Agile
Resilient
Stronger
ASOS PLC Annual Report and Accounts 2020
About us
We are an online retailer for fashion-loving 20-somethings around
the world. Our purpose is to give our customers the confidence
to be whoever they want to be. Through our market-leading
app and web experience, ASOS customers can shop a curated
edit of c.85,000 products, sourced from 850+ of the best global
and local third-party brands, alongside our mix of fashion-led
in-house labels including ASOS DESIGN, ASOS EDITION, ASOS
4505 and Collusion. We aim to deliver a truly frictionless
experience for our customers,
with an ever-greater number of
payment methods and hundreds
of local delivery and returns
options, dispatched from state-of-
the-art fulfilment centres in the
UK, US and Germany.
Contents
Strategic report
Highlights
1
2
4
A truly global retail leader
Chairman’s statement
6 Operational & financial review
Performance by market
10
12
Governance report
36 Board of Directors
39 Corporate Governance Report
45 Audit Committee Report
49 Nomination Committee Report
51 Directors’ Remuneration Report
Strengthened foundations for growth
71 Directors’ Report
16 Key Performance Indicators
74
Statement of Directors’ Responsibility
18
Looking to the future
20 Our business model
22 Stakeholder engagement
24
26
The people behind the brand
Fashion with Integrity
30 Managing risk at ASOS
32
Principal risks and opportunities
ASOS PLC Annual Report and Accounts 2020
Financial statements
76
Independent Auditors’ Report to the Members
of ASOS Plc
81
Consolidated Statement of Total Comprehensive
Income
82 Consolidated Statement of Changes in Equity
83 Consolidated Statement of Financial Position
84 Consolidated Statement of Cash Flows
85 Notes to the Financial Statements
111 Company Statement of Changes in Equity
112 Company Statement of Financial Position
113 Company Statement of Cash Flows
114 Notes to the Company Financial Statements
118 Five-Year Financial Summary (unaudited)
120 Company information
Highlights
Revenue
2019: £2,733.5m
2018: £2,417.3m
A statement from
our Chairman,
Adam Crozier
Page 4
Diluted EPS1
2019: 29.4p
2018: 98.0p
125.6p
£3,263.5m
Cash
generation2
2019: (£133.2m)
2018: (£117.6m)
Gross margin
2019: 48.8%
2018: 51.2%
£258.6m
Page 24
47.4%
Our performance
by market
Page 10
EBITDA margin1
2019: 3.9%
2018: 6.5%
8.2%
1 FY20 figures include the transition to IFRS 16 ‘Leases’
2 FY20 figure is excluding the net equity raise proceeds of £239.4m
The people
behind the brand
Profit
before tax1
2019: £33.1m
2018: £102.0m
£142.1m
1
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020 A truly global
retail leader
From almost any country in the world, you can shop over
85,000 products from ASOS’ own collections and other
global brands.
Our mission is to be the world’s number one
fashion destination for fashion-loving
20-somethings. We believe in a world
where you have the freedom to explore
and express yourself without judgement, no
matter who you are or where you’re from.
That is why our purpose is to give fashion-
loving 20-somethings the confidence to be
whoever they want to be. We give our
customers confidence by creating and
curating products and experiences to inspire
them. Our market-leading app and website
now boast more localised and personalised
shopping features than ever before, and
customers can now shop on 12 fully
US
Retail Sales
£401.9m
+18%
localised sites, in 10 languages and
19 currencies. Our global network of
fulfilment and returns centres use the latest
automation to improve availability and
stock efficiency, while smart carrier software
and best-in-class propositions make
rapid and convenient deliveries and
returns possible in more countries.
Atlanta
– 1m Sq Ft
– 1.5m customer
fulfilment capacity
New brands
and collaborations
Our brand offering is more desirable
than ever, with ASOS seen as the
one-stop shop for fashion-loving
20-somethings. We added over 100
brands to our offering during the year,
including fashion giant Topshop and
cult beauty labels Urban Decay and
Charlotte Tilbury. We captured attention
with sought after collaborations including
POLO Ralph Lauren X ASOS, a perfect
mix of classic heritage design and
throwback 90s style. We celebrated
Pride with our fourth ASOS X GLAAD&
drop and are proud to have given
100% of the net profits of this rainbow
pastel collection to GLAAD (Gay and
Lesbian Alliance Against Defamation).
