have
the greatest impact on forecasts of future business performance and the range
of reasonably possible outcomes of those assumptions. The economic environment
has remained challenging throughout FY24 with cost of living pressures
continuing to impact customer spending and sentiment, however there have been
improvements experienced in both the macro environment and ASOS share
performance in Q4 of FY24. The future impact that the economic environment
will have on ASOS performance however is uncertain, so for the purposes of the
Group's going concern assessment, the Directors have therefore made
assumptions on the likely future cash flows in the uncertain macro
environment.
2 MATERIAL ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATES - CONTINUED
The assumptions considered include the full transition to the Group's new
commercial model, as well as a sustained marginal recovery in the macro
trading environment, with the online fashion market assumed to experience low
single digit % growth on an aggregated basis across the Group's key
territories. The base case assumes a less aggressive share loss in FY25 than
experienced in FY24 owed to recent performance and the success of the adoption
of the new commercial model, with assumed ASOS sales growth rates of -5% to
-10%, returning to double digit YoY growth by the end of the assessment
period. Improvements in adjusted gross margin of at least 300bps vs FY24 are
assumed during FY25 with further YoY growth in H1 FY26 of c.200bps. These
forecasted cash flows include the ongoing impact of the disposal of the
Topshop and Topman brands from the Group.
Aligned to the Group's principal risks, the Directors have also considered
various severe but plausible downside scenarios against the base case,
comprising of the following assumptions:
· Sales growth reduction;
· Gross margin reduction;
· Potential working capital cash impacts.
The downside scenarios are considered across both FY25 and H1 FY26, with the
greater degree of assumption-based improvements and subsequent volatility in
the outer periods commanding more severe downside sensitivities. Sensitivities
mapped against the base case within the downside case are highlighted below:
Downside vs base case FY25 H1 FY26
Sales (8)% (20)%
Gross Margin (320)bps (400)bps
Working Capital impact (average) £(88)m £(77)m
Should the Group see such significant events unfold it has several mitigating
actions it can implement to manage its liquidity risk, such as deferring
capital investment spend, deferring or reducing stock intake to match the
sales reduction, and implementing further cost management to maintain a
sufficient level of liquidity headroom during the going concern period. The
combined impact of the above downside scenarios and mitigations does not
trigger a liquidity breach at any point in the going concern period.
Reverse stress tests have also been performed on both the Group's revenue and
gross margin. The tests under consideration hold all metrics in line with the
downside case highlighted above, analysing how far the stress metric would
need to decline against the base case to cause a liquidity event. Such results
would have to see over a 22% decline in sales over the base case or an
aggregate decline in gross margin rate from the base case of over 550bps
across the entire assessment period. Both are considered remote based on
results of previous significant economic events and recent trading
performance, particularly on the basis that the Group is annualising the
challenging market conditions in FY24.
The Directors have also considered the £74m convertible bonds that mature in
April 2026 (outside of the assessment window) and concluded that they can be
repaid within both a base case and downside scenario. The Group is also
subject to a springing maturity clause in the term loan facility in April
2026, conditional upon forward projection of base case cash flows, which was
also considered as part of the assessment and is not expected to be triggered.
Based on the above, the Directors have concluded that, on the basis of there
being liquidity headroom under both the base case and downside scenarios, and
the consideration that the reverse stress test scenario is remote, it is
appropriate to adopt the going concern basis of accounting in the preparation
of the Group's annual financial statements, with no material uncertainty to
disclose.
2.3 New accounting standards
The Group adopted the following accounting standards and amendments during the
year with no material impact:
· IFRS 17 Insurance Contracts
· Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
· Definition of Accounting Estimates - Amendments to IAS 8
· Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - Amendments to IAS 12
· International Tax Reform - Pillar Two Model Rules - Amendments to
IAS 12
The application of these new interpretations and amendments did not have a
material impact on the financial statements.
2 MATERIAL ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATES - CONTINUED
The Group is assessing the impact of the following standards, interpretations
and amendments that are not yet effective:
· Amendments to the IFRS for SMEs Accounting Standard - International
Tax Reform - Pillar Two Model Rules
· Lease Liability in a Sale and Leaseback - Amendments to IFRS 16
Leases
· Classification of liabilities as Current or Non-current and
Non-current Liabilities with Covenants - Amendments to IAS 1 Presentation of
Financial Statements
· Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures - Supplier Finance Arrangements
· IFRS S1 General Requirements for Disclosure of
Sustainability-related Financial Information
· IFRS S2 Climate-related Disclosures
· Lack of Exchangeability - Amendments to IAS 21 The Effects of
Changes in Foreign Exchange Rates
· Amendments to the Classification and Measurement of Financial
Instruments - Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial
Instruments: Disclosures
· IFRS 18 Presentation and Disclosure in Financial Statements
· IFRS 19 Subsidiaries without Public Accountability: Disclosures
· Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture - Amendments to IFRS 10 Consolidated Financial Statements and
IAS 28 Investments in Associates and Joint Ventures
The Group has considered the impact of the remaining above standards and
revisions and has concluded that they will not have material impact on the
Group's financial statements, with the exception of IFRS 18 which is under
review.
2.4 Alternative Performance Measures (APMs)
In the reporting of financial information, the Directors use various APMs.
These APMs 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.
The Directors believe that these APMs provide additional useful information
for understanding the financial performance and health of the Group. They are
also used to enhance the comparability of information between reporting
periods (such as adjusted profit) by adjusting for non-recurring or
uncontrollable factors which affect IFRS measures, to aid users in
understanding the Group's performance. Consequently, APMs are used by the
Directors and management for performance analysis, planning, reporting and
incentive setting purposes.
The income statement shows the items excluded from adjusted profit with a more
detailed analysis of the adjustments set out in Note 3. Other APMs that the
Group has focused on in the period are defined and reconciled within the
Alternative Performance Measures disclosures at the end of the financial
statements. All of the APMs relate to the current period's results and
comparative periods.
2.5 Significant accounting judgements and estimates
The preparation of the Group's financial statements requires the use of
judgements, estimates and assumptions in applying the Group's accounting
policies to determine the reported amounts of assets, liabilities, income and
expenses.
Estimates and judgements are continually reviewed and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the current circumstances. Actual results may
differ from these estimates. Any revisions to accounting estimates are applied
prospectively.
Key sources of estimation uncertainty
The key sources of estimation uncertainty at the reporting period end that may
have a significant risk of causing a material adjustment to the carrying
amount of assets and liabilities within the next financial period are as
below:
· Impairment of non-financial assets - refer to Note 11
· Inventory valuation - refer to Note 12
· Recognition of deferred tax assets - refer to Note 6
The recognition of deferred tax assets has been added as a key source of
estimation uncertainty this year.
