REG - ASOS PLC - Interim Results <Origin Href="QuoteRef">ASOS.L</Origin> - Part 2
12/04/2016 07:05
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219.2 218.7 237.3
1 All numbers subject to rounding
CONDENSED UNAUDITED Consolidated Statement of Cash Flows
For the six months ended 29 February 2016
Six months to 29 February 2016 Six months to 28 February 2015 Year to 31 August 2015
(unaudited) (unaudited) (audited)
£m1 £m1 £m1
Operating profit 21.0 18.0 47.3
Adjusted for:
Depreciation of property, plant and equipment 5.1 3.7 8.3
Amortisation of other intangible assets 9.8 6.7 14.8
Loss on disposal of non-current assets - 0.1 4.9
(Increase)/decrease in inventories (4.2) 0.1 (32.1)
(Increase)/decrease in trade and other receivables (5.1) 1.8 2.3
Increase/(decrease) in trade and other payables 23.4 (14.1) 47.6
Share-based payments charge 1.6 1.1 2.2
Other non-cash items (0.3) 0.3 0.7
Income tax paid (3.5) (0.2) (2.8)
Net cash generated from operating activities 47.8 17.5 93.2
Investing activities
Payments to acquire other intangible assets (23.3) (15.2) (32.5)
Payments to acquire property, plant and equipment (8.6) (11.7) (17.9)
Finance income 0.4 0.1 0.3
Net cash used in investing activities (31.5) (26.8) (50.1)
Financing activities
Net cash inflow relating to Employee Benefit Trust - - 0.9
Finance expense (0.1) (0.1) (0.1)
Net cash (used)/generated in financing activities (0.1) (0.1) 0.8
Net increase/(decrease) in cash and cash equivalents 16.2 (9.4) 43.9
Opening cash and cash equivalents 119.2 74.3 74.3
Effect of exchange rates on cash and cash equivalents 0.5 - 1.0
Closing cash and cash equivalents 135.9 64.9 119.2
1 All numbers subject to rounding
Notes to the CONDENSED UNAUDITED financial information
For the six months ended 29 February 2016
1. Preparation of the condensed unaudited consolidated financial information
("interim financial statements")
a) General information
ASOS Plc ('the Company') and its subsidiaries (together, 'the Group') is a
global fashion retailer. The Group sells products across the world and has
websites targeting the UK, US, Australia, France, Germany, Spain, Italy,
Russia and China. The Company is a public limited company which is listed on
the Alternative Investment Market (AIM) and is incorporated and domiciled in
the UK. The address of its registered office is Greater London House,
Hampstead Road, London NW1 7FB.
The interim financial statements have been reviewed, not audited and were
approved by the Board of Directors on 11 April 2016.
b) Basis of preparation
The interim financial statements for the six months ended 29 February 2016
have been prepared in accordance with IAS 34, "Interim Financial Reporting" as
adopted by the European Union. The interim financial statements should be read
in conjunction with the Group's Annual Report and Accounts for the year ended
31 August 2015, which has been prepared in accordance with IFRSs as adopted by
the European Union.
The interim financial statements have been reviewed, not audited, and do not
constitute statutory accounts within the meaning of section 434 of the
Companies Act 2006. The Annual Report and Accounts for the year ended 31
August 2015 has been filed with the Registrar of Companies. The auditors'
report on those accounts was unqualified, did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying the report and did not contain statements under s498 of the
Companies Act 2006.
The Group's business activities together with the factors that are likely to
affect its future developments, performance and position are set out in the
Business Review. The Business Review describes the Group's financial position,
cash flows and borrowing facilities.
Going concern
The Directors have reviewed current performance and forecasts, combined with
expenditure commitments, including capital expenditure. After making
enquiries, the Directors have a reasonable expectation that the Group has
adequate financial resources to continue its current operations, including
contractual and commercial commitments for the foreseeable future. For this
reason, they have continued to adopt the going concern basis in preparing the
interim financial statements.
Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge, the interim
financial statements have been prepared in accordance with IAS 34 "Interim
Financial Reporting" as adopted by the European Union, and that the interim
management report includes a fair review of the information required.
Accounting policies
The interim financial statements have been prepared in accordance with the
accounting policies set out in the Annual Report and Accounts for the year
ended 31 August 2015. Various new accounting standards and amendments were
issued during the period, none of which have had or are expected to have any
significant impact on the Group, and none of which have been adopted early.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to the expected total annual earnings.