We had stellar results from product
collaborations and style edits with
carefully selected influencers throughout
the year. Highlights include a second
collection with Ovie Soko and edits
with Delilah Bell and Emily Shak.
Our influencer content garnered huge
engagement, with wide-reaching
organic impressions and large uplifts
on the associated product.
+
85K
products
on site
UK
Retail Sales
£1,175.9m
+18%
n
o
23m
active customers
i
l
l
i
Berlin Euro Hub
– Fully automated
– Capacity to handle 20m units
Barnsley
– 1.5 orders placed
per second
EU
Retail Sales
£1,005.3m
+22%
RoW
Retail Sales
£587.9m
+18%
Map key
Fulfilment Centres
Returns Centres
c.850
third-party brands
2
3
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020
Chairman’s
statement
Robust and resilient operations have enabled
ASOS to successfully navigate an
unprecedented year.
A tough but necessary
transformation journey
Navigating our way through an
unprecedented year
We started our 2020 financial year with
a strong first half performance, before
the outbreak of COVID-19. Of course,
the pandemic had significant repercussions,
not just for ASOS, but for the entire world,
and for our customers, too.
Throughout the global pandemic, our first
priority was to protect the health, safety
and wellbeing of our people. As we went into
lockdown, we quickly redesigned how our
fulfilment centres operate, reducing their
capacity and headcount to make them
COVID-secure and compliant with social
distancing guidelines, and we moved all of
our office staff to working from home
wherever possible, even when that meant
significantly changing the way we shoot our
product – with models asked to photograph
themselves at home instead of using our
studio space.
We also took significant steps to protect the
business financially. In April we announced
additional financing to strengthen our
balance sheet and position us for long-term
growth. This included a non-pre-emptive
placing of ordinary shares, which raised
£246.6m (gross). With c.95% of these new
shares allocated to our existing shareholders,
I wish to extend heartfelt thanks to these
investors for their continued confidence
in the future of our business.
Undoubtedly, our 2019 financial year was
a challenging one for ASOS. As I wrote then,
while we had made significant progress with
our transition to an expanded international
warehouse network, we had underestimated
the complexity of these changes, highlighting
where gaps in our experience and
capabilities existed within the business.
Coming out of that period we defined 2020
as a pivotal year for ASOS. We entered it
with the intention of using it both as a reset
period for us to get back on track, and also
as a priming phase for our next stage of
growth, towards delivering world-class, lean
and frictionless operations internationally.
Regaining our momentum meant taking a
critical look at our internal operations and
our deployment of spend across the business,
and refocusing on the core elements of what
we do and what differentiates ASOS. We’re
really proud of our work developing ASOS
DESIGN, which is deserving of the position
it occupies at the front and centre of our
offering. We continue to augment our
leading own-brand labels with the best,
most relevant fashion from the most desirable
20-something brands around the world,
who continue to see ASOS as a strategic
partner of choice to support their products
and marketing.
Alongside our curated product range, we
have focused on constant engagement with
our customers through our social channels,
and delivering compelling content at scale.
These strategic priorities and focus areas will
help us continue to build market share as the
shift to online retail accelerates.
It’s been a year like no other for ASOS,
just as it has been for the wider world.
The Coronavirus-19 pandemic (‘COVID-19’)
has posed significant unforeseen challenges
for all businesses, including ASOS; however,
the transformative organisational changes
that we put into action more than 12 months
ago, and the resilience that we built into the
business, have enabled us to navigate the
uncertainty with confidence and rigour.
Our strengthened Boardroom and Executive
team have demonstrated expert leadership,
and for this I wish to extend my gratitude.
Thanks to their commitment and the effort of
the entire ASOS team to deliver the objectives
we set out last year, we are ready to emerge
from the current situation as a nimble,
fast-growing business, with a more robust
balance sheet, and with the tools and
capabilities we need to achieve our
global ambitions.
As we finish this period with a solid set of
results, I want to take this opportunity to thank
you all for your unwavering resolve during
the most turbulent of times. The superb
response from everyone at ASOS, at every
level, as well as all of our business partners,
has ensured that we have come through this
stronger together. Your talent, passion and
enthusiasm is what drives our success.