Critical accounting judgements
Critical judgements, apart from those involving estimations, that are applied
in the preparation of the consolidated Group financial statements are
discussed below:
· Going concern - refer to Note 2.2
· Identification of adjusting items - refer to Note 3
· Lease term - refer to Note 10
3 ADJUSTED PROFIT BEFORE TAX
Critical accounting judgement - identification of adjusted items
In order to provide shareholders with additional insight into the year-on-year
performance of the business, an adjusted measure of profit is provided to
supplement the reported IFRS numbers, and reflects how the business measures
performance internally. Adjusted items are those which are significant either
by virtue of their size and/or nature, the inclusion of which could distort
comparability between periods. The assessment is made both on an individual
basis and, if of a similar type, in aggregate.
The assessment of whether to adjust certain items requires judgement, and
covers the nature of the item, the cause of its occurrence and the scale of
impact of that item on reported performance and individual financial statement
line items, as well as consistency with prior periods. The same assessment is
applied consistently to any reversals of prior adjusting items. Adjusted
profit before tax is not an IFRS measure and therefore not directly comparable
to other companies.
Income statement
2024 Administrative Finance expenses Total before tax
Revenue Cost of sales expenses £m £m Tax Total
£m £m £m £m £m
Commercial operating model change 9.8 (104.6) - - (94.8) 23.6 (71.2)
Property-related costs - - (141.5) (2.9) (144.4) 36.1 (108.3)
Other strategic initiatives - - (3.4) - (3.4) 0.9 (2.5)
Amortisation of acquisition intangibles - - (10.7) - (10.7) 2.7 (8.0)
Unrecognised deferred tax assets - - - - - (25.3) (25.3)
9.8 (104.6) (155.6) (2.9) (253.3) 38.0 (215.3)
2023 Administrative Finance
Revenue Cost of sales expenses expenses Total before tax Tax Total
£m £m £m £m £m £m £m
Commercial operating model change 11.5 (130.0) (14.7) - (133.2) 33.2 (100.0)
Property-related costs - - (60.2) (0.5) (60.7) 15.2 (45.5)
Other strategic initiatives - - (24.6) (6.4) (31.0) 7.4 (23.6)
Amortisation of acquisition intangibles - - (10.7) - (10.7) 2.7 (8.0)
Other items - 14.1 (4.9) - 9.2 (2.3) 6.9
11.5 (115.9) (115.1) (6.9) (226.4) 56.2 (170.2)
Cash flow statement
The total cash flow impact of adjusting items is as follows:
2024 2023
£m £m
Commercial operating model change 0.2 3.5
Other strategic initiatives (20.4) (56.9)
Total adjusting items within operating cash flow (20.2) (53.4)
Commercial operating model change
During the prior period, the Board approved the introduction of a new
commercial operating model. The new model involves a more disciplined approach
to intake, increased speed to market and clearing product more quickly to
reduce the Group's inventory requirement, increase full price sales and hence
gross margin, and improve customer engagement. To unlock these benefits, the
Group has had to clear old stock acquired under its previous ways of working
via clearance routes, resulting in additional costs recognised in the prior
period of £133.2m.
The Group has been transitioning to the new model throughout the period,
utilising increased discounting during the first half to accelerate the
clearance of aged stock. In the second half of the period, the Group tested
the suppression of remaining older stock to increase the full-price sales mix
in line with the new operating model principles. The increases in gross margin
were in line with those anticipated as part of the new operating model. As a
result, a decision was taken to recognise a provision against this inventory
with a view to fully removing from the website and selling via clearance
routes, allowing the Group to operate fully on the new model from the
beginning of the next financial year.
Additional net costs were recognised in the current period totalling £93.0m.
The remaining net cost of £1.8m relates to the sell through of inventory
written down in the prior period. Net expenditure incurred to date in relation
to the commercial model change totals £228.0m, across 2023 and 2024.
3 ADJUSTED PROFIT BEFORE TAX - CONTINUED
Property-related costs
Adjusted property-related costs comprise the following, of which £141.8m
relates to the closure of the Lichfield fulfilment centre, announced during
the current period:
2024 2023
£m £m
Impairment of property, plant and equipment (a) (97.7) (5.6)
Impairment of intangible assets (a) (2.2) (1.7)
Impairment of right-of-use assets (a) (15.8) (20.0)
Impairment of investment property (a) (4.2) (1.3)
Non-capitalised asset spend (b) (16.5) -
Onerous occupancy costs (c) (5.3) (18.3)
Accelerated depreciation (d) - (7.6)
Recognition of net investment in lease receivable (e) 4.4 -
Other closure costs (f) (7.1) (6.2)
(144.4) (60.7)
a) Impairment of assets following activity to vacate sites the Group
operates from, which for the current period predominantly relates to the
Group's Lichfield fulfilment centre. During the current period, the Board
approved the commencement of a process to mothball the Lichfield fulfilment
centre, following completion of the automation project in this period. The
site is not yet being actively marketed, however during the period the Group
commenced and completed activities to vacate and mothball the site. The
recoverable amount for the Lichfield fulfilment centre was based on its
value-in-use, and determined to be £nil on the basis that the site would be
mothballed. Investment property amounts relate to impairments on vacant office
space.
b) Following activity to commence vacating the Lichfield fulfilment centre
at the end of January 2024, the Group considered whether subsequent committed
spend to complete the automation could be capitalised and concluded not, on
the basis that it was no longer probable that the spend would result in future
economic benefits. The spend has therefore been recognised in the income
statement during the period, outside of adjusted profit. Prior to this date,
the spend incurred was considered capital.
c) Onerous contract costs that the Group is contractually committed to due
to being party to a lease on a site agreed to be exited. Upon initial
recognition of such provisions, management uses its best estimates of the
relevant costs to be incurred as well as expected closure dates. This excludes
business rates on leased property which are recognised in the period they are
incurred.
d) Where sites are to be vacated in a later period, the remaining useful
economic lives of corresponding sites are reassessed to align with closure
dates, resulting in an acceleration in depreciation of these assets. The
accelerated depreciation (over and above the charge absent the closure
decision) is recognised within adjusting items.
e) During the period, the Group sublet its distribution centre in Austell,
which had been vacated and therefore impaired in the prior period. The sublet
constitutes the remaining term of the lease and therefore constitutes a
finance lease under IFRS 16 "Leases". A lease receivable (within other
receivables on the balance sheet) has therefore been recognised, with a net
income statement gain of £4.4m.
f) Includes costs associated with vacating sites, such as severance and
stock transfers, as well as business rates and interest costs on vacant sites.
Other strategic initiatives
After the period end date, on 5 September 2024, the Group announced that it
had entered into a binding agreement with a subsidiary of Heartland A/S to
sell the Topshop and Topman brand names from ASOS. Costs of £3.4m have
therefore been recognised, relating to consultancy and other professional
costs. The transaction subsequently completed on 9 October 2024. Refer to Note
20 for more information.
