REG - ASOS PLC - Interim Results
12/04/2022 07:00
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RNS Number : 0349I ASOS PLC 12 April 2022
12 April
2022
ASOS Plc
Global Online Fashion Destination
Interim Results for the six months to 28 February 2022
Accelerating operational and strategic progress
· Delivered 4% revenue growth (constant currency) and £14.8m adjusted profit
before tax, both in line with guidance, despite industry-wide supply chain
constraints impacting stock availability and ongoing COVID-19 restrictions
· Strong operational progress delivered year to date, with H2 stock position
materially enhanced, driving increased newness and availability
· Encouraging progress on the implementation of the strategy outlined at the
Capital Markets Day (CMD); centred on driving a more customer-centric
organisation, accelerating pace of delivery across the Commercial function,
and increasing emphasis on Data and Digital Product
· Save for the removal of Russia's contribution to H2 following the decision to
suspend sales announced on 2 March 2022, guidance remains unchanged although
an increasingly challenging external environment introduces a greater degree
of risk than normal
Summary financial results
Six months to Six months to CCY(2) Change
£m(1) 28 February 28 February Change
2022 2021
Group revenues(3) 2,004.1 1,975.9 1% 4%
Gross margin 43.1% 45.0% (190bps)
Operating (loss)/profit (4.4) 109.7 (104%)
Operating (loss)/profit margin (0.2%) 5.6% (580bps)
Adjusted EBIT(4) 26.2 116.2 (77%)
Adjusted EBIT margin(4) 1.3% 5.9% (460bps)
Adjusted profit before tax(4) 14.8 112.9 (87%)
Reported (loss)/profit before tax (15.8) 106.4 (115%)
Diluted earnings per share (13.5p) 81.9p (117%)
Net (debt)/cash(4) (62.6) 92.0
(1)All numbers subject to rounding throughout this document, (2)Constant
currency is calculated to take account of hedged rate movements on hedged
sales and spot rate movements on unhedged sales. Any reference to total or
retail sales throughout the document is on a constant currency basis,
(3)Includes retail sales and income from other services, (4)Definitions of the
adjusted performance measures used above and throughout this document can be
found in Note 12, page 33 of the Condensed Financial Statements.
Results Summary
· 4% revenue growth (CCY), as expected supply chain constraints impacted newness
and stock availability
· Continued increase in active customers to 26.7m, up 0.3m over six months, with
slower customer growth a result of cycling a period of exceptional customer
acquisition in the prior year when High Street retail was closed
· Despite reduced stock availability impacting growth across all regions, both
the UK (+8%) and US (+11% CCY) delivered a strong performance, with the US
supported by a particularly strong peak trading period; EU remained subdued
(+1% CCY) as COVID-19 restrictions impacted demand and RoW declined (-10% CCY)
as delivery challenges continued
· Gross margin decreased by 190bps reflecting increased clearance activity and
elevated freight costs; partially offset by cost efficiencies that delivered
improvements in buying margins along with low to mid-single digit percentage
increases across both ASOS and partner brands taking effect in January 2022
· Adjusted PBT of £14.8m reflecting the expected unwind of all COVID-19 related
benefits (£48.5m) from H1 FY21 and planned investment in marketing; alongside
significant cost inflation, most notably warehouse labour and freight,
partially offset by cost efficiencies of c.£50m
· Reported revenue growth of 1% and reported loss before tax of £15.8m,
reflecting costs of adjusting items which total £30.6m
· Net debt position of £62.6m reflecting negative working capital cycle in H1,
amplified by accelerated stock build for '22 Spring / Summer to accommodate
longer lead times and capital expenditure of £86.5m to support supply chain
and technology investments outlined at the CMD
Operational & Strategic Update
· Strong operational progress in the first half of the year and ASOS enters the
second half with a much-improved stock position driving increased newness and
availability
· Leverage ASOS' Platform & Capabilities:
o Successful roll out of Partner Fulfils in the UK in H1 to be followed by
range extension and expansion to select countries within Europe by end of FY22
o Highly successful optimisation of the Premier offer, supporting 24% growth
in Premier subscribers
o Continued improvements in data science to further personalise the
experience, and next phase of data evolution and investments underway in
support of the Data Strategy
· Amplify ASOS' Winning Offer:
o Continued triple digit sales growth of Topshop brands (+193%
year-on-year), particularly strong across the UK, US and Germany
o Completed the reorganisation of the Commercial function to accelerate the
pace and intensity of delivery, including the creation of 12 new business
units centred around brands, geographies and emerging channels, providing
increased autonomy and pace of decision making
· Driving International Expansion:
o Roll out of broad reach marketing campaign across multiple platforms in
test areas within the UK, US and France
o Debut of select ASOS brands in two Nordstrom stores and on Nordstrom.com
in November with further extensions to two new retail concepts in store in
February
· Expansion of Executive structure to better align teams for delivery of the
strategy; with newly created Strategy Board, led by COO and underpinned by
expanded Executive team
Fashion with Integrity Update
· ASOS today published its first annual update as part of its FWI 2030
Programme, reporting progress in the period ending August 2021
· The full report is published here
(https://www.asosplc.com/fashion-with-integrity/)
Outlook
· Save for the removal of Russia's contribution to H2 following the decision to
suspend sales announced on 2 March 2022, guidance remains unchanged
· More challenging external environment since guidance was provided in October
2021
· Greater risk in H2 than normal as the full impact of recent inflationary
pressure on consumers and the potential impact on discretionary spend are yet
to be felt
· Despite the external challenges, ASOS anticipates sales growth to accelerate
in H2 supported by:
o Improved stock profile
o Easing of comparative growth rates
o Return of event and holiday-led demand
o Increased marketing investment to support international sales acceleration
o Improved lead-times as supply chain constraints ease
· ASOS looks to the future with confidence and remains committed to the
execution of its medium-term strategy in support of long-term growth
acceleration
Mat Dunn, COO and CFO, said:
"ASOS has delivered an encouraging trading performance, against the continuing
backdrop of significant volatility and disruption. The team has acted with
determination and pace and is making good early progress on the strategic plan
for the next phase of growth, as set out at our CMD last year. While much
remains to be done, we have a clear plan for each of the three key pillars -
our platform, consumer offer, and international expansion - and are already
seeing positive signs of progress across the business. We're confident of the
benefits these efforts will create and our continued ability to deliver.
"We've entered the second half of the year well placed, and believe that our
stock position, with increased product availability and newness, will stand us
in good stead. We remain mindful of the potential impact on demand from the
growing pressures on consumer spend and will continue to be responsive to any
changes in market conditions as we progress the work started in the first half
to deliver on our ambitions."
Investor and Analyst conference call and presentation:
The Company will be hosting an in-person presentation for analysts and
investors starting promptly at 09:30 at ASOS HQ, Greater London House, NW1
7FB, to be hosted by Mat Dunn and Katy Mecklenburgh. For those unable to
attend in person a live webcast will be available, and a recording of the
presentation will be uploaded to the ASOS investor relations website
afterwards.
To access live please dial +44 (0) 330 088 5830, and use Meeting ID:
(tel:+443300885830) 895 3501 6492. A live stream of the event will be
available here (https://event.sparq.me.uk/asos/) .
For further information:
ASOS Tel: 020 7756 1000
Plc
Mathew Dunn, Chief Operating Officer & Chief Financial Officer
Taryn Rosekilly, Director of Investor Relations
Website: www.asosplc.com/investor-relations
(www.asosplc.com/investor-relations)
Headland Consultancy Tel: 020 3805 4822
Susanna Voyle / Stephen Malthouse
JPMorgan Cazenove
Tel: 020 7742 4000
Bill Hutchings / Will Vanderspar
Numis Securities Tel: 020 7260 1000
Alex Ham / Jonathan Wilcox / Tom Jacob
Berenberg Tel: 020 3207 7800
Michelle Wilson / Jen Clarke
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 ten languages
and in over 200 markets, ASOS customers can shop a curated edit of over
100,000 products, sourced from nearly 900 global and local partner brands
alongside a mix of fashion-led own-brand labels - ASOS Design, ASOS Edition,
ASOS 4505, Collusion, Reclaimed Vintage, Topshop, Topman, Miss Selfridge and
HIIT. ASOS aims to give all of its customers a truly frictionless experience,
with an ever-greater number of different payment methods and hundreds of local
delivery and return options, including Next-Day Delivery and Same-Day
Delivery, dispatched from state-of-the-art fulfilment centres in the UK, US
and Germany.
Important information
This announcement may include statements that are, or may be deemed to be,
"forward-looking statements" (including words such as "believe", "expect",
"estimate", "intend", "anticipate" and words of similar meaning). By their
nature, forward-looking statements involve risk and uncertainty since they
relate to future events and circumstances, and actual results may, and often
do, differ materially from any forward-looking statements. Any forward-looking
statements in this announcement reflect management's view with respect to
future events as at the date of this announcement. Save as required by
applicable law, the Company undertakes no obligation to publicly revise any
forward-looking statements in this announcement, whether following any change
in its expectations or to reflect events or circumstances after the date of
this announcement.