I would also like to express my regret that
we are unable to gather together for our
Annual General Meeting (AGM). As per
government guidance on preventing the
spread of COVID-19, we will be holding
a closed meeting this year. Meeting
face-to-face to discuss the Group’s annual
performance and strategy is an important
part of the governance process, but
protecting the health and safety of everyone
is paramount. We look forward to
welcoming you to the AGM in 2021.
Until we meet again, look after yourselves
and your families.
Adam Crozier
Chairman
To further protect ASOS, we also made
appropriate use of government support,
including payment deferrals and job retention
programmes. However, we did so with the
intention always to do the right thing and
not take advantage of funding support which
we did not require. As a result, following
our strong results in our P3 Trading Statement
in July, we announced that we would be
returning the funds received under the
government’s furlough scheme and, later,
the Bank of England’s Covid Corporate
Financing Facility.
It would also not have been possible without
the expert leadership and judgement shown
by our Executive team, who have been able
to adapt at speed during this critical time.
Their quick and commendable decision-
making has impressed me, and I am sure
they will emerge from this experience having
learned many valuable lessons for the future.
The past year has been one of significant
challenges, but we have emerged a better
business for it. With our internal capabilities
aligned to our global growth ambitions, we
are ready for whatever the future may hold.
The organisation
has been able to adapt
at speed and continue
to focus on delivering
against the commitments
we made last year
We were able to make that decision because
of the strong financial results achieved by the
business. In spite of the initial impact on sales
and customer demand caused by COVID-19,
and the continued uncertain outlook into the
future, the organisation has been able to
adapt at speed and continue to focus on
delivering against the commitments we made
last year. These commitments, combined with
rigorous business and cost management,
have ensured that we delivered a strong
performance in these most difficult of
circumstances. This would not have been
possible without the terrific response from
our partners and the commitment of everyone
at ASOS.
Looking towards a sustainable
future of continued growth
Across our markets, ASOS continues to be
an important part of consumers’ lives. Our
longstanding commitment to our Fashion
with Integrity programme, and to acting
as a responsible business, is at the heart
of everything we do. Purpose-led brands
continue to trailblaze, so it is vital that moving
into 2021 we focus on operating in the right
way. Even in these difficult times, we must
never lose sight of the big picture. Alongside
improving fiscal performance, we need to
drive a transparent, responsible and inclusive
approach to business to transform the impact
of fashion on people, communities, animals
and our shared planet.
This year, we have proven the resilience of
our model and the strength of our customer
engagement. Looking ahead to our priorities
for 2021, we will continue our progress
towards becoming a global leader in online
fashion, and we are positioned to capitalise
on the accelerated shift in demand for
shopping online. The full implications
of COVID-19 on consumer demand and
the wider economy remain to be seen,
but we are in a strong position to face
any challenges that come our way.
4
5
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020
Operational &
financial review
We are pleased by the improvements we have
made this year but there is still lots more for us
to do to continue our progress.
After a record first half which saw
us make progress in addressing
the performance issues of the previous
financial year, the second half will
always be defined by our response to
COVID-19. I am proud of the way ASOS
met this challenge head on, putting our
duty to act as a responsible business at
the heart of our approach and working
to balance our performance in that
context. As well as protecting staff,
suppliers and customers, we’ve driven
efficiency and emerged a stronger and
more agile business whilst delivering
strong profit and cash generation.
Whilst life for our 20-something customers
is unlikely to return to normal for quite some
time, ASOS will continue to engage, respond
and adapt as one of the few truly global
leaders in online fashion retail.
Overview
ASOS delivered a strong performance
across the year as we navigated the
unprecedented challenges that arose as
a result of COVID-19. Total sales grew
by 19% to £3,263.5m and profit before
tax increased to £142.1m, an increase of
£109.0m on the previous year. We entered
this financial year with a clear focus on
rebuilding momentum and executing
consistently. Last October, we set out the
key priorities to help us achieve this; restoring
the strength of our customer facing offer
and ensuring we had the right internal
capabilities and financial strength to continue
pursuing our global growth ambitions.