2. Principal risks and uncertainties
The Board considers the principal risks and uncertainties which could impact
the Group over the remaining six months of the financial year to 31 August
2016 to be unchanged from those set out in the Annual Report and Accounts for
the year ended 31 August 2015, summarised as follows:
- Technological risk, including robustness and sufficiency of IT systems
and infrastructure, and IT capacity and capability keeping pace with business
growth and complexity
- Financial risks, including ensuring our UK business model is profitable
on a scalable basis in key territories and managing exposure to changes in
foreign exchange rates
- Market risks, including failure to meet customer demand and changing
tastes, maintaining our market position and fashionability, or an inadequate
digital experience
- Supply chain risks, including interruption to supply of core category
products and disruption to delivery services or warehousing activities and
capacity
- Reputational risks around (a) our brand name, including trade mark
oppositions, legal claims and formal litigation as a result of failure or
inability to support and protect our brand, trademarks and domain names, and
(b) the security of our customer and business data, including unauthorised
access to or breach of our systems and records
- Reliance on key personnel
These are set out in detail on pages 20 to 23 of the Group's Annual Report and
Accounts for the year ended 31 August 2015, a copy of which is available on
the Group's website, www.asosplc.com. Information on financial risk management
is also detailed on pages 78 to 79 of the Annual Report.
3. Segmental analysis
IFRS 8 'Operating Segments' requires operating segments to be determined based
on the Group's internal reporting to the Chief Operating Decision Maker. The
Chief Operating Decision Maker has been determined to be the Executive Board
and has determined that the primary segmental reporting format of the Group is
geographical by customer location, based on the Group's management and
internal reporting structure.
The Executive Board assesses the performance of each segment based on revenue
and gross profit after distribution expenses, which excludes administrative
expenses.
Six months to 29 February 2016 (unaudited)
UK US EU RoW Total
£m1 £m1 £m1 £m1 £m1
Retail sales 289.5 76.8 167.9 114.4 648.6
Delivery receipts 7.2 2.7 3.2 3.0 16.1
Third party revenues 2.4 0.1 - 0.1 2.6
Internal revenues - - - 2.4 2.4
Total segment revenue 299.1 79.6 171.1 119.9 669.7
Eliminations - - - (2.4) (2.4)
Total revenue 299.1 79.6 171.1 117.5 667.3
Cost of sales (160.4) (31.9) (91.9) (58.3) (342.5)
Gross profit 138.7 47.7 79.2 59.2 324.8
Distribution expenses (33.2) (22.7) (23.3) (18.3) (97.5)
Segment result 105.5 25.0 55.9 40.9 227.3
Administrative expenses (206.3)
Operating profit 21.0
Finance income 0.2
Profit before tax 21.2
Internal revenues relate to sale of stock by ASOS.com to ASOS (Shanghai)
Commerce Co. Limited.
1 All numbers subject to rounding
3. Segmental analysis (continued)
Six months to 28 February 2015 (unaudited)
UK US EU RoW Total
£m1 £m1 £m1 £m1 £m1
Retail sales 231.4 54.5 136.2 114.3 536.4
Delivery receipts 5.4 1.6 2.2 2.6 11.8
Third party revenues 2.3 - - - 2.3
Internal revenues 0.4 - - 1.3 1.7
Total segment revenue 239.5 56.1 138.4 118.2 552.2
Eliminations (0.4) - - (1.3) (1.7)
Total revenue 239.1 56.1 138.4 116.9 550.5
Cost of sales (132.1) (23.3) (71.2) (58.7) (285.3)
Gross profit 107.0 32.8 67.2 58.2 265.2
Distribution expenses (25.1) (17.2) (18.1) (18.4) (78.8)
Segment result 81.9 15.6 49.1 39.8 186.4
Administrative expenses (174.7)
Net other income 6.3
Operating profit 18.0
Finance income 0.1
Finance expense (0.1)
Profit before tax 18.0
Year to 31 August 2015 (audited)
UK US EU RoW Total
£m1 £m1 £m1 £m1 £m1
Retail sales 473.9 119.5 294.0 232.5 1,119.9
Delivery receipts 11.5 3.7 5.1 5.4 25.7
Third party revenues 4.4 0.8 - - 5.2
Internal revenues - - 0.3 3.1 3.4
Total segment revenue 489.8 124.0 299.4 241.0 1,154.2
Eliminations - - (0.3) (3.1) (3.4)
Total revenue 489.8 124.0 299.1 237.9 1,150.8
Cost of sales (260.7) (49.3) (151.8) (114.2) (576.0)
Gross profit 229.1 74.7 147.3 123.7 574.8
Distribution expenses (52.8) (38.4) (40.8) (36.7) (168.7)
Segment result 176.3 36.3 106.5 87.0 406.1
Administrative expenses (365.1)
Net other income 6.3
Operating profit 47.3
Finance income 0.3
Finance expense (0.1)
Profit before tax 47.5
Due to the nature of its activities, the Group is not reliant on any
individual major customers.