ASOS Plc ("the Group")
Global Online Fashion Destination
Interim Results for the six months to 28 February 2022
Overview
ASOS delivered results in line with guidance with total sales growth of 4% on
a constant currency basis (CCY) (1% on a reported basis) and adjusted Profit
Before Tax of £14.8m (reported loss of £15.8m, after £30.6m of adjusting
items).
In the first half of the year, supply chain disruption played out as expected
with capacity constraints across both sea and air freight causing delays and
inflating costs. The demand environment was also impacted by increased
COVID-19 caseloads and sporadic lockdowns, particularly in Europe, along with
a rebalancing of demand between online and offline channels. Despite this,
ASOS delivered a successful peak period, particularly in the US, and
successfully launched its fourth fulfilment centre to increase stockholding
and optimise availability. The scale-up of this facility has progressed more
quickly than anticipated, adding incremental capacity during peak, and
performing ahead of original capacity expectations. ASOS has made strong
operational progress in the first half of the year and approaches the second
half with a much-improved stock position along with increased newness and
optimised stock availability. Returns rates have picked up in P2, however they
have not exceeded pre-pandemic levels as sales mix returns to a more
traditional balance of product demand.
Active customers have grown by 0.3 million since year end to 26.7 million,
reflecting 7% growth year-on-year with 1.8 million net additions over the past
12 months as ASOS cycled a period of strong customer acquisition in the prior
year aided by lockdowns and store closures which drove customers online. With
the reopening of physical stores, ASOS has seen a rebalancing of demand
between online and offline channels as customers have returned to the High
Street, whilst the impact of reduced product availability and the resulting
impact on newness has also affected new customer acquisition in the first
half. Pleasingly though, online share of overall sales remains higher than
pre-pandemic levels in all key territories, and ASOS has seen improvements in
frequency and conversion as customers have increasingly engaged with more
aspects of the offer.
In November, the ASOS leadership team presented a full Capital Markets Day
(CMD), outlining the change required to shift the Company to the next phase of
its growth, centred on accelerating growth outside the UK. ASOS has proceeded
at pace to roll out this strategy, known internally as 'ASOS Reimagined', in
support of the CMD objectives. Additionally, ASOS has accelerated its
organisational re-design in support of these objectives to improve the pace
and delivery of the Commercial function whilst elevating its focus on Data and
Digital Technology Product.
Financial Performance
ASOS delivered against its first half guidance of mid-single digit sales
growth, with adjusted Profit Before Tax of £14.8m and an adjusted PBT margin
of 0.7%. This reflected the unwind of all COVID-19 related benefits received
in H1 FY21 of £48.5m as expected, as returns rates normalised and the Company
saw increased demand for going-out product. Furthermore, ASOS delivered
adjusted EBIT of £26.2m, representing an adjusted EBIT margin of 1.3%, which
was a 460bps decline year-on-year and a 210bps decline after excluding the
COVID-19 related benefits from the prior year comparative.
Gross Margin reduced by 190bps in the first half of the year, driven by
increased rates of clearance to shift slow-moving and late arriving
Spring/Summer stock that was left over at the end of the prior season, along
with elevated freight costs as a result of supply chain constraints. This was,
however, an improvement on P1 gross margin performance (-400bps versus last
year) with the improvement in P2 driven by pricing benefits as low to
mid-single digit percentage price increases across ASOS and partner brands
took effect to mitigate cost inflation; along with sourcing benefits driving
an improvement in buying margins.
ASOS has faced significant inflationary pressures as the industry wrestles
with the increased cost of warehouse labour, freight and delivery costs. The
Company has looked to offset these across the year through continued cost
efficiencies and scale leverage and is pleased to have delivered c.£50m in
operational efficiencies in the first half to largely offset both forecast and
shock cost escalations. Despite these short-term cost pressures, ASOS has
continued to invest to capture the significant long-term opportunities by
increasing its marketing investment to 6.0% as a percentage of sales, up from
5.5% in the comparator period.
The net debt position of £62.6m reflects ASOS' typical working capital
outflow in H1, however this was amplified by an accelerated stock build for
'22 Spring / Summer, to accommodate longer lead times and mitigate supply
chain constraints, as well as the delayed intake of '21 Autumn / Winter stock
which is held in storage for '22 Autumn / Winter. Capital expenditure was
£86.5m in support of the supply chain and technology investments outlined at
the CMD as part of ASOS' medium-term strategy. This includes capital
expenditure in support of the automation programmes at Lichfield and Atlanta,
both expected to complete by the end of FY23, along with technology
investments into the customer experience and data capabilities.
Performance by Market
UK
After an exceptionally successful FY20 and FY21 in the UK, the first half
presented a period of tough comparatives. Notwithstanding this, total sales
grew a pleasing 8% to £895.5m, despite cycling a period of lockdown
restrictions which caused the closure of hospitality venues and physical
retail stores last year, particularly in P2. The expected reduction in stock
availability and newness, driven by supply chain constraints, weighed on
performance. Additionally, Omicron-related uncertainty drove weakness around
big sale events in January which further impacted growth. Demand for going-out
wear continued its recovery despite Omicron uncertainty over the Christmas
period, and has been further supported by the removal of all COVID-19
restrictions in February.
Despite these factors, ASOS added a further 1m new customers year-on-year,
with 0.3m new customers added since FY21. Furthermore, ASOS delivered growth
in orders, visits, and average order frequency as well as improvements in
conversion. The number of Premier subscribers grew by 23% supported by a
global Premier Party in October, and a Premier Day in the UK in February.
EU
Europe delivered revenue growth of 1% CCY to £577.4m, as the region was
particularly impacted by supply chain constraints which in turn impacted on
stock availability, along with continued COVID-19 restrictions throughout much
of the period as Delta and Omicron waves hit the region. Germany performed
well in the first half of the year, driven by increased demand for going-out
wear, however this was offset by a weaker trading period in France where the
return of customers to the High Street was more pronounced. Pleasingly,
Premier subscribers grew by 13% with subscriptions in Germany (+41%) and
Ireland (+91%) reflecting substantial growth, with Ireland's growth supported
in part by the Premier Day in February.
While Average Basket Value (ABV) stepped back and visits remained flat, orders
and average order frequency grew, and conversion improved. Active customers
grew by 6% year-on-year, however remained broadly unchanged since FY21.
US
The US delivered revenue growth of 11% CCY to £252.7m. This was particularly
pleasing against a backdrop of supply chain constraints and port congestion
which impacted ASOS' ability to effectively stock its fulfilment centre in
Atlanta, and resulted in low stock availability in high demand categories.
Despite these challenges, a strong promotion programme and underlying demand
generated the highest ever peak sales month in the US in November.
Furthermore, February also saw strong customer engagement supported by
successful Superbowl, Single's Day and Presidents' Day events. ASOS expanded
its Wholesale business in the US further, as the existing strategic
partnership with Nordstrom included products from ASOS Design online and in
select Nordstrom stores, with wholesale sales supportive of overall growth in
the US during H1.
Active customers grew by 6% year-on-year to 3.5m customers, and remained
broadly flat versus year-end, with a 58% growth in Premier subscribers. Total
visits stepped back year-on-year, however conversion, constant currency ABV
(CCY ABV) and average order frequency increased reflecting a more intentional
shopping visit. Whilst it is still early days, these trends show that
customers are engaging with more parts of the ASOS offer, including Premier,
and additional categories such as Face + Body and Sportswear.
Rest of World (RoW)
RoW total sales declined by 10% CCY versus last year to £278.5m, as low stock
availability impacted all markets and delivery lead times remained a
constraint, particularly to Australia and Israel. In addition to this, demand
in Australia was weaker as the country began to exit lockdown from September
and customers returned to the High Street. Consequently, both orders and
visits declined and ABV stepped back driven by higher markdown.
RoW active customers were flat, but Premier subscribers grew by 45%
year-on-year, supported by the resumption of the Premier offer in Australia.
Growth in the customer base was also constrained by the extended delivery
proposition and lower levels of stock availability impacting consumer choice
and newness.
As announced in the RNS on 2 March 2022, sales in Russia have been suspended
following the invasion of Ukraine. In FY21 Russia represented c.4% of Group
revenue and contributed approximately £20m to Group profit.
Strategic Performance Update
ASOS' strategy, as outlined at the CMD, is focused on fashion-loving
20-somethings, ensuring it offers relevant product, at relevant price points,
with an onsite experience and delivery methods that are tailored to their
needs. With a model combining exclusive own-brand product and a platform for
partner brands, ASOS is well-positioned to pursue the sizeable opportunity,
represented by a Total Addressable Market which the Company believes may be in
the region of £430bn in the UK, US, Europe, and core RoW territories by 2030.
ASOS' strategy focuses on three key areas in the medium term:
1. Leveraging its platform and capabilities through further enhancements
to the customer experience including the next stage of personalisation,
tailored category experiences, and the amplification of ASOS' Premier offer;
along with expansion of the ASOS platform with the launch of its Partner
Fulfilment programme, targeting c.5% of GMV; underpinned by the next phase of
ASOS' Operational Excellence programme, focused on increasing operational
efficiencies as it implements a Lean programme across the business.