Amortisation of acquired intangible assets
Amortisation of acquired intangible assets is adjusted for as acquisitions are
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.
Unrecognised deferred tax assets
Deferred tax assets of £52.3m were not recognised in the period and were
instead recognised in the income statement. Of the amounts unrecognised,
£25.3m was attributed to losses excluded from adjusted profit. Further
information is included in Note 6.
4 SEGMENTAL ANALYSIS
IFRS 8 "Operating Segments" requires operating segments to be identified on
the basis of internal reporting on components of the Group that are regularly
reviewed by the Chief Operating Decision-Maker to allocate resources to the
segments and to assess their performance.
The Chief Operating Decision Maker has been determined to be the Management
Committee. It is the Management Committee that reviews the Group's internal
reporting in order to assess performance and allocate resources across the
business. In doing so, the Management Committee reviews performance across the
Group via a number of sources, comprising regular monthly management accounts,
and ad hoc analysis that provides deep dives into different areas, including
territory, brands and revenue streams.
In determining the Group's operating segments, management has considered the
level of information which is regularly reviewed by the Management Committee.
Information regularly reviewed by the Management Committee is at a
consolidated Group level only, with some disaggregated revenue information and
associated metrics provided for the geographical territories of the UK, the
US, Europe and the Rest of the World. However, decisions on resource
allocation are not made based on this information. Such decisions are made on
ad hoc analysis, separately provided to the Management Committee, and does not
constitute information that is either regularly provided to, nor reviewed by,
the Management Committee. As a result, it has been concluded that the Group
has only one operating segment (the Group level).
The following sets out the Group's revenue in the key geographic markets in
which customers are located:
2024
UK EU US Rest of World Total
£m £m £m £m £m
Retail sales 1,270.4 977.8 298.2 214.1 2,760.5
Income from other services 63.2 30.6 40.6 10.9 145.3
Total revenue 1,333.6 1,008.4 338.8 225.0 2,905.8
Cost of sales (1,743.3)
Gross profit 1,162.5
Distribution expenses (326.1)
Administrative expenses (1,170.3)
Other income 2.0
Operating loss (331.9)
Finance income 12.0
Finance expenses (59.4)
Loss before tax (379.3)
Non-current assets(1) 668.6 175.0 183.2 - 1,026.8
2023
UK EU US Rest of World Total
£m £m £m £m £m
Retail sales 1,494.6 1,127.3 443.6 322.7 3,388.2
Income from other services 59.8 29.4 57.5 14.6 161.3
Total revenue 1,554.4 1,156.7 501.1 337.3 3,549.5
Cost of sales (2,090.5)
Gross profit 1,459.0
Distribution expenses (429.7)
Administrative expenses (1,279.8)
Other Income 2.0
Operating loss (248.5)
Finance income 5.0
Finance expenses (53.2)
Loss before tax (296.7)
Non-current assets(1) 994.1 177.9 162.0 - 1,334.0
1 Non-current assets above exclude 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 EXPENSES
2024 2023
£m £m
Finance income
Interest on deposits 12.0 5.0
Finance expenses
Interest on borrowings (58.5) (50.8)
IFRS 16 lease interest (5.5) (5.6)
Provisions - unwind of discount (3.1) (1.6)
Interest capitalised 7.7 4.8
Total finance expenses (59.4) (53.2)
Net finance expenses (47.4) (48.2)
6 TAXATION
2024 2023
£m £m
Current period UK tax - -
Current period overseas tax 3.6 3.4
Adjustment in respect of prior period corporation tax (4.4) (4.1)
Total current tax credit (0.8) (0.7)
Origination and reversal of temporary differences (42.4) (73.2)
Adjustment from changes in tax rates - (0.1)
Adjustment in respect of prior periods 2.6 0.4
Total deferred tax credit (39.8) (72.9)
Total income tax credit in income statement (40.6) (73.6)
Analysed as:
Tax on adjusted loss (2.6) (17.4)
Tax on items excluded from adjusted loss (38.0) (56.2)
Total income tax credit in income statement (40.6) (73.6)
Effective tax rate 10.7% 24.8%
Significant source of estimation uncertainty - Recognition of deferred tax
assets
In accordance with IAS 12 "Income Taxes", the Company recognises deferred tax
assets to the extent that it is probable that future taxable profit will be
available, against which the deductible temporary differences and the
carry-forward of unused tax losses can be utilised. In line therefore with the
judgements and estimates disclosed with going concern (refer Note 2) and
impairment (refer Note 11), the recognition of deferred tax assets requires
the Group to make significant estimates about the future profitability of its
operations.
In determining the amount of deferred tax assets recognised, management makes
estimates of future taxable profits and the likelihood of their being
recovered within a reasonably foreseeable timeframe, being a minimum of five
years, aligned to the Group's strategic planning process. In making these
estimates, management considers the current and projected financial
performance of the Group, including profit margins, revenue growth, and cost
management strategies, which are derived from management forecasts and
consistent with those used as part of the Group's going concern and impairment
assessments. Risk adjustments are then applied, with a greater adjustment
applied to periods where there is less evidence of profits, in particular,
those further in the future. The Group also considers the timing and amount of
deductible temporary differences. As at 1 September 2024, the Group has net
deferred tax assets of £114.8m of which £62.5m have been recognised. A
further £52.3m of deferred tax assets in relation to losses have not been
recognised.
The deferred tax assets have no expiry date and the Group believes that it is
probable that future taxable profits, together with the reversal of existing
temporary differences, will be sufficient to utilise the recognised deferred
tax assets, however actual outcomes could differ from these estimates due to
changes in the factors mentioned above. A movement of +/-10% in the forecast
taxable profits would increase/decrease the amount of deferred tax asset
recognised by £7.8m, and is considered a reasonable possible change.
The deferred tax assets unrecognised relate to losses on a mix of adjusted and
non-adjusted items. Therefore the charge relating to the unrecognised deferred
tax asset has been apportioned between adjusted and unadjusted profit in
proportion to the total tax losses arising within each category, with £25.3m
recognised outside adjusted profit, and £27.0m within adjusted profit.
7 EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit attributable to
the owners of the parent company ASOS Plc by the weighted average number of
ordinary shares in issue during the period. Own shares held by the Employee
Benefit Trust and Link Trust are excluded from the weighted average number of
ordinary shares.
Diluted earnings per share is calculated on the same basis as basic earnings
per share, but where the weighted average share numbers have also been
adjusted for the weighted average effects of potentially dilutive shares.
These represent share options granted by the Group, including
performance-based options, where the scheme to date performance is deemed to
have been earned. It also includes the number of shares that would be issued
if all convertible bonds are assumed to be converted unless the convertible
instrument is out-of-the-money.
