10th Jul 2007 07:00
ASOS PLC10 July 2007 FOR RELEASE 7.00 AM 10 JULY 2007 ASOS plc ('ASOS or Group') A leading Internet based fashion retailer Final Results for the year ended 31 March 2007 RESULTS Key business highlights * ASOS.com revenues up 116% to 42.6m * Group profit before tax up 144% to £3.4m (2005/6: £1.4m) * Group profit before insurance proceeds, goodwill write offs and tax £3.1m * Group profit including insurance proceeds but before goodwill write offs and tax £3.6m * Cash at bank up 44% to £5.4m * Fully diluted EPS up 74% to 3.3p * ASOS.com registered users 1.3m as at 9 July 2007 * Revenues for the 13 weeks to 30 June 2007 85% ahead year on year For further information: ASOS plc Tel: 020 7756 1000 Nick Robertson, Chief Executive Jon Kamaluddin, Finance Director Cubitt Consulting Tel: 020 7367 5100 Brian Coleman Smith / Leanne Denman / James Verstringhe Seymour Pierce Tel: 020 7107 8000 Mark Percy / Nicola Marrin ASOS plc is an Internet Retail business, established in June 2000 and admittedto AIM in October 2001. ASOS.com is the UK's largest independent online fashionand beauty retailer. Aimed primarily at Internet savvy 18-34 year olds, ASOSoffers over 4500 fashion products across womenswear, menswear, footwear,accessories, jewellery and beauty. ASOS.com attracts over 2 million uniquevisitors a month and has 1.3 million registered users as at 9 July 2007.www.asos.com ASOS plc Final Results for the year ended 31 March 2007 CHAIRMAN'S STATEMENT I am delighted to report another set of record results for the group. Revenuescontinue their healthy progression, rising 116% to £42.6m, although thecomparative year was affected by the Buncefield fuel depot explosion in December2005. Profit before tax rose 144% to £3.4m. Dividend Due to the continued programme of investment in the business, the Board hasdecided that, as in previous years, no dividend will be payable. This policyremains under constant review. Board Changes In April 2006 we welcomed both Robert Bready to the Board as Retail Director andPeter Williams to the Board as Non Executive Director, and Chairman of both theAudit and Remuneration Committees. Colleagues We are extremely grateful for the energy and commitment of our colleagues andextend our sincere thanks to all of them for their hard work and dedication. Iam delighted that their efforts are being constantly recognised both internallyand externally. In the last 12 months alone the company has won: More Magazine 'Most Addictive Online Shopping Site'Company Magazine 'Best Online Shopping'AIM Awards 'Best Communication'Drapers Awards 'E-tailer of the Year' (Second year running)Retail Week 'Online Retailer of the Year'Getlippy Awards 'Best Online Shopping'Drapers Footwear Awards 'E-tailer of the Year'Business XL 'Growth Company of the Year'Business XL 'Company of the Year' Outlook Revenues for the first 13 weeks of the new financial year are 85% ahead of lastyear. With tougher comparables ahead and the all important Christmas tradingperiod yet to come, these figures should not be taken as an indication of theoutcome for the full year. We remain committed to building the current business and driving both profit andrevenues. Sustaining the current growth levels requires a programme of continuedinvestment in both personnel and infrastructure which will be reflected in ourcosts over the short to medium term. Lord AlliChairman9 July 2007 CHIEF EXECUTIVE'S STATEMENT The online marketplace According to the IMRG (Interactive Media in Retail Group) total online spend inthe UK is expected to grow by 40% in 2007 and a further 30% in 2008. Business Review The business continues to grow following significant investment in people,infrastructure and marketing. ASOS.com remains the second most visited onlineclothing store in the UK, behind Next.co.uk, attracting over two millionvisitors a month. Of these, 7% make a purchase, resulting in 140,000 orders amonth. The average basket has increased from £39.32 (including VAT) to £42.80.There are now over 4,500 lines available and on average our stock is turningjust under 6 times per year. As at the 9 July 2007, ASOS.com has 1.3m registered users. Through better buying and stock control, we have improved the gross margin onrevenues by 0.5 percentage points and are on course to increase this further inthe 07/08 financial year. Key Performance Indicators 06/07 05/06Retail margin (Excluding third party revenues) 44.3% 43.8%Returns % to sales 21.7% 21.4%Average Basket Value (Inc. VAT) £42.80 £39.32Average units per basket 2.5 2.4Average selling price per unit (Inc. VAT) £16.92 £16.54% ASOS.com sales from North America 1.3% 1.6%% ASOS.com sales from rest of world 9.2% 7.2% ASOS Product Offer Over the course of the year we invested heavily in our buying, merchandising,design and garment technology departments as part of our strategy to broaden theproduct offer and