2. Amplifying its winning offer by transforming its loved ASOS brands into
truly iconic brands, whilst improving speed to market and leveraging the
strength of its design, buying and merchandising teams to incubate and create
new brands, with the objective of adding at least £1bn to annual own-brand
sales; along with the expansion of Face + Body and Sportswear which are both
strategic categories for future growth.
3. Driving international expansion by truly localising the offer and
investing in marketing to support an acceleration in international growth
rates, which includes doubling the size of the combined US and Europe
business.
In the first half, ASOS has made good progress in support of these objectives,
particularly in platform and capability development which will serve to
support the international expansion in the medium term. Furthermore, ASOS has
accelerated its organisational re-design to improve the pace and delivery of
the Commercial function whilst elevating Data and Digital Product. Each of
these areas of progress against the strategy in H1 are expanded on as follows:
1. Leveraging ASOS' Platform and Capabilities
ASOS successfully launched its Partner Fulfils pilot with adidas and Reebok in
the UK in November. The initial roll out focused on offering additional
availability of the existing ASOS range where product had sold out in ASOS'
own fulfilment centres. By the end of February, Partner Fulfils accounted for
c.8% of adidas and c.7% of Reebok gross sales in the UK on ASOS.com. This has
since been expanded to include additional styles that are not currently
stocked in ASOS' fulfilment centres, adding width to ASOS' existing range and
providing increased choice to customers. This is expected to expand to c.500
new styles in the UK by the end of the financial year. ASOS is also on track
to launch Partner Fulfils in select countries within Europe by the end of FY22
in partnership with adidas and Reebok. By the end of FY22, ASOS also expects
to have onboarded additional brands to its Partner Fulfils programme.
ASOS has made good progress on improving its customer experience through the
ongoing deployment of data science to personalise the experience. ASOS has
continued to iterate and test the in-house personalised search results
algorithm; as well as adding personalised search results on the app. ASOS has
completed its Data Strategy in the first half and is currently mobilising the
next phase of the data evolution and investments. This involves developing a
larger data product team, improving data governance to drive more value,
enhancing the data architecture for future scalability and agility, and
growing the Company's data science capability.
At the CMD in November, ASOS reiterated the importance of its Premier offer in
driving increased customer loyalty and improved customer economics, with
Premier customers in the UK shopping five times as frequently as non-Premier
customers. To deliver improved Premier participation in non-UK markets, ASOS
undertook a thorough review and optimised pricing in key markets to better
tailor the offer locally. The Company also launched a Global Premier Party in
October, along with a Premier Day in February for the UK and Ireland. These
initiatives, combined with strong underlying growth, have driven 24% growth in
Premier subscribers across the Group, led by 58% year-on-year growth in
Premier subscribers in the US, with RoW +45%, UK +23% and Europe +13%.
2. Amplifying ASOS' Winning Offer
ASOS has completed the reorganisation of its Commercial function in support of
its "create, curate, convert" strategy outlined at the CMD through the
creation of 12 new business units centred around brands, geographies and
emerging channels to create a more customer-centric organisational structure
and increase autonomy and pace of decision making.
Topshop brands continued their growth trend delivering growth of 193%
year-on-year as it grew its share of ASOS sales by 390bps over the last year.
Growth rates remain strong across the UK, US and Germany, with all maintaining
triple digit growth rates when compared to Topshop brands sales on the ASOS
platform last year. Topshop visits growth remained strong in the run up to the
anniversary of the acquisition across all key markets, and particularly in the
UK. Topshop customers shopped with higher frequency on average and were more
likely to be Premier customers and buy Face + Body products. This was also
true among Topman customers, who had a higher frequency and were more likely
to place more than 10 orders a year. Both Topshop and Topman customers were
highly valuable with a higher average customer value across key markets than
ASOS' group average.
3. Driving International Expansion
ASOS is well-positioned to accelerate international growth, with strong
foundations in place having built a winning customer offer combining exclusive
ASOS fashion brands with a curated edit of nearly 900 partner brands,
supported by investments in infrastructure and technology, enabling ASOS to
ensure an attractive user experience combined with next-day-delivery that is
offered to more than 85% of our customers globally. ASOS' customer proposition
is particularly strong in the UK, and the focus is now on replicating this in
the US and Europe through the localisation of both operations and customer
experience, along with the growth of a relevant assortment and an increase in
marketing investment in international territories to drive enhanced awareness.
The enhancement of local operations has progressed well with Trade Heads
appointed for US, France and Germany and Southern Europe. In the second half
of the year ASOS will focus on localising the assortment, with a particular
focus on the US where ASOS Edition, ASOS Luxe and plus sizes resonate well.
This is further supported by an experiential presence that showcases our
product to US consumers, which ASOS has explored through its partnership with
US-based retailer Nordstrom.
In November, ASOS debuted its first drop with Nordstrom, with an edit of ASOS
Design, ASOS Edition and ASOS Luxe ranges available in two physical Nordstrom
stores - Bellevue and Century City - and on Nordstrom.com, with ASOS Curve
exclusively available online. In February, this was extended further to two
retail concepts at The Grove in Los Angeles - Nordstrom I ASOS Glass Box and
Nordstrom I ASOS Pop-Up at The Grove featuring 120 options across Womenswear
and Menswear. Additionally, customers can also now collect their ASOS.com
orders at the Topshop by Nordstrom store at The Grove in Los Angeles, as well
as Nordstrom Bellevue and Nordstrom Century City. An expanded assortment of
ASOS product is now also available for customers to shop on Nordstrom.com. In
H2, there will be a further ASOS I Nordstrom drop in 10 stores and on
Nordstrom.com, and Topshop and Topman will launch in Canada in six stores and
on Nordstrom.ca.
This year, ASOS has embarked on a broad reach marketing campaign with the
first phase rolled out on a "test and learn" basis targeting 18 to 34-year-old
females with the aim of building up awareness and consideration. This was
rolled out across multiple platforms including TikTok, YouTube, Snapchat, Hulu
and Roku for a period of 90 days during peak across core test areas within the
UK, US and France. The initial test received both positive feedback and
constructive criticism which have been incorporated as learnings and will be
iterated on for the next round of testing. The scale-up of the broad reach
marketing campaign is currently expected to take place towards the back end of
FY22.
Organisational Realignment in Support of the Strategy:
In support of its strategy, ASOS has expanded its Executive structure to help
better align teams for the delivery of its strategy. These changes in
organisational design are key to driving operational effectiveness across the
business, improving change management, and organising the Company around key
business divisions to deliver new growth opportunities at pace. At its core,
the strategy is focused on developing people and ensuring ASOS has the talent
and capability to execute its plans, enabling it to execute more consistently
at scale in tandem with an organisational design that unlocks potential and
sets ASOS up for its next phase of growth. This programme is expected to last
for at least the next 12 months, with costs expected to be £10m-£15m in H2
FY22.
Following the strategy refresh, ASOS has created a Strategy Board to oversee
the implementation of the strategy to drive the business forward, consisting
of the Chief Operating Officer & Chief Financial Officer, Chief Commercial
Officer, Chief Growth Officer and Chief Technology Officer. The Strategy Board
will be supported by the expanded Executive Team, which includes:
o Two newly created roles leading the elevated focus on product and data - a
Chief Product Officer and Chief Data Officer
o The roles of Group Communications Director, Group Supply Chain Director,
and General Counsel & Company Secretary have been elevated to the
Executive Team
o The remaining roles on the Executive Team are the Chief People Officer and
Interim CFO
Following the successful strategy refresh, Patrik Silén, Chief Strategy
Officer, has left ASOS. In addition, Jo Butler, Chief People Officer, and
Robert Birge, Chief Growth Officer, have also left the business.
Fashion With Integrity FY21 Results
· ASOS today published its first annual update as part of its FWI 2030
Programme, reporting progress in the period ending August 2021.
· The Company has shown progress across all four goals underpinning
its FWI 2030 Programme
· The full report is available here
(https://www.asosplc.com/fashion-with-integrity/) .
· Highlights include:
o Reduction in Scope 1 and 2 emissions / order of 59%
o 42% reduction in transport emissions / £ profit
o 100% of all Tier 1 to 3 ASOS own-brand suppliers mapped
o Launch of a new package of policies to provide crucial support to
colleagues of all genders and circumstances going through health-related life
events
Outlook
Since ASOS provided guidance in October, the external environment has become
more challenging. The business, however, has performed well, delivering
results in line with guidance and successfully absorbing significant
incremental cost pressures, predominantly from wage increases and freight
inflation. There is greater risk than normal as the full impact of recent
inflationary pressures and the potential impact on the discretionary spend on
our customers is yet to be felt. ASOS has acted decisively to manage the
factors within its control and the business enters the second half of the year
with a much-improved stock profile, and has worked hard to mitigate the direct
impact of inflation by locking in the majority of the cost base for the
remainder of the financial year.
