4th Jul 2006 07:00
ASOS PLC04 July 2006 FOR RELEASE7.00 amTuesday 4 July 2006 ASOS plc "ASOS" or "Group" ("A leading Internet based fashion retailer") RECORD RESULTS RESULTS •Group sales +39% to £18.80m •Group profit before tax and amortisation of goodwill + 49% to £1.65m •Group profit before tax + 61% to £1.42m •Remaining insurance proceeds of £0.60m expected in the six months to 30 September 2006 •Cash at bank +82% to £3.74m •Fully diluted EPS before tax and goodwill amortisation +47% to 2.2p •ASOS.com registered users +60% to 960,000 (as at 2 July 2006) •Sales for the 13 weeks to 2 July 2006 are 65% ahead of last year HIGHLIGHTS •Continued strong growth •Investment in the future - people, systems and logistics •Resilience of business - recovery from Buncefield •Confident of another strong year ASOS plc Nick Robertson, Chief Executive Tel: 020 7240 7070Jon Kamaluddin, Finance Director Tel: 020 7240 7070www.asos.com Cubitt ConsultingBrian Coleman-Smith / Nia Thomas Tel: 020 7367 5100 Seymour PierceMark Percy / Nicola Marrin Tel: 020 7107 8000 ASOS plc is an Internet Retail and Marketing Services Group, established in June2000 and admitted to AIM in October 2001. Its principal business is ASOS.com, aleading online fashion and beauty retailer. Aimed primarily at an Internet savvy18-34 year old, ASOS has over 960,000 registered customers at 2 July 2006, andoffers over 4,000 lines across womenswear, menswear, jewellery, beauty,accessories and footwear. CHAIRMAN'S STATEMENTFOR THE YEAR ENDED 31 MARCH 2006 SUMMARY The Group reports a 39% increase in sales to £18.80m for the year to March 2006and a 49% increase in profit before tax and amortisation of goodwill to £1.65m.At the year end there was £3.74m in cash at bank, up from £2.06m the previousyear to March 2005. A strong performance considering our only warehouse was damaged by theBuncefield Fuel Depot explosion on 11 December 2005. As a result, the websitewas closed for transactions for five and a half weeks and 19,000 undeliverableorders were refunded. Trading in the fourth quarter was disrupted as were-established the stock position to the correct mix and level. Had we not been affected by Buncefield, we believe Group sales would have beenin the region of £25m, delivering a profit before tax of approximately £2.20m.Due to phasing of the insurance proceeds, we are expecting to receive anadditional £0.60m due during the 6 months to 30 September 2006. The business hasnow fully recovered. On behalf of the board, I would like to pass on our sincere thanks to ourcolleagues whose spirit and determination got us back on our feet so quickly. Iwould also like to extend our very best wishes to the 106 colleagues in HemelHempstead who are now employed by Unipart Logistics Limited. We now have 960,000 registered users (as at 2 July 2006) and are firmlypositioned behind Next as the second most visited online fashion retailer in theUK. In April 2006 we welcomed Rob Bready to the board as retail director and PeterWilliams as a non-executive director. The New Year has started strongly with sales for ASOS.com 65% above last yearfor the 13 weeks to 2 July 2006. With nine months trading and the importantChristmas period still to come, this performance should not necessarily be takenas an indication of the results for the full year. The business continues toevolve and it is essential that we continue to invest in our infrastructure tosupport our growth forecasts. RESULTS •Group sales +39% to £18.80m •Group profit before tax and amortisation of goodwill + 49% to £1.65m •Group profit before tax + 61% to £1.42m •Remaining insurance proceeds of £0.60m expected in the six months to 30 September 2006 •Cash at bank +82% to £3.74m •Fully diluted EPS before tax and goodwill amortization +47% to 2.2p •ASOS.com registered users +60% to 960,000 (as at 2 July 2006) •Sales for the 13 weeks to 2 July 2006 are 65% ahead of last year HIGHLIGHTS •Continued strong growth •Investment in the future - people, systems and logistics •Resilience of business - recovery from Buncefield •Confident of another strong year Lord W AlliChairman4 July 2006 CHIEF EXECUTIVES STATEMENTFOR THE YEAR ENDED 31 MARCH 2006 The online marketplace The growth in online shopping shows no sign of slowing. For 2006, the IMRG(Interactive Media in