increase full price sell through. I am pleased to see thepositive effects of this coming through in both top line sales and achievedmargin. Further investment in personnel is planned across the business to support ourgrowth plans. The website Most back office functions were upgraded and strengthened during the year. InOctober 2006 we successfully implemented a new warehouse management system aswell as a new finance package. Further changes are planned to the website in the coming months as part of ourcommitment to continuous improvement and to showcase the increased productoffer. This includes better refining of product searches and improvednavigation. The category and product pages are also being updated. Logistics Twelve months into our partnership with Unipart Logistics Ltd, I am pleased toreport that we have made significant improvements to our service levels and ourcost per unit performance. The introduction of a new and improved warehousemanagement system, a new 6 day / 2 shift pattern and a re-configured warehousehave all contributed to a substantial reduction in average costs. It was calculated that our current facility in Hemel Hempstead would supportretail sales of £50m. Growth in excess of our internal forecasts, two and a halfyears ago, has meant that this level has been reached earlier than envisaged andadditional capacity is likely to be required this year. Together with Unipart wewill secure an additional site close to the existing facility. Our currentintention is to use the new site as overflow during the peak Christmas periodwith a view to potentially moving the entire operation in early 2008. Third party revenue Our third party revenues grew 79% in the year to £656,000. These revenuesinclude banner advertising and revenue from list sales and inserts and revenuederived from the ASOS magazine. We anticipate further growth in this area drivenby increased traffic to the website and the general shift by advertisers toonline advertising. Marketing and the ASOS Magazine In the second half of the year we diverted our advertising spend fromtraditional magazine advertising and into our own monthly ASOS magazine. Thefirst six issues of the magazine were 68 pages and it was sent out with 100,000orders each month. Since April 2007, the magazine has increased to 100 pages andsent to 400,000 customers each month. International International revenues grew 158% in the year to £4.5m accounting for 10.5% ofsales. We are currently exploring ways of exploiting this further in 2007/8prior to launching a potentially fully 'Internationalised' website within thenext few years. Entertainment MarketingThe Board decided during the year that Entertainment Marketing (UK) Ltd was non core and would be closed in order for management to focus all of its attention on the significant growth opportunities within ASOS.com. The closure was effective 31 March 2007. Current Trading and Prospects Revenues for the 13 weeks to 30 June 2007 are 85% ahead for the year. Thiscompares to the 65% increase for the similar period last year. With threequarters of the year to go, including the important Christmas period, andtougher comparables ahead it is too early to assess whether this performancewill continue for the full year. However, we continue to outperform the market as a whole and have in place anumber of initiatives to drive continued organic growth. Further investment,most notably in human resource, will be required to support these initiativesand deliver our own ambitious growth targets. We remain very confident about the prospects for ASOS and we look forward todelivering sustainable growth. Nick RobertsonChief Executive9 July 2007 FINANCE DIRECTOR'S REVIEW Revenues An analysis of Group revenues is shown below: £'000s 2006/7 2005/6 Increase/ (Decrease)Retail Sales 37,720 17,841 111%Delivery Receipts 4,238 1,509 181%Third Party Revenues 656 366 79%ASOS.com Sales 42,614 19,716 116%Entertainment Marketing* 488 601 (19%)Group Sales 43,102 20,317 112% * Entertainment Marketing was closed on 31 March 2007 During the prior year ASOS.com was closed for transactions for 5 weeks followingthe Buncefield Fuel Depot Explosion. We believe that approximately £4m of saleswere lost as a result and that a sales uplift of 80% more accurately reflectsthe performance of the business over the year. The presentation in the accounts of delivery receipts has been changed sincelast year and this income is now shown as revenue as opposed to netting it offagainst the related cost. The prior year has also been re-presented. Margin The ASOS.com margin can be broken down as follows: 2006/7 2005/6Retail Sales 44.3% 43.8%Third Party Revenues 100.0% 100.0%Total Margin ASOS.com 42.5% 40.8% We anticipate that the retail sales margin will improve significantly over thecoming year and we are targeting an increase of around 3-4% points. Operating costs Operating