Notwithstanding the backdrop, we made
solid progress against each of the priorities
which has strengthened the foundations of
our business. There is still a lot more work
for us to do but we are pleased with the
improvements we have made this year.
This progress, combined with an increased
operational grip and more rigorous
performance management, enabled us to
steer the business through the challenges
caused by the pandemic. The business
showed great agility, adapting to significant
operational change, disruption across our
supply chain, a dramatic shift in consumer
demand and an uncertain and fast changing
landscape. From our perspective,
COVID-19 initially presented itself as a
challenge to product supply as suppliers
managed lockdown constraints and freight
was disrupted. As we moved into April,
the challenge we faced shifted to uncertain
demand. Whilst demand for certain types
of product, particularly occasion and
formal-wear, remained constrained we
saw strong growth in casualwear and other
lockdown relevant products. However, this
polarisation in demand in turn drove further
supply constraints exacerbated by the
reduction in product produced globally this
year given the restrictions most businesses
are operating under.
Throughout this period, our primary focus
was on continuing to do the right thing –
ensuring the health and safety of people
across our operations, our customers and
our wider supply chain. Initially we had to
restrict our business to protect our people
and give us the space to reshape every
element of how we work to ensure that we
were able to slowly increase our capacity
in a COVID-19 secure manner. The amount
The incremental COVID-19 costs we incurred
were primarily driven by: the increased safety
measures we implemented in our warehouse
operations (which increased support costs
and reduced efficiencies); higher airfreight
rates; and additional customer facing
investment to stimulate demand on ‘going out’
product. However, these were more than
offset by two main cost benefits that we
would not expect to repeat. Warehouse and
distribution costs benefited from a significant
reduction in returns rates, as customers mixed
into lower returns rate categories and
exhibited more deliberate purchasing
behaviour, which drove lower processing
costs through our network. Secondly, we
reduced our marketing spend significantly in
P3 to avoid stimulating demand we could not
service as we managed capacity restrictions
in our warehouses, implemented for social
distancing purposes.
Beyond this, we made good progress in
removing non-strategic costs across the
business and saw substantial improvements
in efficiency from the transformational
investments we have made in automation,
more detail of which can be found in
this statement under our corresponding
key priorities.
We closed the financial year in a strong net
cash position of £407.5m, up from a net debt
position of £90.5m at the start of the year.
This inflow has been driven by a combination
of the proactive capital raise we undertook
in April (net cash proceeds of £239.4m), a
significant increase in EBITDA and improved
working capital discipline. In addition, the
year end position has been enhanced by a
later than usual stock build for peak trading
due to COVID-19, which is phased into the
first half of FY21. Excluding this tailwind of
c.£89m, we expect to be cash generative
in the year ahead.
Capital expenditure of £115.6m was invested
this year across our technology platforms
and warehouse infrastructure. This was lower
than our initial expectations as we delayed
implementation of our Truly Global Retail
(TGR) programme due to lockdown
restrictions, which will be rephased into FY21.
We plan to invest £170m - £180m in capital
expenditure in FY21. This includes the
conclusion of the £5m investment we made
to ensure our warehouses go well beyond
government guidelines with respect to
COVID-19 secure sites. We will also
commence investment into our fourth
fulfilment centre. Leveraging learnings from
the recent investments we have made,
investment work will begin this year to allow
for a gradual ramp up ahead of the capacity
requirements for peak in FY23. This
incremental capacity will be situated in the
UK and will support the continuing high
growth we have seen in our home market
and also allows for maximum flexibility
and resilience to service demand across
our global network. We have learnt a lot
from our recent investment programme
and are confident that the implementation
timeframe, as well as our ability to bring
the centre on-stream in a measured way
to enhance the capacity we already have
around the Group, should help in the
implementation of this project.
Augmented reality
– collab with Zeekit
This year, we accelerated our use of
augmented reality (AR) technology,
using it to simulate real-life model
photography as part of our response
to the pandemic. The technology,
powered by Israeli-based start-up
Zeekit, meant we could offer our
customers a simulated view of up
to 500 products each week on six
real-life models, without the need to
shoot product in a studio. By digitally
mapping each product onto the model
in a realistic way, taking account of
the size, cut and fit of each garment,
the technology ensured product
presentation remained as realistic and
engaging as possible, while supporting
social distancing.
of change we undertook to reshape every
element of our business was unprecedented
– we learnt much and many of the processes
we developed are and will remain the way
we do business. As we progressed we
were increasingly able to capitalise on
opportunities for customer acquisition
and growth as they arose.