Despite the external challenges, sales growth is expected to accelerate in the
second half due to: the improved stock position; the easing of the strong
comparative growth rates that ASOS hurdled in the first half of the year,
particularly in the UK; the return of event and holiday-led demand; increased
marketing investment to accelerate international sales; and an improved
delivery proposition as supply constraints ease. All of this is underpinned by
the strength of the ASOS brand and the breadth of our offer. While there
remains a proportion of the cost base that may be susceptible to further
inflation, second half profitability will be supported by low to mid-single
digit percentage price increases across both ASOS and partner brands which
were implemented in H1.
Save for the removal of Russia's contribution to H2 following the decision to
suspend sales, as announced on 2 March, we are maintaining guidance for the
full year. The exclusion of Russia is expected to reduce full year revenue
growth by approximately 2%, adjusted PBT by £14 million and a working capital
outflow associated with a rebalancing of stock. However, it is clear that the
outlook has become less certain, and much will depend on how broader consumer
discretionary spend evolves over the coming months. This uncertainty
introduces a greater degree of risk to our performance than normal.
Notwithstanding the near-term uncertainty, ASOS looks to the future with
confidence, founded on significantly improved operational grip and
increasingly strong foundations which will accelerate long-term growth as
execution continues at pace on the delivery of the strategy set out at the CMD
in November 2021.
Mathew Dunn Patrick Kennedy
Chief Operating Officer & Chief Financial Officer Senior Independent Director & Chair of the Audit Committee
Financial review
Overview
Six months to 28 February 2022
UK EU US RoW(1) Total
£m £m £m £m £m
Retail sales(2) 867.2 564.1 226.0 270.1 1,927.4
Income from other services(3) 28.3 13.3 26.7 8.4 76.7
Total revenue 895.5 577.4 252.7 278.5 2,004.1
Cost of sales (1,140.9)
Gross profit 863.2
Distribution expenses (255.6)
Administrative expenses (612.0)
Operating loss (4.4)
Net finance expense (11.4)
Loss before tax (15.8)
Adjusted Performance Measures(4)
Operating loss (4.4)
Adjusting items(5) 30.6
Adjusted operating profit 26.2
Net finance expense (11.4)
Adjusted profit before tax 14.8
1 Rest of World
2 Retail sales are internet sales recorded net of an appropriate deduction for
actual and expected returns, relevant vouchers and sales taxes
3 Income from other services comprises delivery receipts payments, wholesale
sales and marketing services
4 The adjusted performance measures used by ASOS are defined and explained on
page 33
5 Adjusting items for the six months to 28 February 2022 are shown on page 13.
Further detail on these items is on page 33
Six months to 28 February 2022 Six months to 28 February 2021 Change
Active customers(1) (m) 26.7 24.9 7%
Average basket value(2) £38.47 £41.09 (6%)
Average order frequency(3) 3.70 3.45 7%
Total shipped orders (m) 50.1 46.7 7%
Total visits(4) (m) 1,587.2 1,581.4 0%
Conversion(5) 3.2% 3.0% 20bps
(1)Defined as having shopped in the last 12 months as at 28 February 2022,
(2)Average basket value is defined as net retail sales divided by shipped
orders. This was changed at the end of FY21 from the previous definition,
which calculated the metric based on gross sales (3)Calculated as last 12
months' total shipped orders divided by active customers, (4)Restated visits,
previously reported number 1,585.1, (5)Calculated as total orders divided by
total visits
Total sales grew 4% constant currency (CCY), in line with guidance for H1,
against a backdrop of expected supply chain constraints, which impacted
product availability and newness across all markets, along with demand and
returns rate volatility related to the emergence of the Omicron variant.
Overall growth was largely driven by performance in the UK and US markets,
which grew 8% and 11% CCY respectively, supported by strong peak performance,
successful customer engagement through key trading events, the strengthening
of ASOS' Premier offer, and the continued strength of the Topshop brands as
the Company marked the one year anniversary of acquisition of these iconic
brands. EU growth was 1% CCY, as demand was particularly impacted by
uncertainty in the market following an increase in COVID-19 cases and
associated restrictions in the period. RoW was down 10% CCY as ASOS' delivery
proposition continued to be impacted by the reduction in flights servicing key
territories in the region.
Active customers grew in the first half by 0.3m to reach 26.7m, up 7%
year-on-year and 1% since year-end, with Premier customers growing by 24%
year-on-year. H1 last year saw strong acquisition and reactivation of
customers who were driven online by the closure of physical retail stores,
conditions which have not been as widespread or stringent in the current year.
This has led to a rebalancing of demand which, along with lower levels of
stock availability, has impacted customer acquisition in H1. Taken together,
these factors have contributed to slower growth in active customers, a trend
expected to improve in H2 as comparatives ease and stock availability returns
to normal levels. Focusing on Premier customers, the traction seen from the
enhanced offering in key markets has been pleasing, with growth of 23% in the
UK and 58% in the US versus last year, and 10% and 17% respectively versus
year-end.
Reported loss before tax and adjusted profit before tax reduced by 115% and
87% to (£15.8m) and £14.8m respectively. Adjusting items for the half
totalled £30.6m comprised of: (i) £7.9m costs incurred in relation to
accelerating the ASOS strategy, (ii) £5.5m relating to ASOS' transition to a
Main Market listing, (iii) £18.3m for a one-off, non-cash impairment charge
relating to the right-of-use asset and associated fixtures and fittings at
ASOS' Leavesden office because of the decision to vacate and sublet unused
space to third parties, (iv) (£6.4m) relating to the release of a provision
for employee and other costs relating to the Topshop acquisition, (v) £5.3m
relating to the amortisation of acquired intangible assets. Further detail on
each of these items can be found on page 33.
The reduction in profitability year-on-year reflects the unwind of the
COVID-19 tailwind of £48.5m referenced at H1 last year as the product mix and
returns rates have normalised. Additional factors include a reduction in gross
margin of 190bps, due to elevated freight and duty costs and higher markdown
activity to clear slow-moving '21 Spring / Summer stock; and an increase in
operating costs, reflecting planned increases in marketing investment and
inflationary cost pressures, particularly in warehouse labour. These elevated
costs have been largely offset by strong cost efficiency initiatives across
gross profit, supply chain, marketing, and other parts of the fixed cost base.
ABV was down year-on-year, driven by higher markdown and promotion activity
related to the clearance of slow-moving '21 Spring / Summer stock, and the
higher year-on-year returns rate.
UK performance
UK KPIs Six months to 28 February 2022
Total sales +8%
Visits +8%
Shipped orders +13%
Conversion +20bps
ABV -4%
Active customers 8.8m (+13%)
ASOS saw strong performance in the UK during the first half, as sales, visits,
and orders continued to grow despite the exceptional nature of the comparator
period, where physical retail stores and hospitality venues were closed due to
lockdowns. The peak trading months of November and December saw customers
engage well with ASOS' offer, whilst Face + Body and Sportswear continued to
perform well. Since acquisition the Topshop brands have been strong performers
in the UK, sustaining the triple digit sales growth seen in H2 FY21 throughout
H1 FY22.
Active customers grew to 8.8m, +13% versus last year and +4% since year-end,
with Premier customers growing to just under 2m, +23% versus last year and
+10% since year-end, reflecting the ongoing resonance of the offer and the
success of the Premier Days held in October and February.
Visits growth was 8%, while conversion increased by 20bps. ABV stepped back 4%
as the level of markdown and promotion increased, driven by the clearance of
slow-moving '21 Spring / Summer stock and the investment made over peak
trading to capture the demand in the market.
EU performance
EU KPIs Six months to 28 February 2022
Total sales +1% CCY
Visits Flat
Shipped orders +5%
Conversion +10bps
ABV -7%
ABV (CCY)(1) -3%
Active customers 10.5m (+6%)
(1)ABV (CCY) is calculated as constant currency retail sales / shipped orders
EU sales growth was +1% CCY, reflecting the impact of the fourth COVID-19 wave
on demand and returns rates.
Within the EU, Germany grew mid-single digits as visits remained strong and
customers engaged well with promotions. The period also ended positively
following the removal of restrictions. In contrast, the French market was more
challenging as customers returned to the reopened High Street leading to lower
visits and weaker sales. This was more pronounced in P1, where sales declined
year-on-year, however the decline in sales slowed in P2 as a more localised
approach to promotion during the Soldes period drove improved performance.
Active customers were up 6% versus last year, as the Company cycled a strong
period of growth in the comparative period. However, there was evidence to
suggest that changes made to the Premier proposition across key EU territories
proved compelling for customers, with subscriptions increasing year-on-year in
Germany (+41%) and Ireland (+91%) in particular. Growth of 11% in Sportswear
was also pleasing, and, along with Premier, highlights that customers are
becoming more engaged with the full ASOS offer. Growth in the Topshop brands
remained strong in Germany, more than doubling versus the equivalent period
last year.
ABV stepped back 3% CCY (reported -7%) on the year which, as with the UK,
reflected higher markdown and promotional activity. Visits were flat, but
shipped orders grew at 5% as conversion improved year-on-year.