No analysis of the assets and liabilities of each operating segment is
provided to the Chief Operating Decision Maker in the monthly management
accounts therefore no measure of segments assets or liabilities is disclosed
in this note.
There are no material non-current assets located outside the UK.
1 All numbers subject to rounding
4. Other income
Other income recognised during the six months ended 28 February 2015 and the
year to 31 August 2015 related to final business interruption reimbursements
as a result of the fire in our main distribution hub in June 2014.
Six months to 29 February 2016 Six months to 28 February 2015 Year to 31 August 2015
(unaudited) (unaudited) (audited)
£m1 £m1 £m1
Other income - 6.3 6.3
5. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
the owners of the parent company by the weighted average number of ordinary
shares in issue during the year. Own shares held by the Employee Benefit Trust
and Capita Trust are eliminated from the weighted average number of ordinary
shares.
Diluted earnings per share is calculated by dividing the profit attributable
to the owners of the parent company by the weighted average number of ordinary
shares in issue during the period, adjusted for the effects of potentially
dilutive share options.
Adjusted basic and diluted earnings per share removes the one-off increase in
the Group's effective tax rate due to the release of our deferred tax asset in
relation to China as this entity's losses will no longer be offset against
future profits. Excluding this impact of China, the effective tax rate for the
rest of the Group would have been 20.7%.
Six months to 29 February 2016 Six months to 28 February 2015 Year to 31 August 2015
(unaudited) (unaudited) (audited)
No. of shares No. of shares No. of shares
Weighted average share capital
Weighted average shares in issue for basic earnings per share 82,967,753 82,921,082 82,963,517
Weighted average effect of dilutive options 15,015 64,978 70,742
Weighted average shares in issue for diluted earnings per share 82,982,768 82,986,060 83,034,259
Six months to 29 February 2016 Six months to 28 February 2015 Year to 31 August 2015
(unaudited) (unaudited) (audited)
£m1 £m1 £m1
Earnings
Earnings attributable to owners of the parent 15.2 14.6 36.9
Adjusted earnings attributable to owners of the parent 16.8 - -
Six months to 29 February 2016 Six months to 28 February 2015 Year to 31 August 2015
(unaudited) (unaudited) (audited)
Pence1 Pence1 Pence1
Earnings per share
Basic earnings per share 18.3 17.6 44.4
Diluted earnings per share 18.3 17.6 44.4
Adjusted earnings per share
Basic adjusted earnings per share 20.3 17.6 44.4
Diluted adjusted earnings per share 20.3 17.6 44.4
1 All numbers subject to rounding
6. Reconciliation of cash and cash equivalents
Six months to 29 February 2016 Six months to 28 February 2015 Year to 31 August 2015
(unaudited) (unaudited) (audited)
£m1 £m1 £m1
Net movement in cash and cash equivalents 16.2 (9.4) 43.9
Opening cash and cash equivalents 119.2 74.3 74.3
Effect of exchange rates on cash and cash equivalents 0.5 - 1.0
Closing cash and cash equivalents 135.9 64.9 119.2
The Group has a £20m revolving loan credit facility which includes an
ancillary £10m guaranteed overdraft facility and which is available until
October 2018. We expect to renegotiate this loan facility during the second
half of the year.
7. Capital expenditure and commitments
During the period, the Group acquired property, plant and equipment of £7.7m
and intangible assets of £26.5m. Disposals were immaterial. At the period end
capital commitments contracted, but not provided for by the Group, amounted to
£8.1m.
8. Financial instruments
There are no changes to the categories of financial instruments held by the
Group.