Retail Group) are forecasting a 36% year on year increasein online spend to £26.1 billion. The number of online shoppers is set to growby 8% to 26 million, and they will spend an average of £1,003, up from £816 in2005. Key to e-commerce is the number of broadband connections and this isexpected to rise by 37% to 13.4 million. Customers, as they always do, arevoting with their feet. Product offer The buying and merchandising team has doubled in size to support the increase inproduct lines from 2,000 to 4,000. Further appointments are planned to enable usto compete with the very best of the high street. In addition we will besupporting the buying team with an in-house design department over the comingmonths. As the profile of ASOS has risen, we have been able to attract major newbrands including Diesel, Firetrap and Replay. We believe the investment inbroadening our product range will support our growth ambitions for 2006/7 andbeyond. The Website The website is continually evolving as the product range expands and newtechnologies emerge. In April 2006 we launched ASOS Catwalk - a function wherebyfashion lines are presented in moving images on a catwalk as well as thetraditional still images. We are currently the only fashion retailer in the UKto do this. A number of new initiatives are planned for the coming months tofurther enhance the shopping experience. Marketing We have over 960,000 registered users as at 2 July 2006 all of whom receive twoemails a week featuring the latest products, trends and style tips. The rate atwhich we gather new e-mail addresses is expected to increase following a newcontract, signed in April 2006, with an email acquiring company. Of all ourmarketing activity the email remains the single biggest generator of sales. Our investment in magazine advertising has increased which has in part beenfunded by our deliberate reduction in affiliate marketing activities. In ourview this is necessary if we are to establish ASOS as the UK's leading onlinefashion business. Key Performance Indicators 05/06 04/05 ASOS.com margin (excluding Third Party Revenues) 43.8% 44.9%Returns % to sales 21.4% 20.5%Basket Value (inc VAT) £39.32 £36.56Average units per basket 2.4 2.1Average Selling Price per unit (inc VAT) £16.54 £17.02% ASOS.com Sales from North America 1.6% 1.3%% ASOS.com Sales from Rest of World 7.2% 5.4% Third party revenues For the year to March 2006 we generated £0.37m (2004/5: £0.23m) in third partyrevenues. This is made up of banner advertising, list sales and sampling. We nowhave specific resource in this area and expect revenues to increase by 70% forthe year to March 2007. Logistics In early 2006 we made the decision to outsource our logistics function to athird party to ensure our capabilities keep pace with the requirements of thebusiness and to allow us to focus on our core competencies. From 1 May 2006,Unipart Logistics Limited took over the running of our distribution centre inHemel Hempstead. Entertainment Marketing Our Marketing business fared less well during the year with sales dropping from£0.74m to £0.60m. An internal re-structure and a re-focusing of the businessshould result in a return to profit in the coming year. Current trading and prospects The prize for dominating online fashion in the UK is high so we must continue toinvest in resource, infrastructure and marketing if we are to sustain thecurrent growth levels and realise the full potential of ASOS. The high street isstarting to invest in their online offer, so we must ensure we have bettercapabilities at every level to compete. Early signs are that 2006/7 should be another strong year of growth with salesfor the 13 weeks to 2 July 2006 running 65% ahead of last year. Nick RobertsonChief Executive4 July 2006 FINANCE DIRECTOR'S REVIEWFOR THE YEAR ENDED 31 MARCH 2006 Sales The breakdown of Group sales is shown below. £'000s 2006/7 2005/6 Increase % Clothing and Accessories 17,841 12,545 42%Third Party Revenues 366 229 60%Entertainment Marketing 601 744 (19%)Group Sales 18,808 13,518 39% Margin ASOS.com delivered a gross margin before third party revenues of 43.8% (2004/5:44.9%). This was behind our expectations for the year and resulted from theincrease in markdown required to clear stock left unsold after the Christmasperiod when the website