US performance
US KPIs Six months to 28 February 2022
Total sales +11% CCY
Visits -7%
Shipped orders Flat
Conversion +20bps
ABV Flat
ABV (CCY) +2%
Active customers 3.5m (+6%)
(1)ABV (CCY) is calculated as constant currency retail sales / shipped orders
US sales grew by 11% CCY. From a retail sales perspective, performance was
supported by strong promotion mechanics and underlying demand and was
particularly pleasing given the port congestion and supply chain disruption
which inhibited ASOS' ability to fully service the available demand. In
addition to this, February saw strong customer engagement, driven by
successful promotions around the Superbowl, Single's Day, and Presidents' Day,
as well as stronger visits and conversion. In addition, ASOS has continued to
expand its wholesale partnership with Nordstrom, which now includes products
from ASOS Design sold on Nordstrom.com in addition to Topshop and Topman.
In the year since the acquisition of the Topshop brands, customers in the US
have responded positively to the increased range on offer, reflecting the
resonance of the brand in market. Total sales have grown triple digit versus
the equivalent period last year, with customer metrics reinforcing the appeal
the brands have for ASOS' core customer.
Active customers were up 6% versus last year and broadly flat versus year-end,
whilst the enhanced Premier proposition introduced at the start of the
financial year drove a 58% increase in Premier customer numbers versus last
half year, and a 17% increase since the start of the current year. Whilst it
is still early days, trends show that more US customers are engaging with more
parts of the ASOS offer, including Premier and additional categories such as
Face + Body and Sportswear. Whilst this drives benefits in customer
engagement, with frequency up 2% versus last year, the growth of Premier has
also driven growth in delivery income.
RoW performance
RoW KPIs Six months to 28 February 2022
Total sales -10% CCY
Visits -6%
Shipped orders -8%
Conversion -10bps
ABV -6%
ABV (CCY) -2%
Active customers 3.9m (Flat)
(1)ABV (CCY) is calculated as constant currency retail sales / shipped orders
RoW sales were back 10% CCY versus last year, as the delivery proposition to
key RoW markets remained relatively uncompetitive. Visits have been weak
across the period, particularly in Australia as the country exited lockdown in
October and customers returned to the High Street, whilst performance was also
constrained by low product availability across all RoW markets. Consequently,
shipped orders fell at a faster rate than visits, and ABV was suppressed by
higher markdown.
RoW active customers have remained flat versus last half year and year-end,
with new customer growth and reactivations slowing down. Growth in the
customer base was also constrained by the extended delivery proposition and
lower availability.
As announced in the RNS on 2 March 2022, sales in Russia have been suspended
following the invasion of Ukraine. In FY21 Russia represented c.4% of Group
revenue and contributed approximately £20m to Group profit and for FY22, the
suspension of sales is expected to reduce Group revenue by 2% and Group profit
by £14m, with the impact on profit reflecting that ASOS' profits are
predominantly earned in H2 each year.
Gross margin
Gross margin reduced by 190bps in the period driven by heightened clearance
activity relating to slow-moving '21 Spring / Summer stock and elevated
freight costs. This was an improvement from P1, which saw gross margin step
back 400bps versus last year, as initiatives to improve buying margin were
actioned, and low to mid-single digit price increases were implemented.
Operating expenses
£m Six months to 28 February 2022 % of sales Six months to 28 February 2021 % of sales Change
Distribution costs (255.6) 12.8% (247.9) 12.5% 30bps
Warehousing (207.2) 10.3% (171.9) 8.7% 160bps
Marketing (119.7) 6.0% (108.9) 5.5% 50bps
Other operating costs (186.1) 9.3% (184.7) 9.3% -
Depreciation and amortisation (68.4) 3.4% (60.4) 3.1% 30bps
Adjusting items(1) (30.6) 1.5% (6.5) 0.4% 110bps
Total operating costs (867.6) 43.3% (780.3) 39.5% 380bps
1 Further detail on adjusting items can be found on page 13 and page 33.
Operating expenses increased 11% to £867.6m and increased by 380bps as a
percentage of sales, reflecting inflationary pressure, growth investments, and
the one-off costs mentioned above.
Distribution costs have increased by 30bps year-on-year due to the continued
normalisation of the returns rate, with the impact partly offset by successful
contract negotiations with carriers in key markets and carrier mix, as we were
able to re-allocate volume to less expensive suppliers.
Warehousing costs have increased as expected due to high rates of labour rate
inflation, which ASOS has met to maintain recruitment levels. This is expected
to be a structural change within the market. Warehouse costs have also been
impacted by the launch of Lichfield as a manual facility which has, as
expected, had a further drag on profitability. This is because units
previously despatched from Barnsley, which is highly automated, have been
fulfilled from Lichfield instead at a lower efficiency and consequently a
higher cost per unit. This is a short-term cost drag, expected to reverse once
automation is completed in the second half of FY23. Across the more
established sites, we continue to drive improvements in efficiency -
particularly in Eurohub - whilst the closure of the returns site at Swiebodzin
and reallocation of volume to the other returns sites in Europe, has improved
efficiency and reduced fixed costs within the EU returns network. The Lean
programme has also supported supply chain in identifying further areas for
efficiency, supporting operational excellence initiatives.
Marketing costs increased by 50bps as a percentage of sales as expected, as
investment in broad reach marketing began. The first phase utilised the test
and learn approach and spend was increased across the ASOS social platforms to
drive engagement.
Other operating costs, excluding adjusting items, are flat year-on-year due to
increased leverage of the fixed cost base of the business, as well as benefits
derived from operational excellence initiatives across procurement and
technology.
Depreciation and amortisation costs as a percentage of sales are up 30bps
year-on-year, excluding the amortisation on acquired intangibles, driven by
depreciation relating to the Truly Global Retail system, which went live in
March 2021, and Lichfield, which went live in August 2021.
Interest
Net interest costs were £11.4m in the period, an increase of £8.1m
year-on-year mainly driven by interest costs incurred on the convertible bond
issued in April 2021.
Taxation
The reported effective tax rate is 14.6% based on the reported loss before tax
of £15.8m. The H1 reported tax rate is different from the full year forecast
rate of 22.0% due to a greater portion of full year profits being earned in H2
in the current year, meaning the impact of the adjustments have a larger
impact on the effective tax rate in H1 FY22 than they did in the prior years.
The reported tax rate is below the prior year comparative of 23.1%.
Going forward, ASOS expects the effective tax rate to continue to be higher
than the prevailing rate of UK corporation tax due to permanently disallowable
items and the impact of the new tax rate on deferred tax balances arising in
the year.
Earnings per share
Both basic and diluted loss per share was 13.5p, falling by 117% versus last
year (H121: basic and diluted earnings per share of 82.1p and 81.9p). This was
driven by a reported loss before tax of £15.8m, down from profit before tax
of £106.4m last year. The potentially convertible shares related to both the
convertible bond and ASOS' employee share schemes have been excluded from the
calculation of diluted loss per share as they are anti-dilutive for the six
months ended 28 February 2022.
Cash flow
There was a £262.1m decrease in net cash (cash and cash equivalents less
borrowings) in the period, driven by a working capital outflow of £243.2m
reflecting ASOS' typical working capital cycle but more exaggerated than last
year due to the accelerated stock build for '22 Spring / Summer in response to
longer lead times. Capital expenditure of £86.5m is split across supply
chain, as the automation programmes continue in Lichfield and Atlanta, and
technology, as investments continue to be made into key parts of ASOS'
infrastructure.