costs, including depreciation, have increased in the year by £6.1m to£15.3m. Shown below is an analysis of the movements against last year: £'000s 2006/7 2005/6Payroll and staff costs 5,814 3,062Office costs 614 403Warehousing 5,435 3,527Marketing 1,276 881Production 668 360IT 430 228Depreciation 467 222Finance, Legal and PLC Costs 558 448 Staff costs have increased by £2.8m to £5.8m as we continued to expand all areasof the business in order to broaden our product ranges and to cope with theincreased activity. Our strategy of broadening the product offer has been a key driver of revenuegrowth. We will continue to broaden our ranges and, to facilitate this, we willmake further increases in our Buying and Merchandising team over 2007/8 whichwill increase from 46 at the start of the year to 83 people by March 2008. Weare also increasing our headcount in IT and marketing in order to bring forwardsome of the planned changes to our systems, improvements to our web site and tosupport an increase in our marketing initiatives. Accordingly, our payroll andstaff costs will increase from £5.8m to approximately £9.0m for the year toMarch 2008. Staff numbers will increase from 128 at the year end to around 210by March 2008. As planned, due to the expiry of our lease, we moved our London office to Camdenin May 2007. This move will increase head office costs in 2007/08 from £0.6m to£1.6m. Warehousing costs have fallen as a percentage of sales as the fixed costs of £1mare spread over a greater number of orders. Our variable warehouse costs havedecreased from 12.7% of sales to 11.8% of sales, and we anticipate a furtherfall to approximately 11.5% during 2007/8. This improvement is attributable toimprovements made to the warehouse processes by Unipart and to theimplementation of a new warehouse management system in October 2007. If additional warehouse capacity is secured during 2007/8, this will add in theregion of £0.8m to this year's fixed warehouse costs. In 2006/7 our marketing spend increased to £1.3m. This was spent on magazineadvertising, TV sponsorship and on the ASOS magazine. The magazine has proved tobe a success and we are planning 11 issues during 2007/8 at a cost in the regionof £3.2m. Other marketing activity will amount to a further £0.5m. Production costs, which relate to the shooting of images for the web site andfor use in print will increase in 2007/8 to approximately £0.9m in line with thebroadening of the range. Buncefield Fuel Depot Explosion The credit of £0.6m shown in the profit and loss account represents theremaining insurance proceeds that were identified in the last annual report. Closure of Entertainment Marketing (UK) Ltd The decision was made in 2006/7 to exit this non-core business. We were unableto find a buyer and hence the business was closed in March 2007 with a resultingwrite off in the carrying value of goodwill of £188,000. Taxation The effective tax rate of the Group was 27.7%. 2006/7 is the first year in which brought forward losses have not fully offsettaxable profits and the Group will make its first corporation tax payment duringthe 2007/8 financial year. Balance Sheet Review The write off of the carrying value of Entertainment Marketing (UK) Ltd of£188,000 has reduced goodwill since last year. The remaining £1.1m relates tothe purchase of ASOS.com Ltd at the time of the flotation. We invested over £1.6m in the year, primarily in improving our computer systemsincluding a new warehouse management system, finance system and managementreporting tool. As stated above the new warehouse management system is drivingdown our labour costs and we anticipate that this investment will payback inunder 2 years. The Group has recognised a deferred tax asset of £0.5m (2005/6: £0.6m) as thedirectors believe that this amount is likely to be recovered in the foreseeablefuture. This asset predominantly arises from the availability of tax relieffollowing the exercise of employee share options. Closing inventories have grown in the year by 122% in line with sales growth andour strategy of broadening all product areas. Receivables have fallen in the year by £0.2m. Receivables as at 31 March 2006included insurance proceeds receivable of £0.8m. We are now taking greater advantage of the early settlement terms offered by oursuppliers and accordingly the increase in our trade and other payables of 30%year on year is lower than our growth in stock and overheads. Current tax liabilities have increased to £1.4m from £0.4m mainly due to acorporation tax creditor of £0.8m (2005/6: Nil). Overall net assets have increased by £2.9m to £8.4m. Cash flow and cash balances The Group continues to be highly cash generative and there was a net cash inflowover the period of £1.6m. The Group has sufficient cash reserves to meet itsforecast working capital requirements and capital expenditure plans for the nextyear. Surplus