2024 2023
Weighted average share capital
Weighted average shares in issue for basic earnings per share (no. of shares) 119,085,260 104,729,376
Weighted average effect of dilutive options (no. of shares)(1) - -
Weighted average effect of convertible bond (no. of shares)(2) - -
Weighted average shares in issue for diluted earnings per share (no. of 119,085,260 104,729,376
shares)
Losses
Loss attributable to owners of the parent company for basic earnings per share (338.7) (223.1)
(£m)
Interest expense on convertible bonds (£m)(1,2) - -
Diluted loss attributable to owners of the parent company for diluted loss per (338.7) (223.1)
share (£m)
Basic loss per share (pence per share) (284.4) (213.0)
Diluted loss per share (pence per share) (284.4) (213.0)
1 Dilutive shares and interest not included where their effect is
anti-dilutive.
2 The impact of convertible bonds has been excluded as it is assumed they will
not be exercised.
8 GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill Brands and domain names Customer relationships Software Assets under construction Total
£m £m £m
£m £m £m
Cost
As at 4 September 2023 35.5 219.6 24.4 863.5 19.0 1,162.0
Additions - - - 90.6 7.9 98.5
Transfers to assets held for sale - (187.9) - - - (187.9)
Transfers - - - 12.1 (12.1) -
As at 1 September 2024 35.5 31.7 24.4 966.2 14.8 1,072.6
Accumulated amortisation and impairment
As at 4 September 2023 0.3 19.8 7.8 431.5 2.1 461.5
Amortisation expense - 7.7 3.0 106.6 - 117.3
Transfer to assets held for sale - (22.4) - - - (22.4)
Impairment charge for the period - - - 1.8 0.4 2.2
As at 1 September 2024 0.3 5.1 10.8 539.9 2.5 558.6
Net book value at 1 September 2024 35.2 26.6 13.6 426.3 12.3 514.0
Cost
As at 1 September 2022 35.5 219.6 24.4 752.4 3.6 1,035.5
Additions - - - 109.4 17.1 126.5
Transfers - - - 1.7 (1.7) -
As at 3 September 2023 35.5 219.6 24.4 863.5 19.0 1,162.0
Accumulated amortisation and impairment
As at 1 September 2022 0.3 12.0 4.7 334.6 - 351.6
Amortisation expense - 7.8 3.1 93.8 - 104.7
Impairment charge for the period - - - 3.1 2.1 5.2
As at 3 September 2023 0.3 19.8 7.8 431.5 2.1 461.5
Net book value at 3 September 2023 35.2 199.8 16.6 432.0 16.9 700.5
Intangible assets under construction relates to spend on software-based
projects, including the enhancement of the Group's mobile apps/ website, and
other software. No individual projects are material in value. Refer to Note 13
for details of transfers to assets held for sale.
9 PROPERTY, PLANT AND EQUIPMENT
Fixtures, fittings, plant and machinery Computer hardware Assets under construction Total
£m £m £m
£m
Cost
As at 4 September 2023 410.7 43.0 109.2 562.9
Additions 1.2 4.0 42.0 47.2
Disposals - (1.8) - (1.8)
Transfers 0.2 0.1 (0.3) -
As at 1 September 2024 412.1 45.3 150.9 608.3
Accumulated depreciation and impairment
As at 4 September 2023 165.4 32.1 2.8 200.3
Charge for the year 22.5 6.4 - 28.9
Disposals - (1.8) - (1.8)
Impairment charge for the year 31.0 1.2 65.5 97.7
As at 1 September 2024 218.9 37.9 68.3 325.1
Net book value at 1 September 2024 193.2 7.4 82.6 283.2
Cost
As at 1 September 2022 408.5 41.1 65.4 515.0
Additions 1.1 0.6 46.2 47.9
Transfers 1.1 1.3 (2.4) -
As at 3 September 2023 410.7 43.0 109.2 562.9
Accumulated depreciation and impairment
As at 1 September 2022 134.8 26.0 2.5 163.3
Charge for the period 25.4 6.0 - 31.4
Impairment charge for the period 5.2 0.1 0.3 5.6
As at 3 September 2023 165.4 32.1 2.8 200.3
Net book value at 3 September 2023 245.3 10.9 106.4 362.6
Significant assets under construction as at 1 September 2024 consists
primarily of amounts spent to automate the Atlanta fulfilment centre totalling
£79.8m (2023: £58.0m). Refer to Note 3 for details of impairments.
10 LEASES
10.1 Right-of-use assets
2024 2023
£m £m
At the beginning of the period 295.2 380.3
Modifications/reassessments 2.6 (9.6)
Impairment charge (15.8) (20.0)
Depreciation charge (25.1) (35.9)
Transfers to investment property - (12.8)
Foreign exchange differences (2.9) (6.8)
At the end of the period 254.0 295.2
Right-of-use assets comprise entirely leases for land and buildings.
10.2 Lease liabilities
2024 2023
£m £m
At the beginning of the period 329.0 380.1
Modifications/reassessments (9.9) (21.1)
Payments (31.0) (28.0)
Interest expense 5.5 5.6
Foreign exchange differences (4.0) (7.6)
At the end of the period 289.6 329.0
Current 27.2 25.3
Non-current 262.4 303.7
289.6 329.0
10 LEASES - CONTINUED
Critical accounting judgement - lease terms
The inclusion of a lease extension period or lease break period in the lease
term is a key judgement for the Group and considers all relevant factors that
create an economic incentive for it to exercise them. For leased properties,
this includes the current and expected profitability of the respective site,
as well as the length of time until the option can be exercised. Any changes
to the Group's judgement over lease terms will impact both the right-of-use
asset and lease liability.
Set out below are the undiscounted future rental payments not currently
included within the reported lease liability for where lease extensions have
not been included, or for where break options have been assumed:
2024 2023
£m £m
Extension options expected not to be exercised 127.7 129.2
Break clauses expected to be exercised 12.6 -
11 IMPAIRMENT OF NON-FINANCIAL ASSETS
11.1 Inputs and assumptions
Cash-generating units (CGUs)
CGUs are deemed the smallest group of assets that independently generate cash
inflows and are independent of the cash flows generated by other assets. It
was determined that the Group only has one CGU (the Group level), on the basis
that the majority of assets within the Group are shared (i.e. software assets
that support the entire Group), therefore unable to be allocated on a
reasonable or consistent basis in any other way.
Composition of CGU
For impairment testing purposes, the CGU comprises the following:
2024 2023
£m £m
Goodwill and other intangible assets 514.0 700.5
Property, plant and equipment 283.2 362.6
Right-of-use assets 254.0 295.2
1,051.2 1,358.3
Assets relating to the Lichfield fulfilment centre were tested separately and
excluded from the above due to the decision during the period to vacate the
site, as were assets held for sale which have been assessed separately (see
Note 13).