Consolidated UNAUDITED Statement of Total Comprehensive Income
Interim Results for the six months to 28 February 2022
Six months to Six months to
28 February 2022 28 February 2021
(unaudited) (unaudited)
£m £m
Revenue 2,004.1 1,975.9
Cost of sales (1,140.9) (1,085.9)
Gross profit 863.2 890.0
Distribution expenses (255.6) (247.9)
Administrative expenses (612.0) (532.4)
Operating (loss)/profit (4.4) 109.7
Finance income 0.1 0.1
Finance expense (11.5) (3.4)
(Loss)/profit before tax (15.8) 106.4
Income tax credit/(expense) 2.3 (24.6)
(Loss)/profit for the period (13.5) 81.8
(Loss)/profit for the period attributable to owners of the parent company (13.5) 81.8
Alternative Performance Measures (note 12)
Operating (loss)/profit (4.4) 109.7
Adjusting items:
Strategic acceleration costs ('ASOS Reimagined') 7.9 -
Main market transition costs 5.5 -
Impairment of Leavesden assets 18.3 -
Employee and other liabilities relating to Topshop acquisition (6.4) -
Amortisation of acquired intangible assets 5.3 0.6
One-off acquisition and integration costs - 5.9
Adjusted EBIT 26.2 116.2
Net finance expenses (11.4) (3.3)
Adjusted profit before tax 14.8 112.9
( )
( )
( )
( )
( )
( )
( )
( )
( )
( )
( )
Consolidated UNAUDITED Statement of Total Comprehensive Income (continued)
Interim Results for the six months to 28 February 2022
( )
Six months to Six months to
28 February 2022 28 February 2021
(unaudited) (unaudited)
£m £m
(Loss)/profit for the period (13.5) 81.8
Net translation movements offset in reserves 0.1 (0.1)
Net fair value gains on derivative financial instruments 31.0 31.5
Income tax expense relating to these items (5.5) (6.0)
Other comprehensive income for the period(1) 25.6 25.4
Total comprehensive income for the period attributable to owners of the parent 12.1 107.2
company
Earnings per share for the period attributable to owners of the parent company
(note 5)
Basic (13.5p) 82.1p
Diluted (13.5p) 81.9p
(1 )All items of other comprehensive income will subsequently be reclassified
to profit or loss
Called up share capital Share premium Retained earnings(1) Employee Benefit Trust reserve (EBT) (2) Hedging reserve Equity portion of convertible bond Translation reserve Total equity
£m £m £m £m £m £m £m £m
At 1 September 2021 3.5 245.7 711.9 2.1 14.3 58.9 (2.4) 1,034.0
Loss for the period - - (13.5) - - - - (13.5)
Other comprehensive income for the period - - - - 25.5 - 0.1 25.6
Total comprehensive (loss)/income for the period - - (13.5) - 25.5 - 0.1 12.1
Share-based payments charge - - 1.9 - - - - 1.9
Tax relating to share option scheme - - (0.8) - - - - (0.8)
Balance as at 28 February 2022 3.5 245.7 699.5 2.1 39.8 58.9 (2.3) 1,047.2
Consolidated UNAUDITED Statement of Changes in EquitY
Interim Results for the six months to 28 February 2022
Called Share premium Retained earnings(1) Employee Benefit Trust reserve Hedging reserve Equity portion of convertible bond Translation reserve Total equity
up (EBT)(2)
share capital
£m £m £m £m £m £m £m £m
At 1 September 2020 3.5 245.7 577.0 2.0 (15.8) - (2.1) 810.3
Profit for the period - - 81.8 - - - - 81.8
Other comprehensive income/(loss) for the period - - - - 25.5 - (0.1) 25.4
Total comprehensive income/(loss) for the period - - 81.8 - 25.5 - (0.1) 107.2
Net cash received on exercise of shares from EBT(2) - - - 0.2 - - - 0.2
Share-based payments charge - - 5.0 - - - - 5.0
Tax relating to share option scheme - - 1.4 - - - - 1.4
Balance as at 28 February 2021 3.5 245.7 665.2 2.2 9.7 - (2.2) 924.1
(
)
(1)Retained earnings includes share-based payments reserves
(2)Employee Benefit Trust and Link Trust
Consolidated UNAUDITED Statement of Changes in EquitY (CONTINUED)
( )
Called Share premium Retained earnings(1) Employee Benefit Trust reserve Hedging reserve Equity portion of convertible bond Translation reserve Total equity
up (EBT)(2)
share capital
£m £m £m £m £m £m £m £m
At 1 September 2020 3.5 245.7 577.0 2.0 (15.8) - (2.1) 810.3
Profit for the year - - 128.4 - - - - 128.4
Other comprehensive loss for the year - - - - 30.1 - (0.3) 29.8
Total comprehensive income/(loss) for the year - - 128.4 - 30.1 - (0.3) 158.2
Issue of convertible bond - - - - - 58.9 - 58.9
Recognition of gross obligation to purchase own shares - - (2.8) - - - - (2.8)
Net cash received on exercise of shares from EBT(2) - - - 0.1 - - - 0.1
Share-based payments charge - - 9.4 - - - - 9.4
Tax relating to share option scheme - - (0.1) - - - - (0.1)
Balance as at 31 August 2021 3.5 245.7 711.9 2.1 14.3 58.9 (2.4) 1,034.0
(
)
(1)Retained earnings includes share-based payments reserves
(2)Employee Benefit Trust and Link Trust
Consolidated UNAUDITED Statement of Financial PositioN
Interim Results for the six months to 28 February 2022
At At At
28 February 2022 28 February 2021 31 August 2021 (audited)
(unaudited) (unaudited)
£m £m £m
Non-current assets
Goodwill(1) 35.2 23.4 33.1
Other intangible assets 629.1 613.6 619.1
Property, plant and equipment 679.4 628.6 659.2
Derivative financial assets 14.7 14.5 13.4
1,358.4 1,280.1 1,324.8
Current assets
Inventories(1) 986.4 694.6 807.1
Trade and other receivables 87.4 86.8 57.7
Derivative financial assets 40.8 27.9 23.5
Cash and cash equivalents 406.7 92.0 662.7
Current tax asset 8.7 - 8.7
1,530.0 901.3 1,559.7
Current liabilities
Trade and other payables (927.0) (823.3) (956.1)
Borrowings (1.4) - (3.8)
Lease liabilities (24.9) (20.0) (23.9)
Derivative financial liabilities (6.5) (24.1) (14.2)
Current tax liability - (9.0) -
(959.8) (876.4) (998.0)
Net current assets 570.2 24.9 561.7
Non-current liabilities
Lease liabilities (320.2) (309.6) (305.0)
Deferred tax liability (45.6) (22.0) (41.3)
Provisions (45.9) (38.0) (43.2)
Derivative financial liabilities (1.8) (11.3) (3.6)
Borrowings (467.9) - (459.4)
(881.4) (380.9) (852.5)
Net assets 1,047.2 924.1 1,034.0
Equity attributable to owners of the parent
Called up share capital 3.5 3.5 3.5
Share premium 245.7 245.7 245.7
Employee Benefit Trust reserve(2) 2.1 2.2 2.1
Hedging reserve 39.8 9.7 14.3
Translation reserve (2.3) (2.2) (2.4)
Equity portion of convertible bond 58.9 - 58.9
Retained earnings 699.5 665.2 711.9
Total equity 1,047.2 924.1 1,034.0
(1)During the period these balances have been adjusted as a result of a change
to the provisional acquisition date fair values during the remeasurement
period. Please see note 9 for further details
(2)Employee Benefit Trust and Link Trust
Consolidated UNAUDITED Statement of Cash Flows
Interim Results for the six months to 28 February 2022
Six months to Six months to
28 February 2022 28 February 2021
(unaudited) (unaudited)
£m £m
Operating (loss)/profit (4.4) 109.7
Adjusted for:
Depreciation of property, plant and equipment 30.0 31.0
Amortisation of other intangible assets 43.7 30.0
Impairment of assets 18.9 0.1
Increase in inventories (181.3) (159.4)
(Increase)/decrease in trade and other receivables (30.2) 0.7
(Decrease)/increase in trade and other payables (31.7) 25.1
Share based payments charge 1.5 4.2
Other non-cash items 0.3 (1.6)
Income tax refunded/(paid) 2.0 (15.1)
Net cash (outflow)/inflow from operating activities (151.2) 24.7
Investing activities
Payments to acquire intangible assets (53.4) (50.9)
Payments to acquire property, plant and equipment (33.1) (9.7)
Payments to acquire assets in a business combination - (266.0)
Finance income received 0.1 0.1
Net cash used in investing activities (86.4) (326.5)
Financing activities
Net cash inflow relating to EBT(1) - 0.2
Principal portion of lease liabilities (13.4) (11.1)
Finance expense paid (5.5) (2.8)
Net cash utilised in financing activities (18.9) (13.7)
Net decrease in cash and cash equivalents (256.5) (315.5)
Opening cash and cash equivalents 662.7 407.5
Net decrease in cash and cash equivalents (256.5) (315.5)
Effect of exchange rates on cash and cash equivalents 0.5 -
Closing cash and cash equivalents 406.7 92.0
( )
(1)Employee Benefit Trust and Link Trust
Consolidated UNAUDITED Statement of Cash Flows (Continued)
Interim Results for the six months to 28 February 2022
Six months to Six months to
28 February 2022 28 February 2021
(unaudited) (unaudited)
£m £m
Adjusted Performance Measures (note 12)
Net cash (outflow)/inflow from operating activities (151.2) 24.7
Adjusted for:
Payments to acquire intangible assets (53.4) (50.9)
Payments to acquire property, plant and equipment (33.1) (9.7)
Principal portion of lease liabilities (13.4) (11.1)
Finance expense paid (5.5) (2.8)
Free cash flow (256.6) (49.8)
Impact of adjusting items 7.8 -
Adjusted free cash flow (248.8) (49.8)
Notes to the financial information
Interim Results for the six months to 28 February 2022
1. Preparation of the consolidated financial information
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, the
Netherlands, Russia, Sweden, Denmark and Poland. The Company is a public
limited company which is listed on the London Stock Exchange 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 2022.
b) Basis of preparation
The interim financial statements for the six months to 28 February 2022 have
been prepared in accordance with the UK-adopted IAS 34, "Interim Financial
Reporting" and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority. The interim financial statements
transitioned to UK-adopted International Accounting Standards for financial
periods beginning after 1 January 2021. This change constitutes a change in
accounting framework. However, there is no impact on recognition, measurement
or disclosure in the period reported as a result of the change in framework.
The interim financial statements should be read in conjunction with the
Group's Annual Report and Accounts for the year to 31 August 2021, which was
prepared in accordance with IFRSs as issued and adopted by the IASB.
The interim financial statements have been reviewed, not audited, and do not
constitute statutory accounts within the meaning of section 434 of the
Companies Act 2006. The Annual Report and Accounts for the year to 31 August
2021 have been filed with the Registrar of Companies. The auditors' report on
those accounts was unqualified, did not include a reference to any matters to
which the auditors drew attention by way of emphasis without qualifying the
report and did not contain statements under section 498 of the Companies Act
2006.