Six months to 29 February 2016 Six months to 28 February 2015 Year to 31 August 2015
(unaudited) (unaudited) (audited)
£m1 £m1 £m1
Financial assets
Loans and receivables1 149.0 75.6 129.2
Financial assets at fair value through profit and loss - 12.3 6.3
Financial liabilities
Financial liabilities at fair value through profit and loss (36.9) - -
Amortised cost2 (248.5) (165.2) (228.5)
1Loans and receivables include trade and other receivables and cash and cash
equivalents, and excludes prepayments.
2Included in financial liabilities at amortised cost are trade payables,
accruals and other payables.
The Group operates internationally and is therefore exposed to foreign
currency transaction risk, primarily on sales denominated in US dollars, Euros
and Australian dollars. The Group's policy is to mitigate foreign currency
transaction exposures where possible and the Group uses financial instruments
in the form of forward foreign exchange contracts to hedge future highly
probable foreign currency cash flows.
These forward foreign exchange contracts are classified above as derivative
financial assets and are classified as Level 2 financial instruments under
IFRS 13, "Fair Value Measurement." They have been fair valued at 29 February
2016 with reference to forward exchange rates that are quoted in an active
market, with the resulting value discounted back to present value. All forward
foreign exchange contracts were assessed to be highly effective during the
period to 29 February 2016 and a net unrealised loss of £43.2m (H1 2015: gain
of £10.1m) was recognised in equity. All derivative financial assets at 29
February 2016 mature within two years based on the related contractual
arrangements.
1 All numbers subject to rounding
9. Related Parties
The Group's related parties are the Employee Benefit Trust, Capita Trust and
key management personnel. There have been no material changes to the Group's
related party transactions during the six months to 29 February 2016.
10. 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. As at 29 February 2016, these
include long-running proceedings with Assos of Switzerland SA, a Swiss
manufacturer of high performance, technical cycling apparel and accessories.
All such cases brought against the Group are robustly defended and a liability
is recorded only when it is probable that the case will result in a future
economic outflow which can be reliably measured. At 29 February 2016, there
were no pending claims or proceedings against the Group which were expected to
have a material adverse effect on its liquidity or operations.
At 29 February 2016, the Group had contingent liabilities of £3.8m (H1 2015:
£4.7m) in relation to supplier standby letters of credit, rent deposit deeds
and other bank guarantees. The likelihood of cash outflow in relation to these
contingent liabilities is considered to be low.
11. Subsequent Events
Following a strategic review, we have decided to discontinue our China
in-country operation over the coming months. It is estimated that the
financial impacts of this decision are one-off closure costs of up to £10m, of
which the majority will be non-cash, and operating losses for the current
financial year of c.£4m. Both of these amounts are pre-tax and will be
presented as discontinued operations at the year end.
Independent review report to ASOS PLC
Report on the condensed unaudited financial information
Our conclusion
We have reviewed ASOS plc's condensed unaudited financial information (the
"interim financial statements") in the half-yearly report of ASOS plc for the
6 month period ended 29 February 2016. Based on our review, nothing has come
to our attention that causes us to believe that the interim financial
statements are not prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial Reporting', as
adopted by the European Union and the AIM Rules for Companies.
What we have reviewed
The interim financial statements comprise:
· the condensed unaudited consolidated statement of financial position as
at 29 February 2016;
· the condensed unaudited consolidated statement of total comprehensive
income for the period then ended;
· the condensed unaudited consolidated statement of cash flows for the
period then ended;
· the condensed unaudited consolidated statement of changes in equity for
the period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the half-yearly report have been
prepared in accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the AIM Rules for
Companies.
As disclosed in Note 1 to the interim financial statements, the financial
reporting framework that has been applied in the preparation of the full
annual financial statements of the Group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The half-yearly report, including the interim financial statements, is the
responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly report in accordance with the AIM
Rules for Companies which require that the financial information must be
presented and prepared in a form consistent with that which will be adopted in
the company's annual financial statements.
Our responsibility is to express a conclusion on the interim financial
statements in the half-yearly report based on our review. This report,
including the conclusion, has been prepared for and only for the company for
the purpose of complying with the AIM Rules for Companies and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom this
report is shown or into whose hands it may come save where expressly agreed by
our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and, consequently,
does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
We have read the other information contained in the half-yearly report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
St Albans
11 April 2016
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