Identification of impairment indicator
Given the reported loss recognised during the period, combined with the
volatility within the macroeconomic environment and the market capitalisation
of the Group being below the Group's net assets, an indicator of impairment
was deemed to exist during the financial period.
Approach and assumptions
The recoverable amount for the CGU has been determined using a value-in-use
calculation which is based upon the cash flows expected to be generated,
derived from the latest budget and forecast data which are reviewed by the
Board, and consistent with those used for the Group's going concern and
viability assessments. Budget and forecast data reflects both past experience
and future expectations of market conditions. The forecasted cash flows
include the ongoing impact of the disposal of the Topshop and Topman brands
from the Group.
11 IMPAIRMENT OF NON-FINANCIAL ASSETS - CONTINUED
The key assumptions in measuring the value-in-use are as follows:
Assumption Details
Cash flow years/assumptions · Derived from medium-term forecasts reviewed and approved by the
Board which cover a period of five years. Growth rates are then reduced to 2%
(the long-term growth rate) over four years, with cash flows subsequently
extrapolated to perpetuity with a growth rate of 2% (2023: 2%).
· Whilst the value-in-use excludes lease rentals (a financing cash
flow under IFRS 16 "Leases"), an estimated cash outflow for future lease
renewals is assumed from the current lease end dates.
Discount rate · A post-tax discount rate representing the Group's weighted average
cost of capital (WACC), subsequently grossed up to a pre-tax rate using an
iterative calculation that yields the same value-in-use when tax cash flows
are excluded.
· The post-tax WACC has been calculated using the capital asset
pricing model, the inputs of which include a UK risk-free rate based on
government bond rates, a UK equity risk premium and levered debt premium
benchmarked to externally available data, and an average beta derived from a
comparator group.
· The resulting discount rates are:
2024 2023
Post-tax rate Pre-tax rate Post-tax rate Pre-tax rate
12.7% 15.5% 13.0% 15.6%
11.2 Outputs
Outside of specific impairments recognised during the period in relation to
sites identified for exit as disclosed in Note 3, no further impairments were
identified as a result of the impairment review described above, with c.£600m
of headroom noted.
Key source of estimation uncertainty - assumptions in relation to impairment
assessment
Of the above assumptions, the value-in-use calculations are most sensitive to
changes in the discount rate, the long-term growth rate and forecast cash
flows (comprising revenue, gross margin and fixed overheads). As noted above,
cash flows are derived from forecasts reviewed by the Board, and in line with
those used for the going concern and viability assessments which assume sales
growth rates of (5)% to (10)% for the first year, with subsequent periods
thereafter returning to +5% to +15% year-on-year growth. Improvements in
adjusted gross margin of at least 300bps vs FY24 are assumed during FY25 with
up to a further c.200bps growth over the remaining years.
A sensitivity analysis for a reasonable possible change in assumptions was
conducted on the impairment tests, where management assessed a scenario in
which the revenue growth rates within the five-year forecasted cash flows
(being the most sensitive assumption) were reduced by half. To reflect this
adjustment, a corresponding reduction in variable costs and cost of sales was
modelled to maintain the gross margin percentage in line with original
forecasts. Under this sensitivity scenario, an impairment of approximately
£75 million would be recognised.
The following table shows the amount by which the assumptions would have to
change to make the recoverable amount equal to the carrying value to show the
headroom sensitivity. It is not considered that a reasonable possible change
in the discount rate, fixed overheads nor the long term growth rate would
cause an impairment, therefore they are not included below.
Sensitivity 2024 2023
A reduction in forecast annual growth rates of:(1) (2.7)% (1.8)%
A reduction in forecast revenue vs base case of:(2) (11.4)% (6.9)%
A reduction in forecast gross margin in each year of:(2) (2.4)% (1.2)%
1 Applied to Group five-year plan period
2 Applied to all years within the assessment period
12 INVENTORIES
2024 2023
£m £m
Gross finished goods 683.6 892.4
Inventory provision (163.3) (124.4)
Net inventory recognised on consolidated balance sheet 520.3 768.0
The carrying value of inventory shown on the balance sheet includes a £49.2m
(2023: £52.1m) right to recover asset in relation to the inventory expected
to be received back from customers as returns. The amount of inventories
recognised as an expense and charged to cost of sales for the period was
£1,743.3m (2023: £2,104.6m).
Key source of estimation uncertainty - inventory provisions
As disclosed in Note 3, additional inventory provisions were recognised in the
period to write down inventory that has been identified to be sold via offsite
clearance to accelerate the Group's transition to its commercial model. The
provisions write inventory down to its net realisable value, being expected
income less any related selling costs.
In addition to these specific provisions, the Group's approach to inventory
provisioning is to hold a net realisable value provision for inventory sold
via the Group's website and is based on forecast expected loss rates. In
addition, provisions are recognised for inventory that will ultimately be sold
off-site via clearance routes at the end of its lifecycle in line with the new
commercial model. Both provisions consider historical trends, as well as
consideration of current and forecast economic conditions.
The provisions are calculated using estimates of loss rates and website sell
through rates, both of which are calculated based on historical data from the
prior 12 months' sales when categorising the stock by age banding. Provisions
recognised are net of any expected proceeds to be received. The provisions are
therefore most sensitive to the following assumptions:
· Forecast loss rates
· Forecast sell through rates
· Offsite sales price assumptions
The movements in the Group's provisions based on reasonable possible changes
to the above assumptions are as follows:
2024 2023
Decrease in provision Increase in provision Decrease in provision Increase in provision
£m £m £m £m
Using loss rates from FY23/FY22 - 4.0 (6.6) -
A change in the anticipated sell through rates of +/-0.5% (2023: +/-5%)(1) (7.1) 7.1 (5.4) 7.1
A change in the anticipated offsite sales price of +/-10% (2.2) 2.2 (0.7) 0.7
1 2023 provision considered sell through on closing inventory. This was
refined in the period to consider sell through on inventory intake.
With the exception of provisions excluded from adjusted profit, inventory
provisions are adjusted at each reporting period rather than throughout the
period to ensure inventory is not carried at an amount greater than net
realisable value. Write-downs and write-backs of inventory balances are
therefore represented by net movements in the inventory provision.
Provisions/write-downs recognised during the financial period as part of the
transition to the new commercial model (recognised outside adjusted profit)
totalled £93.0m (2023: £122.7m) - and are part of the £94.8m (2023:
£133.2m) commercial operating model costs highlighted in Note 3. There have
been no reversals of the commercial model transition provisions during the
period. Excluding inventory provisions recognised as part of the commercial
model transition, the net provisions/write-down movements totalled a cost of
£0.9m this period (2023: £19.3m cost).