The Group's business activities, together with the factors that are likely to
affect its future developments, performance and position, are set out on pages
5 to 11. The Financial Review on pages 12 to 17 describes the Group's
financial position and cash flows.
Going concern
The Directors have reviewed current performance and cash flow forecasts, and
are satisfied that the Group's forecasts and projections, taking account of
potential changes in trading performance, show that the Group will be able to
operate within the level of its available facilities for the foreseeable
future. The Directors have therefore continued to adopt the going concern
basis in preparing the Group's financial statements.
Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge, these condensed
interim financial statements have been prepared in accordance with UK-adopted
IAS 34, "Interim Financial Reporting" and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority and that the interim management report includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8, namely:
1. Preparation of the consolidated financial information (continued)
* An indication of important events that have occurred during the first six
months and their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the remaining six
months of the financial year; and
* Material related-party transactions in the first six months and any material
changes in the related-party transactions described in the last annual report.
Accounting policies
The interim financial statements have been prepared in accordance with the
accounting policies set out in the Group's Annual Report and Accounts for the
year to 31 August 2021.
Accounting estimates
During the period, in accordance with IAS 16, "Property, Plant and Equipment
and IAS 38, "Intangible Assets", management have reviewed the useful economic
life ("UEL") of all asset groups. Management have reviewed all asset
categories and, where appropriate, increased or decreased the UEL to align
with the expected life of the asset. This change includes reassessment of UELs
on the automation assets within ASOS' fulfilment centres, the systems which
support these assets as well as the systems directly connected with the Total
Global Retail programme ("TGR").
The impact of this reassessment, effective from 1 September 2021, is a
decrease in the amortisation and depreciation charge of £5.6m in the
six-month period ending 28 February 2022.
The updated useful lives are as follows:
· Right of use assets: depreciated over remaining lease term which is typically
between seven and twenty-five years
· Fixtures, fittings, plant and machinery: depreciated over five to fifteen
years or over the remaining lease term where applicable
· Computer equipment: depreciated over three to five years according to the
estimated life of the asset or over the remaining lease term where applicable
· Capitalised software development cost: amortised over the assets' expected
economic lives, normally between five and seven years, except for major
technical infrastructure projects which have an expected economic life of
between ten and fifteen years
Significant accounting judgements and key sources of estimation uncertainty
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets and liabilities, income and
expense. Actual results might differ from these estimates.
In preparing these condensed interim financial statements the significant
judgements made by management and the key sources of estimation uncertainty
were the same as those applied to the consolidated financial statements for
the year ended 31 August 2021 as outlined in the Group's Annual Report and
Accounts on page 99.
2. Principal risks and uncertainties
The Board have concluded, following a reassessment of emerging risks in
relation to the Russia/Ukraine conflict, that the principal risks and
uncertainties which could impact the Group over the remaining six months of
the financial year to 31 August 2022 are unchanged from those set out in the
Annual Report and Accounts for the year to 31 August 2021. The applicable
risks are summarised as follows:
· Operational risks, including:
- Transformation projects are delayed or fail to deliver;
- Supply chain disruption;
- Understanding local market context, globally;
- Sustainability and climate change;
- Failure to comply with legislation or regulation; and
- Ethical trade or sourcing issues in our supply chain
· Market risks, including:
- Geopolitical uncertainty including the Russia/Ukraine conflict;
- Shift in e-commerce market dynamics;
- Cyber threat and data security;
- Key third party supplier or service provider failure and
business continuity; and
- Foreign exchange movement
These are set out in detail on pages 36 to 43 of the Group's Annual Report and
Accounts for the year to 31 August 2021, a copy of which is available on the
Group's website, www.asosplc.com (www.asosplc.com) . Information on financial
risk management is also detailed on pages 111 to 114 of the Annual Report.
3. Segmental analysis
Per IFRS 8 the Chief Operating Decision Maker has been determined to be the
Executive Committee which receives information on the revenue and associated
metrics of the Group in key geographical territories. Management monitors and
makes decisions considering the entire Group. The Group has reviewed its
assessment of reportable segments under IFRS 8, "Operating Segments" and
concluded that the Group continues to have one reportable segment.
3. Segmental analysis (continued)
The following sets out the Group's revenue in the key geographic markets in
which customers are located:
Six months to 28 February 2022 (unaudited)
UK EU US RoW(1) Total
£m £m £m £m £m
Retail sales 867.2 564.1 226.0 270.1 1,927.4
Income from other services(2) 28.3 13.3 26.7 8.4 76.7
Total revenue 895.5 577.4 252.7 278.5 2,004.1
Cost of sales (1,140.9)
Gross profit 863.2
Distribution expenses (255.6)
Administrative expenses (612.0)
Operating loss (4.4)
Net finance expense (11.4)
Loss before tax (15.8)
1 Rest of World
2 Income from other services comprises delivery receipt payments, marketing
services, commission on partner-fulfilled sales and revenue from wholesale
sales.
Six months to 28 February 2021 (unaudited)
UK EU US RoW(1) Total
£m £m £m £m £m
Retail sales 800.4 580.1 225.7 313.7 1,919.9
Income from other services(2) 25.4 14.3 7.2 9.1 56.0
Total revenue 825.8 594.4 232.9 322.8 1,975.9
Cost of sales (1,085.9)
Gross profit 890.0
Distribution expenses (247.9)
Administrative expenses (532.4)
Operating profit 109.7
Net finance expense (3.3)
Profit before tax 106.4
1 Rest of World
2 Income from other services comprises delivery receipt payments and marketing
services.
Due to the nature of its activities, the Group is not reliant on any
individual major customers.
The total amount of non-current assets excluding goodwill and derivatives
located in the UK is £986.0m (31 August 2021: £994.1m), EU (Germany):
£188.3m (31 August 2021: £193.6m), US: £134.2m (31 August 2021: £90.6m)
and RoW: £nil (31 August 2021: £nil). The individual countries within the EU
and RoW do not meet the definition of material per IFRS 8 for a reportable
segment and therefore have been assessed as not material for separate
reporting in this disclosure.
4. Taxation
Income tax credit/(expense) is recognised on management's estimate of the
weighted average effective annual income tax rates for corporate and deferred
taxes expected for the full financial year excluding non-underlying costs,
prior year adjustments, share based payments and derivatives, which are
recognised on an actuals basis. The estimated average annual tax rate used for
the six months to 28 February 2022 is 22.0% compared to 23.1% for the six
months to 28 February 2021.
The reported effective tax rate is 14.6% based on the reported loss before tax
of £15.8m. The H1 reported tax rate is different from the full year forecast
rate due to a greater portion of full year profits being earned in H2 in the
current year, meaning the adjustments have a larger impact on the effective
tax rate in H1 FY22 than they did in the prior years. The reported tax rate is
below the prior year comparative of 23.1% due to the period reporting a loss
before tax.
Going forward, ASOS expects the effective tax rate to continue to be higher
than the prevailing rate of UK corporation tax due to permanently disallowable
items and the impact of the new tax rate on deferred tax balances arising in
the year
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 period. Own shares held by the Employee Benefit
Trust and Link 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.
Six months to Six months to
28 February 2022 28 February 2021 (unaudited)
(unaudited)
No. of shares No. of shares
Weighted average share capital
Weighted average shares in issue for basic earnings per share 99,675,829 99,574,955
Weighted average effect of dilutive options - 303,613
Weighted average shares in issue for diluted earnings per share 99,675,829 99,878,568
Earnings (£m)
Earnings attributable to owners of the parent (13.5) 81.8
Diluted earnings attributable to owners of the parent for diluted earnings per (13.5) 81.8
share
Basic earnings per share (13.5p) 82.1p
Diluted earnings per share (13.5p) 81.9p
The Group has issued a convertible bond which is potentially convertible into
6,277,464 shares. These are not included in the calculation of diluted
earnings per share because they are anti-dilutive for the six months ended 28
February 2022. The convertible bond could potentially dilute basic earnings
per share in the future.
5. Earnings per share (continued)
There are 81,186 options relating to various employee share schemes which have
not been included in the calculation of diluted earnings per share because
they are anti-dilutive for the six months ended 28 February 2022. These
options could potentially dilute basic earnings per share in the future.
6. Capital expenditure and commitments
During the period, the Group capitalised intangible assets of £53.5m (28
February 2021: £296.9m) and property, plant and equipment of £68.0m (28
February 2021: £44.4m) of which £32.9m relates to an increase in the Atlanta
right of use asset as a result of a reassessment of the probability of
exercising extension clauses. At the period end capital commitments
contracted, but not provided for by the Group, amounted to £166.4m (28
February 2021: £49.1m).
A one-off, non-cash, impairment charge of £18.3m relating to the right-of-use
assets and associated fixtures and fittings at part of the ASOS' Leavesden
office was recognised in the period. This is required under IAS 36 as a result
of the decision to vacate and sublet part of the building to third parties.