was closed following Buncefield. We anticipate that gross margin before third party revenues will improveslightly during 2006/7. Operating costs Operating costs, including depreciation but before the one-off effects of theBuncefield Fuel Depot explosion and the costs associated with the warehouse movein August 2005, have increased in the year by £3.76m to £9.37m. The mostsignificant rises in operating costs in 2005/6 have been in Head Office costswhich have risen by £1.31m year on year to £3.17m and warehousing costs whichhave risen by £2.13m year on year to £3.40m. We have increased our head office team over the year from 47 to 68 people. Thishas grown further since the year end to 90 people. All disciplines have beenstrengthened and in particular we have grown our teams in Buying, Merchandising,IT and Image Management. Further rises are budgeted in 2006/07 as the full yearimpact of the new starters in 2005/6 flows through and as we continue to ensurethat the business has the infrastructure to support its growth. The growth in staff numbers will necessitate an office move during 2006/7. Weanticipate doubling our space in London during 2006/7. The impact of the above and the increase in headcount means that Head Officecosts will be in the region of £5.70m in 2006/7. Our move to a new warehouse in Hemel Hempstead in August 2005 meant asignificant increase in rent and other occupancy costs and the number ofwarehouse staff increased in the year in order to cope with the growth involumes. Warehouse costs vary with volume and indicatively these would rangefrom £4.60m on sales of £30m rising to £5.80m on sales of £40m in 2006/7. We anticipate that other operating costs will be in the region of £4.00m in 2006/7. Buncefield Fuel Depot Explosion The credit of £2.44m shown in the profit and loss account represents the sum ofthe agreed insurance proceeds received and receivable as at 31 March 2006 inrespect of stock losses, increased costs of working, damage to our plant andequipment and lost gross profit, less the costs incurred as a result of theincident. We anticipate a further final amount of £0.60m to be received in 2006/7. Taxation The group has recognised a deferred tax asset of £0.20m (2004/5: £0.27m) as thedirectors believe that this amount is likely to be recovered in the foreseeablefuture. This asset arises from the availability of trading losses and will berecovered when sufficient trading profits have been generated to utilise thetrading losses. The group has tax losses of £1.24m (2004/5: £2.75m) which are available tooffset against future taxable profits. Cash and Balance Sheet The group continues to be cash generative and there was a net cash inflow overthe period of £1.68m. The group has sufficient cash reserves to meet our workingcapital requirements and capital expenditure plans for the budgeted growth in2006/07. We are confident that the group will continue to generate cash fromoperating activities. Surplus funds are on time deposit with an AAA rated bank. During the period share options under the group's EMI approved Share OptionScheme were exercised raising £16,000. Net current assets increased to £2.97m (31 March 2005: £2.04m). Capital Expenditure A total of £0.90m has been invested in the year to March 2006 of which £0.65mwas spent fitting out the new warehouse in Hemel Hempstead and £0.25m was spentdeveloping our IT systems. For 2006/7 total investment of £1.60m will be required in IT systems, warehousefixtures and fittings and on the fit out of new London office space. Dividends The directors do not propose a dividend, however, we will continue to keep thedividend policy under review. Accounting Policies The introduction of FRS 21 has required a prior year adjustment relating to anintercompany dividend from ASOS.com Ltd to ASOS plc. The effect of this on thepreceding period (2004/5) has been to increase retained earnings by £300,000 inASOS.com Ltd and decrease the retained earnings in the company accounts of ASOSplc by the same amount. Implementation of International Accounting Standards is mandatory for AIM listedcompanies for results reported for years commencing on or after 1 January 2007.We will consider whether early adoption is appropriate once the fullimplications of introduction have been assessed. Jon