13 ASSETS HELD FOR SALE
On 5 September 2024, the Group entered into a binding agreement to sell the
intellectual property relating to the Topshop and Topman brands to a
subsidiary of Heartland A/S, for a consideration as follows:
· Cash of £135m
· 25% of the issued ordinary shares in the entity that will hold the
brands, valued at £45m
The transaction subsequently completed on 9 October 2024. Although the
agreement occurred shortly after the year-end date, as at the year-end, the
deal was significantly progressed, with management committed to a sale, key
terms mostly agreed, and it being highly probable that the sale would complete
within a year. It was therefore concluded that the assets meet the definition
of being held for sale at the period end as follows:
£m
Assets to be disposed
Carrying value of brands 165.5
Total assets to be disposed 165.5
Sales proceeds
Cash 135.0
Shares 45.0
Remaining disposal costs (0.7)
Total fair value less costs to sell 179.3
Assets held for sale 165.5
The asset held for sale has been recognised at £165.5m, being the lower of
the carrying value and fair value less costs to sell. There were no assets
held for sale at the prior year balance sheet date.
Other costs already incurred in relation to the sale totalled £3.4m during
the year (see Note 3).
14 CASH AND CASH EQUIVALENTS
2024 2023
£m £m
Cash in hand and bank balances 83.1 85.6
Money market fund investments 270.2 142.7
Short-term deposits 37.7 125.0
Closing cash and cash equivalents 391.0 353.3
Cash and cash equivalents includes uncleared payment provider receipts of
£68.8m, which are typically received within three business days (2023:
£63.3m).
Included within cash and cash equivalents is £8.1m (2023: £4.1m) of cash
collected on behalf of partners of the Direct-to-Consumer fulfilment
proposition "Partner Fulfils". ASOS Payments UK Limited and the Group are
entitled to interest amounts earned on the deposits and amounts are held in a
segregated bank account that is settled on a monthly basis.
15 TRADE AND OTHER PAYABLES
2024 2023
£m £m
Trade payables 108.1 71.3
Other payables 165.9 174.7
Accruals 242.3 238.7
Returns provision 99.2 108.2
Deferred revenue 41.6 52.1
Taxation and social security 14.6 35.4
671.7 680.4
Trade payables comprise amounts owed in relation to inventory purchases. Other
payables comprise amounts owed in relation to all other purchases.
16 BORROWINGS
2024 2023
£m £m
Convertible bond 478.1 464.4
Term Loan 190.2 184.8
Nordstrom Loan 19.8 20.4
Put option liability(1) - 3.2
688.1 672.8
Current 1.6 1.5
Non-current 686.5 671.3
688.1 672.8
1 The put option liability has been reclassed to other payables during the
year.
Convertible bonds due 2026
On 16 April 2021 the Group issued £500m of convertible bonds. The unsecured
instruments pay a coupon of 0.75% until April 2026, or the conversion date, if
earlier. The initial conversion price was set at £79.65 per share. The fair
value of the debt component was determined using the market interest rate for
an equivalent non-convertible bond, deemed to be 3.4%. As a result, £440.1m
was recognised as a liability on the balance sheet on issue and the remainder
of the proceeds, £59.9m, which represents the equity component, was credited
to reserves. Issue costs of £9.0m were allocated between equity (£1.0m) and
debt (£8.0m).
After the period-end, in September 2024, the Group launched a refinancing
exercise of the Convertible Bonds due 2026 as follows:
· £253.0m was exchanged into new Convertible Bonds due 2028,
· £173.4m of the Convertible Bonds due 2026 was accepted for
repurchase at a discount to par of 15%, and
· As a result, £73.6m remains in the Convertible Bonds due 2026.
Further information is included in Note 20.
Term loan
In May 2023, the Group entered into a £200m senior term loan and a £75m
super senior RCF (together the "Facilities") with specialist lender Bantry Bay
Capital Limited through to April 2026, with the optionality to further extend
to May 2028 subject to meeting lender requirements. Both the senior term loan
and RCF (when drawn) bear interest at a margin above SONIA. The amount
available in relation to the RCF is determined by reference to a calculated
borrowing base (derived from inventory and intellectual property, both with
certain adjustments applied) less the amount drawn under the term loan. At the
period end this was £17.2m. The RCF incurs commitment fees at a market rate
and is currently undrawn.
The Facilities carry a fixed and floating charge over all assets of the
following chargors in the Group - ASOS Plc, ASOS.com Limited, ASOS
Intermediate Holdings Limited, Mornington & Co (No. 1) Limited and
Mornington & Co (No. 2) Limited.
After the period-end, ASOS announced an amendment and extension of its
existing facilities agreement with Bantry Bay Capital to May 2027 with an
option for a 12-month extension. Further information is included in Note 20.
Nordstrom loan
On 12 July 2021 the Group announced a strategic partnership with Nordstrom, a
U.S.-based multi-channel retailer, to drive growth in North America. As part
of this venture, Nordstrom purchased a minority interest in ASOS Holdings
Limited which holds the Topshop, Topman, Miss Selfridge and HIIT brands in
exchange for £10 as well as providing a £21.9m loan, subsequently partially
repaid. The loan attracts interest at a market rate of 6.5% per annum. After
the period-end date, c.£13m was repaid.
17 PROVISIONS
Dilapidations Onerous occupancy Total
£m
£m £m
As at 4 September 2023 53.4 16.8 70.2
Recognised 13.7 5.3 19.0
Utilised - (2.4) (2.4)
Unwinding of discount 2.3 0.8 3.1
Exchange differences (0.7) - (0.7)
As at 1 September 2024 68.7 20.5 89.2
Current - 2.7 2.7
Non-current 68.7 17.8 86.5
As at 1 September 2024 68.7 20.5 89.2
As at 1 September 2022 41.9 - 41.9
Recognised 11.2 18.3 29.5
Utilised - (1.8) (1.8)
Unwinding of discount 1.3 0.3 1.6
Exchange differences (1.0) - (1.0)
As at 3 September 2023 53.4 16.8 70.2
Current - 2.0 2.0
Non-current 53.4 14.8 68.2
As at 3 September 2023 53.4 16.8 70.2
18 NET DEBT RECONCILIATION
Group net debt comprises cash and cash equivalents less any borrowings drawn
down at period-end (including accrued interest), but excluding outstanding
lease liabilities.