7. 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 ecommerce base, may concern the
Group's brand and trading name or its product designs. All such cases brought
against the Group are robustly defended and a liability is recorded only when
it is probable that the case will result in a future economic outflow which
can be reliably measured.
At 28 February 2022, the Group had contingent liabilities of £nil (31 August
2021: £6.4m). The £6.4m previously recognised was in relation to employee
and other liabilities recognised as part of the business combination which
have now expired and have been released in full.
8. Financial instruments
Six months to 28 February 2022 (unaudited) Six months to 28 February 2021 (unaudited) Year to
31 August 2021
(audited)
£m £m £m
Financial assets
Derivative assets used for hedging at fair value 55.5 42.4 36.9
Amortised cost(1) 71.8 72.1 49.2
Cash and cash equivalents 406.7 92.0 662.7
Financial liabilities
Derivative liabilities used for hedging at fair value (8.3) (35.4) (17.8)
Lease liabilities (345.1) (329.6) (328.9)
Amortised cost(2) (1,442.2) (861.3) (1,462.3)
( )
( )(1)Financial assets at amortised cost include trade and other receivables
but exclude prepayments
( 2)Financial liabilities at amortised cost include trade payables,
accruals, borrowings, provisions and other payables
8. Financial instruments (continued)
The Group operates internationally and is therefore exposed to foreign
currency transaction risk, primarily on sales denominated in US Dollars,
Euros, Australian Dollars and Russian Roubles. 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
and vanilla options to hedge future highly probable foreign currency cash
flows.
These forward foreign exchange contracts are classified above as derivative
financial assets and liabilities and are classified as Level 2 financial
instruments under IFRS 13, "Fair Value Measurement." This is consistent with
the prior period. There have been no transfers between fair value levels in
the period. They have been fair valued at 28 February 2022 with reference to
forward exchange rates that are quoted in an active market, with the resulting
value discounted back to present value. The approach to fair valuation can be
seen within the Group's Annual Report and Accounts for the year ended 31
August 2021. All forward foreign exchange contracts were assessed to be highly
effective during the period to 28 February 2022. All derivative financial
liabilities at 28 February 2022 mature within three years based on the related
contractual arrangements.
The Group has in place a £350.0m revolving credit facility (RCF) available
until July 2024. At 28 February 2022 the Group had drawn down £nil of the RCF
(31 August 2021: £nil).
9. Business combination
On 4 February 2021, the Group acquired the trade and assets of a number of
businesses from the administrators of Arcadia Group Limited. The businesses
were purchased out of administration for total consideration of £292.4m.
Purchase consideration Restated Adjustments to provisional figures As previously reported
£m £m
£m
Cash paid 264.8 - 264.8
Contingent consideration 27.6 - 27.6
Total purchase consideration 292.4 - 292.4
The fair value of assets and liabilities acquired was £258.3m. This includes
£219.4m in relation to the Topshop, Topman, Miss Selfridge and HIIT brands
and £38.9m of other net assets. The fair value of assets acquired was less
than the fair value of the consideration by £34.1m, which has been recognised
as goodwill. The goodwill is attributable to the workforce, the high
profitability of the acquired business and expected synergies. It will not be
deductible for tax purposes.
9. Business combination (continued)
The assets and liabilities recognised as a result of the acquisition at 4
February 2021 are as follows:
Fair value of net assets acquired Adjustment to provisional figures As previously reported
Restated (final) £m £m
£m
Intangible assets(1) 243.8 - 243.8
Inventories 25.5 (2.1) 27.6
Total assets acquired 269.3 (2.1) 271.4
Contingent liability (6.4) - (6.4)
Deferred tax liability (4.6) - (4.6)
Total liabilities acquired (11.0) - (11.0)
Net identifiable assets acquired at fair value 258.3 (2.1) 260.4
Goodwill arising on acquisition 34.1 2.1 32.0
Purchase consideration transferred 292.4 - 292.4
(1)Intangible assets include brands of £219.4m relating to Topshop, Topman,
Miss Selfridge and HIIT and reflects their fair value at the acquisition date.
They are estimated to have a useful economic life of between 10 and 30 years.
Also acquired were wholesale customer relationships with a fair value of
£24.4m which are estimated to have a useful economic life of 8 years.
Separately to the acquisition of the trade and assets outlined above, the
Group also agreed to assume a number of purchase orders that were placed with
suppliers by the Arcadia Group prior to the acquisition. Inventory amounts
have been recorded in line with the requirements of IAS 2 upon receipt, when
control transfers.
In accordance with IFRS 3, 'Business combinations' the acquisition accounting
has now been finalised.
a) Acquisition related costs
Acquisition-related costs of £2.0m were incurred and have been included in
administrative expenses in the statement of profit or loss and in operating
cash flows in the statement of cash flows for the year ended August 2021.
b) Contingent consideration
The contingent consideration arrangements primarily relate to amounts ASOS.com
will pay to the Arcadia administrators in relation to qualifying inventory
totalling £21.6m upon collection. Following the acquisition, in FY21 a £1.4m
reduction to inventory consideration was agreed in relation to inventory
sourced from Arcadia Sourcing Regions not in line with ASOS.com's sourcing
strategy, or where ethical concerns existed. As at 28 February 2022 the
consideration amounts have been settled in full.
c) Contingent liability
A contingent liability of £6.4m was recognised in relation to employee and
other liabilities. The Group's assessment of the fair value of these
liabilities represents the probability adjusted possible outcome. As at 28
February 2022 the risk has fully expired and the provision has been released.
10. Related parties
The Group's related party transactions are with the Employee Benefit Trust,
Link Trust, key management personnel and other related parties as disclosed in
the Group's Annual Report and Accounts for the year to 31 August 2021. There
have been no material changes to the Group's related party transactions during
the six months to 28 February 2022.
11. Post balance sheet events
On 2 March 2022 the Group announced its intention to cease trading with
Ukraine and Russia given the ongoing conflict, as the circumstances arose
after the reporting date the event has been concluded to be non-adjusting. The
exclusion of Russia is expected to reduce full year revenue growth by
approximately 2% and adjusted profit before tax by £14m.
12. Alternative performance measures (APMs)
ASOS 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 Definition How we use the measure
Retail sales Internet sales recorded net of an appropriate deduction for actual and A measure of the Group's trading performance focused on the sale of products
expected returns, relevant vouchers 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.
Adjusted EBIT Profit before tax, interest, and the adjusting items defined below. Adjusted A measure of the Group's underlying profitability for the period, as well as
EBIT margin is the Adjusted EBIT divided by total sales. the basis for ASOS' medium term targets as set out at the CMD on 10 November
2021.
Adjusted profit before tax Profit before tax and the adjusting items defined below. A measure of the Group's underlying profitability for the period and used by
management to monitor the performance and profitability of the business each
month.
Net cash/(debt) Cash and cash equivalents less any borrowings drawn down at period-end, but A measure of the Group's liquidity.
excluding outstanding lease liabilities.
Adjusted free cash flow Adjusted free cash flow is net cash generated from operating activities, A measure of the underlying cash generated by ASOS outside cash flows relating
adjusted for payments to acquire intangible and tangible assets, the payment to financing transactions, and excluding the impact of non-underlying
of the principal portion of lease liabilities, and finance expense paid, but transactions.
excluding the payment of adjusting items.
12. Alternative performance measures (APMs) (continued)
Adjusting items
To calculate the alternative performance measures listed above, adjustments
have been made for items of income or expenditure arising from activities
outside the ordinary course of business. These items are quantitatively or
qualitatively material, and incremental or unusual in nature, meaning they do
not reflect the business' usual cost base.
- 'ASOS Reimagined', a multi-year programme which will enable the
business to accelerate delivery of its strategy and medium term plan through
the resetting, restructuring, and reimagining of ASOS' operating model,
brands, relationships and platforms. This is expected to last for at least the
next 12 months, with costs expected to be £10m-£15m in H2 FY22.
- ASOS' transition to the Main Market of the London Stock
Exchange, which was completed on 22 February 2022.
- The release of a contingent liability relating to employee and
other costs, which was originally recognised as part of the Topshop
acquisition in February 2021.
- A one-off, non-cash, impairment charge relating to the
right-of-use assets and associated fixtures and fittings at part of the ASOS'
Leavesden office. This is required under IAS 36 as a result of the decision to
vacate and sublet part of the building to third parties.
- Amortisation of acquired intangible assets is also adjusted for
as the acquisition the amortisation relates to was outside business-as-usual
operations for ASOS. Across the industry this is included as an adjusting item
and therefore to aid comparability ASOS has adopted the same approach.
Independent review report to ASOS Plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed ASOS Plc's condensed consolidated interim financial
statements (the "interim financial statements") in the Interim results of ASOS
Plc for the 6 month period ended 28 February 2022 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
What we have reviewed
The interim financial statements comprise:
· the consolidated unaudited statement of financial position as at
28 February 2022;
· the consolidated unaudited statement of total comprehensive income
for the period then ended;
· the consolidated unaudited statement of cash flows for the period
then ended;
· the consolidated unaudited statement of changes in equity for the
period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim results of ASOS Plc
have been prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Interim results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial
statements in the Interim results 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 Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
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, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Interim results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
11 April 2022
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