funds are on time deposit with the Group's bank. During the period share options under the Group's EMI approved Share OptionScheme were exercised raising £148,000. Capital Expenditure for 2007/8 Since the year end we have moved offices and the capital expenditure relating tothe fit out will be in the region of £0.7m. In addition to this we will take aprovision of £0.2m relating to decommissioning at the end of the lease. Thisprovision will be expensed over the life of the lease. We are anticipating a need for additional warehouse capacity in 2007/8. We arestill at the planning stage and the fit out of a new facility will be phased asnew capacity is required, however, the requirement in 2007/8 could be in theregion of £3.0m. Earning per Share (EPS) Fully diluted EPS has grown by 74% to 3.3p. Accounting Policies Our results for the year have been prepared under IFRS for the first time, oneyear ahead of the required deadline for AIM listed companies. Jon KamaluddinFinance Director9 July 2007 ASOS PLCCONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 MARCH 2007 Year ended Year ended 31 March 31 March 2007 2006 £'000s £'000s Revenue 42,614 19,716Cost of sales (24,488) (11,664) Gross Profit 18,126 8,052 Operating costs (15,262) (9,131) Operating Profit 2,864 (1,079) Finance Income 124 60 Profit/(Loss) for the year on discontinued 65 (15)operations Profit before insurance proceeds, 3,053 (1,034)goodwill impairment and taxation Insurance proceeds 570 2,439 Goodwill impairment (188) - Profit before tax 3,435 1,405 Taxation (951) 12 Profit for the year 2,484 1,417 EPS - Basic 3.4p 2.0pEPS - Diluted 3.3p 1.9p ASOS PLCCONSOLIDATED BALANCE SHEETAT 31 MARCH 2007 31 March 31 March 2007 2006 £'000s £'000s £'000s Non-Current Assets Goodwill 1,060 1,248 Property, plant and 2,086 990 equipment Deferred tax asset 490 549 3,636 2,787 Current Assets Inventories 5,683 2,564 Trade and other receivables 1,669 1,877 Cash and cash equivalents 5,379 3,744 12,731 8,185 Current Liabilities Trade and other payables (6,577) (5,064) Current tax liabilities (1,405) (386) (7,982) (5,450) Net Current Assets 4,749 2,735 Net Assets 8,385 5,522 Equity Ordinary shares 2,544 2,517 Share premium 3,354 3,007 EBT own shares (236) - Retained earnings 2,723 (2) Total Equity 8,385 5,522 ASOS PLCCONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MARCH 2007 Year ended Year ended 31 March 31 March 2007 2006 £'000s £'000sCash flows from operatingactivitiesProfit before discontinued 3,246 1,374operations, Interest, and taxAdjusted forGoodwill write off 188 -Depreciation charge 467 222Loss on disposal of fixed assets 15 16Increase in inventories (3,119) (977)Decrease/(Increase) in receivables 169 (931)Increase in payables 1,822 2,607Share options charge 328 226 Cash generated from operations 3,116 2,523 Finance Income 124 60 Net cash generated from operatingactivities 3,240 2,583 Cash flow from investingactivitiesPayments to acquire fixed assets (1,621) (904)Proceeds from disposal of fixed assets 43 3 Net cash from investing activities (1,578) (901) Cash flow from financingactivitiesProceeds from issue of ordinary shares 149 16Purchase of own shares by EBT (236) - Net cash from financing (87) 16activities Net increase in cash and cash equivalents 1,575 1,698from continuing operations Net increase/decrease in cash and cashequivalents from discontinued operations 60 (15) Net increase in cash and cash equivalents 1,635 1,683 EARNINGS PER SHARE The calculations of earnings per share are based on the following: 2007 2006 £'000s £'000s Profit attributable to shareholders 2,484 1,417 Weighted Average number of sharesFor basic earnings per share 72,089,825 71,753,281For diluted earnings per share 75,522,076 74,785,943 539,701 share options were granted in April 2007 and 125,000 ordinary shareswere issued in July 2007 following the exercise of employee share options. IFRS RESTATEMENT In the IFRS Re-Statement of 2005/6 Results issued 24 November 2006, the IFRS 2share option charge was calculated by spreading the fair value of the optionover an average period of 4 years. The restatement will be changed in the finalresults to spread this charge over the period from grant of option to itsvesting date. This change has led to an additional charge of £123,000 and a related deferredtax credit of £76,000 to the income statement for the twelve months ending 31March 2006. The financial information contained in this announcement does not constitute theCompany's statutory financial statements. The Company's auditors have issued anunqualified report on the statutory financial statements for the 12 months ended31 March 2007 and have not made any statement under section 237(2) or (3) of theCompanies Act 1985. A copy of the company's statutory financial statements willbe delivered to the Registrar of Companies shortly. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ASOS