2024 2023
£m £m
Borrowings (688.1) (672.8)
Leases (289.6) (329.0)
Liabilities from financing activities (977.7) (1,001.8)
Cash and cash equivalents 391.0 353.3
Net debt (586.7) (648.5)
Net debt APM (ex-leases) (297.1) (319.5)
The table below sets out the movements in liabilities arising from financing
activities:
Lease liabilities Borrowings Liabilities from financing activities
£m
£m £m
As at 4 September 2023 (329.0) (672.8) (1,001.8)
Cash flows from financing activities
Repayments of principal 25.5 0.5 26.0
Interest paid 5.5 37.1 42.6
Non-cash movements
Movement in lease liabilities 9.9 - 9.9
Foreign exchange impacts 4.0 - 4.0
Accrued interest (5.5) (52.9) (58.4)
As at 1 September 2024 (289.6) (688.1) (977.7)
Liabilities from
Lease liabilities Borrowings financing activities
£m £m £m
As at 1 September 2022 (380.1) (475.9) (856.0)
Cash flows from financing activities
Repayments of principal/(drawdown of borrowings) 22.4 (198.3) (175.9)
Interest paid 5.6 28.0 33.6
Financing fees paid - 15.8 15.8
Non-cash movements
Movement in lease liabilities 21.1 - 21.1
Foreign exchange impacts 7.6 - 7.6
Accrued interest (5.6) (42.4) (48.0)
As at 3 September 2023 (329.0) (672.8) (1,001.8)
19 CONTINGENT LIABILITIES
From time to time, the Group is subject to various legal proceedings and
claims that arise in the ordinary course of business, which due to the
fast-growing nature of the Group and its e-commerce base, may concern the
Group's brand and trading name or its product designs. All such cases brought
against the Group are robustly defended and a liability is recorded only when
it is probable that the case will result in a future economic outflow which
can be reliably measured.
As previously reported, ASOS is currently party to legal proceedings in
overseas territories which the Group is robustly defending. The claim
considers the laws applicable to the sale of goods in the relevant territory,
under which the claimants are seeking a financial remedy for alleged breaches
by ASOS of local laws. The claim remains in its early stages, and will be
heard in two phases. Completion of such a claim can be a lengthy process, with
a final court decision of the first phase potentially taking up to two years
after the initial hearing. The claim and its defence are relatively complex,
there are multiple factual and legal defences to the claims and the Group
intends to defend them vigorously. The Group therefore cannot make an
assessment of the likely outcome of the litigation, or the potential quantum
of any liability were it to arise or the potential impact on the Group at this
stage. Furthermore, management are of the opinion that, given the early stages
of the claim, disclosure of any potential quantification could be prejudicial
to the Group at this time.
As disclosed in the prior year annual accounts, the Group has made a voluntary
disclosure to an overseas tax authority in relation to potentially overclaimed
VAT. As explained, whether or not the VAT was overclaimed was ultimately
dependent on the relevant tax authority's view. The overseas tax authority has
now concluded that the VAT was correctly charged to ASOS, hence ASOS was
correct in recovering the VAT and no repayment or multi-party non-cash
agreement is necessary. This issue is therefore considered successfully
resolved without the liability crystalising. The Group notes that there are a
small number of suppliers who should likely have historically charged VAT on
services but have not. The Group has notified the relevant suppliers of this
and any amount payable will not be material and will be able to be reclaimed
by ASOS from the overseas tax authority in the normal course of business.
20 POST BALANCE SHEET EVENTS
Disposal of Topshop and Topman brands
On 5 September 2024, the Group entered into a binding agreement to sell the
intellectual property relating to the Topshop and Topman (TSTM) brands to a
subsidiary of Heartland A/S (a related party of the Group), for a
consideration as follows:
• Cash of £135m.
• 25% of the issued ordinary shares in the entity that will hold the brands,
valued at £45m.
As disclosed in Note 13, assets of £165.5m have been classified as held for
sale as at the year-end. The transaction has subsequently completed, resulting
in the derecognition of the assets held for sale, the recognition of an
investment in an associate of £45m, and a profit on disposal of c.£14m.
ASOS has the right, at its sole discretion, to sell a 5% interest in the
associate to Heartland A/S for £9m.
As part of the arrangement, the purchasing entity has granted a licence to
ASOS.com of 10 years (extendable up to 25 years at ASOS' discretion), pursuant
to which ASOS.com has the exclusive right to continue to design TSTM products
(subject to de minimis rights to design local products) for global
distribution and to sell Topshop and Topman products through the ASOS.com
website in consideration for a royalty fee. ASOS also has the right to operate
Topshop.com and Topman.com globally, and has been granted exclusive wholesale
distribution rights in the UK and North America, while the purchasing entity
retains the rights to open branded stores globally and distribute through
wholesale partners outside of the UK and North America.
Refinancing
After the period end, in September 2024, the Group launched a refinancing
exercise of the Convertible Bonds due 2026 as follows:
• £253m was exchanged into new Convertible Bonds due 2028;
• £173.4m of the Convertible Bonds due 2026 was accepted for repurchase at
a discount of par 15%, and
• As a result, £73.6m remains in the Convertible Bonds due 2026.
20 POST BALANCE SHEET EVENTS - CONTINUED
The new Convertible Bonds were issued at par and carry a fixed annual coupon
of 11%, payable semi-annually in arrears. The initial conversion price has
been set at £79.65, in line with the Convertible Bond due 2026. The Bonds
will be redeemed on 19 September 2028, unless previously converted, exchanged,
redeemed or purchased and cancelled in accordance with the terms and
conditions of the Bonds, at a redemption price of 120% of the principal
amount.
In addition, ASOS announced an amendment and extension of its existing
facilities agreement with Bantry Bay Capital to May 2027 with an option for a
12-month extension. As part of this, £50m of the term loan has been repaid,
with a corresponding increase in the available accordion facility. The Group's
previous minimum liquidity covenant has been removed, and maintaining positive
liquidity is the only condition now required to avoid an event of default. In
addition, the Group is also subject to a springing maturity clause in the term
loan facility in April 2026, conditional upon forward projection of base case
cash flows.
Following the disposal of the brands and the refinancing exercise, the Group
recognised a reduction in net debt of approximately £130m.
ALTERNATIVE PERFORMANCE MEASURES
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
Like-for-like revenue growth None Like-for-like revenue growth reflects constant currency revenue, which This measure is presented as a means of eliminating the effects of exchange
includes retail sales and income from other services, adjusted for the impact rate fluctuations on the period-on-period reported results.
of foreign exchange translation. The current period also adjusts for the
impact of four less trading days in FY24.
2024 2023 Growth
£m £m %
Group revenue 2,905.8 3,549.5 (18%)
Adjusted for:
Adjusted items (9.8) (11.5)
LFL financial periods 49.7 -
Impact of foreign exchange translation 11.0 -
Like-for-like revenue growth 2,956.7 3,538.0 (16%)
2023 2022 Growth
£m £m
Group revenue 3,549.5 3,936.5 (10%)
Adjusted for:
Impact of foreign exchange translation, adjusted items, and LFL financial (101.5) -
periods
Excluding Russia - (76.8)
Like-for-like revenue growth 3,448.0 3,859.7 (11%)
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 A
services, commission on partner-fulfilled sales and revenue from wholesale reco
sales ncil
iati
on
of
this
meas
ure
is
incl
uded
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:
2024 2023
£m £m
Revenue 2,905.8 3,549.5
Adjusting items (9.8) (11.5)
Adjusted revenue 2,896.0 3,538.0
Gross profit 1,162.5 1,459.0
Adjusting items 94.8 104.4
Adjusted gross profit 1,257.3 1,563.4
Gross margin % 40.0% 41.1%
Adjusted gross margin % 43.4% 44.2%
Adjusted gross margin None Gross profit divided by revenue and excluding the impact of adjusting items.