KamaluddinFinance Director4 July 2006 ASOS PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2006 Year ended Year 31 March ended 2006 31 March 2005 £ £ TURNOVER 18,807,980 13,517,676Cost of sales (10,028,398) (6,927,613) ----------- -----------GROSS PROFIT 8,779,582 6,590,063 Admin expenses (9,634,780) (5,522,150)Amortisation of goodwill (228,334) (228,334)Exceptional Item - Business Disruption 2,439,078 - ----------- -----------OPERATING PROFIT 1,355,546 839,579 Interest receivable/payable 61,348 38,653 ----------- -----------PROFIT ON ORDINARY ACTIVITIES BEFORETAXATION 1,416,894 878,232Tax on profit on ordinary activities (65,000) - ----------- -----------PROFIT FOR THE FINANCIAL PERIOD 1,351,894 878,232 ----------- -----------EARNINGS PER SHAREBasic 1.9p 1.3pFully Diluted 1.8p 1.2p The profit and loss account includes all recognised gains and losses in thecurrent and preceding year. All activities were derived from continuingoperations. ASOS PLC CONSOLIDATED BALANCE SHEET AT 31 MARCH 2006 31 March 31 March 2006 2005 £ £ FIXED ASSETSIntangible assets 1,020,148 1,248,398Tangible assets 990,426 327,315 ----------- ----------- 2,010,574 1,575,797 CURRENT ASSETSStocks 2,563,863 1,587,308Debtors 2,082,198 1,216,615Cash at bank and in hand 3,743,551 2,059,581 ----------- ----------- 8,389,612 4,863,504CREDITORS: amounts falling due withinone year (5,420,109) (2,827,586) ----------- -----------NET CURRENT ASSETS 2,969,503 2,035,918 ----------- -----------TOTAL ASSETS LESS CURRENTLIABILITIES 4,980,077 3,611,715 ----------- -----------CAPITAL AND RESERVESCalled up share capital 2,516,649 2,511,026Share premium account 3,006,776 2,995,931Profit and loss account (543,348) (1,895,242) ----------- -----------SHAREHOLDERS' FUNDS (ALL EQUITY) 4,980,077 3,611,715 ----------- ----------- ASOS PLC CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2006 Year ended Year ended 31 March 31 March 2006 2005 £ £ Net cash inflow from operating activities 2,506,977 1,163,364 --------- --------- Returns on investments and servicing offinanceInterest received 61,779 38,799Interest paid (426) (146) --------- --------- Net cash inflow from returns oninvestments and servicing of finance 61,353 38,653 Investing activitiesPayments to acquire tangible fixed assets (904,468) (298,861)Proceeds from disposal of tangible fixed assets 3,640 - --------- --------- (900,828) (298,861) NET CASH INFLOW BEFORE FINANCING 1,667,502 903,156 FinancingNet inflow from issue of ordinary shares 16,468 152,307 Net cash inflow from financing 16,468 152,307 INCREASE IN CASH 1,683,970 1,055,463 --------- --------- RECONCILIATION OF NET CASH FLOW TOMOVEMENT IN NET DEBT/FUND Increase in cash for the period 1,683,970 1,055,463 Net funds at 1 April 2005 2,059,581 1,004,118 --------- --------- Net funds at 31 March 2006 3,743,551 2,059,581 --------- --------- NOTES TO THE CASH FLOW STATEMENT Reconciliation of operating profit to net cash inflow from operating activities Year ended Year ended 31 March 31 March 2006 2005 £ Operating profit 1,355,546 839,579Amortisation charge 228,334 228,334Depreciation charge 221,633 87,730Loss on disposal of fixed assets 16,079 -Decrease/(increase) in stock (976,555) (1,065,628)Decrease/(increase) in debtors (930,583) (436,353)Increase in creditors 2,592,523 1,509,702 --------- --------- 2,506,977 1,163,364 --------- --------- EARNINGS PER SHARE The calculations of earnings per share are based on the following: Year ended 31 Year ended 31 March 2006 March 2005 Profit attributable to shareholders 1,351,894 878,148 Weighted Average number of shares For basic earnings per share 71,753,281 69,917,012For diluted earnings per share 74,785,943 73,907,179 No shares have been issued between the year end and date of approval of thesefinancial statements. The financial information contained in the preliminary announcement does notconstitute the company's statutory financial statements. The company's auditorshave issued an unqualified report on the statutory financial statements for the12 months ended 31 March 2006 and have not made any statement under section 237(2) or (3) of the Companies Act 1985. A copy of the company's statutoryfinancial statements will be delivered to the Registrar of Companies shortly. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ASOS