Adjusted gross margin
None
Gross profit divided by revenue and excluding the impact of adjusting items.
ALTERNATIVE PERFORMANCE MEASURES - 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.
Adjusted (loss)/profit before tax excludes items recognised in reported profit
(Loss)/profit before tax or loss before tax which, if included, could distort comparability between
periods.
Adjusted (loss)/profit before tax
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.
2024 2023
£m £m
Operating loss (331.9) (248.5)
Adjusting items excluding finance costs (note 3) 250.4 219.5
Adjusted EBIT (81.5) (29.0)
Net finance costs (note 5) (47.4) (48.2)
Add back adjusting finance costs (note 3) 2.9 6.9
Adjusted loss before tax (126.0) (70.3)
Details of adjusting items are included within Note 3.
Adjusted EBITDA Operating (loss)/profit Adjusted EBIT above, adjusted Adjusted EBITDA is used to review the Group's profit generation and the
sustainability of ongoing capital reinvestments and finance costs.
for depreciation, amortisation
Adjusted EBITDA margin and impairments.
2024 2023
£m £m
Adjusted EBITDA divided by adjusted revenue as defined above Adjusted EBIT (above) (81.5) (29.0)
Add back depreciation and amortisation (per cash flow) 172.3 172.5
Add back impairment (per cash flow) 119.9 32.1
Less depreciation and amortisation excluded from adjusted profit(1) (10.7) (19.6)
Less impairment excluded from adjusted profit (119.9) (31.5)
Adjusted EBITDA 80.1 124.5
Group revenue 2,905.8 3,549.5
Adjusting items (9.8) (11.5)
Adjusted Group revenue 2,896.0 3,538.0
Adjusted EBITDA margin 2.8% 3.5%
1 The prior year comparative comprises £18.3m within property
initiatives, and £1.3m within the commercial operating model change
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 18. A reconciliation is included below:
2024 2023
£m £m
Cash and cash equivalents 391.0 353.3
Borrowings (688.1) (672.8)
Lease liabilities (289.6) (329.0)
Net borrowings (586.7) (648.5)
Add-back lease liabilities 289.6 329.0
Group net debt (297.1) (319.5)
1 The prior year comparative comprises £18.3m within property
initiatives, and £1.3m within the commercial operating model change
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 18. A reconciliation is included below:
2024
2023
£m
£m
Cash and cash equivalents
391.0
353.3
Borrowings
(688.1)
(672.8)
Lease liabilities
(289.6)
(329.0)
Net borrowings
(586.7)
(648.5)
Add-back lease liabilities
289.6
329.0
Group net debt
(297.1)
(319.5)
ALTERNATIVE PERFORMANCE MEASURES - CONTINUED
Performance measure Closest IFRS measure Definition How ASOS uses this measure
Free cash flow Operating cash flow Free cash flow is net cash generated from operating activities, less payments A measure of the cash generated by the Group outside cash flows relating to
to acquire intangible and tangible assets, payment of the principal portion of M&A and financing transactions, which allows management to better assess
lease liabilities and net finance expenses. the cash being generated by the business.
A reconciliation to the Group cash flow is shown below:
2024 2023
£m £m
Cash used generated from/(used in) operations (per cash flow) 228.0 16.4
Purchase of tangible and intangible assets (133.5) (177.9)
Repayment of principal portion of lease liabilities (25.5) (22.4)
Net interest paid (31.3) (29.1)
Free cash flow 37.7 (213.0)
Other working capital movements (per Financial Review) No direct equivalent Removes working capital and cash movements relating to adjusted items. To provide a reconciliation of the working capital movement in the Financial
Statements to the other working capital movement in the Financial Review.
2024 2023
£m £m
Decrease/(increase) in other working capital (per Financial Review) 12.1 (260.4)
Comprises:
Working capital per cash flow (excluding inventory) 7.1 (275.4)
Working capital relating to adjusted items (see below) 5.0 15.0
12.1 (260.4)
Working capital relating to adjusting items:
Adjusted items (note 3) (253.3) (226.4)
Add back adjusted impairment (note 3) 119.9 31.5
Add back adjusted depreciation (note 3)(1) 10.7 19.6
Add back commercial model change (Cost of sales) (note 3) 104.6 130.0
Add back adjusted finance costs (note 3) 2.9 6.9
Adjusted working capital before cash impacts (15.2) (38.4)
Cash impact of adjusted items 20.2 53.4
Working capital relating to adjusted items 5.0 15.0
1 The prior year comparative comprises £18.3m within property
initiatives, and £1.3m within the commercial operating model change
Cost to serve No direct equivalent Operating expenses (excluding depreciation and amortisation and excluding Cost to serve reflects the underlying profitability of the business and
adjusting items) as a percentage of adjusted revenue. demonstrates discipline on cost structure.
2024 2023
£m £m
Operating expenses 1,496.4 1,709.5
Less depreciation and amortisation (172.3) (172.5)
Less adjusting items (155.6) (115.1)
Add back adjusted depreciation and amortisation(1) 10.7 19.6
1,179.2 1,441.5
Adjusted revenue 2,896.0 3,538.0
Costs to serve 40.7% 40.8%
1 The prior year comparative comprises £18.3m within property
initiatives, and £1.3m within the commercial operating model change
1 The prior year comparative comprises £18.3m within property
initiatives, and £1.3m within the commercial operating model change
Cost to serve
No direct equivalent
Operating expenses (excluding depreciation and amortisation and excluding
adjusting items) as a percentage of adjusted revenue.
Cost to serve reflects the underlying profitability of the business and
demonstrates discipline on cost structure.
2024 2023
£m £m
Operating expenses 1,496.4 1,709.5
Less depreciation and amortisation (172.3) (172.5)
Less adjusting items (155.6) (115.1)
Add back adjusted depreciation and amortisation(1) 10.7 19.6
1,179.2 1,441.5
Adjusted revenue 2,896.0 3,538.0
Costs to serve 40.7% 40.8%
1 The prior year comparative comprises £18.3m within property
initiatives, and £1.3m within the commercial operating model change
The Group has added costs to serve as an APM this year to show year-on-year
movements in the Group's cost structure. In addition, a reconciliation of
working capital movements per the Financial Review to the statutory cash flow
is included to aid readers of the financial statements. Adjusted free cash
flow has been removed as an APM this year as it is no longer a performance
measure for the Group's bonus.
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