As our results demonstrate, we have
emerged from this financial year as a
stronger, more resilient and agile business,
having progressed with our priorities as
planned, but also having taken many
learnings from the challenges and disruption
the pandemic has presented. This positions
us well as we consider the uncertain
landscape ahead. We continue to foresee
headwinds to consumer demand, which
will not abate until lifestyles and financial
stability normalise for our 20-something
customer and we expect the disruption to
global product supply will be felt into 2021.
However, we have built greater diversity
into our product mix and have proven how
operationally flexible our business can be.
This gives us confidence that we will be
able to navigate the year ahead and
continue to progress as one of the few truly
global leaders in fashion retail. To help us
achieve our ambition to be a truly global
fashion retailer, we have set out our clear
focus on continuing to develop the three key
strategic pillars of our model: the ASOS
brands, the ASOS platform and the ASOS
customer experience. All of which will be
underpinned by an increasingly efficient,
effective and sustainable operating model.
Financial performance
The business has delivered an exceptionally
strong financial performance this year
including record levels of profit and cash
generation. EBIT increased £116.0m to
£151.1m and equated to a margin of 4.6%,
up 330bps year on year. Whilst this strong
growth in profit was assisted by unusually
low customer returns rates through
lockdown, a strong operational grip,
greater discipline around investment, the
removal of non-strategic cost and leverage
from the transformational investments
we have made are driving sustainable
underlying profit growth.
COVID-19 had a substantial impact on
the shape of the P&L this financial year.
We experienced material incremental
costs from disruption; however the mitigating
action taken across the business, combined
with the significant reduction in returns rates,
generated a profit tailwind for the business
this year of c.£45m.
6
7
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020
Financial overview
Retail sales
Delivery receipts
Third-party revenues
Total revenue
Cost of sales
Gross profit
Distribution expenses
Administrative expenses
Operating profit
Finance expense
Profit before tax
Active customers1 (m)
Average basket value (including VAT)
Average units per basket
Average selling price per unit (including VAT)
Average order frequency2
Total orders (m)
Total visits (m)
Conversion3
Mobile device visits
Net Promoter Score4
Year to 31 August 2020
UK
£m
EU
£m
1,175.9
1,005.3
32.1
6.1
24.9
–
1,214.1
1,030.2
US
£m
401.9
13.3
0.1
415.3
RoW
£m
587.9
16.0
–
603.9
Year to
31 August 2020
Year to
31 August 2019
23.4
£71.92
3.18
£22.63
3.43
80.2
2,691.2
3.0%
85.5%
-2
20.3
£71.29
3.05
£23.34
3.56
72.3
2,266.5
3.2%
81.9%
-4
Total
£m
3,171.0
86.3
6.2
3,263.5
(1,716.1)
1,547.4
(444.6)
(951.7)
151.1
(9.0)
142.1
Change
15%
1%
4%
(3%)
(4%)
11%
19%
-20bps
+360bps
1 Defined as having shopped in the last 12 months as at 31 August
2 Calculated as last 12 months’ total orders divided by active customers
3 Calculated as total orders divided by total visits
4 Net Promoter Score is based on a customer pulse survey and this represents the movement in the average score in the 12-month period ended 31 August
Retail sales grew 19% on the previous year as we navigated the many
ways COVID-19 impacted the business. Following a strong first half
we saw a strong initial impact from the pandemic and associated
lockdown restrictions, but as we progressed through the second half,
and despite a sharp drop-off in demand as countries entered into
lockdown, we saw improvements in underlying demand, as well
as the continuation of a beneficial returns profile.
This changing dynamic is perhaps best reflected in the relationship
between visits and orders. Visits grew 19% on the previous year
whilst orders increased 11% to 80.2m, reflecting a shift to more
deliberate purchasing through COVID-19 lockdown, which
impacted conversion on-site but had a lower associated returns
profile. Whilst ABV improved 1% on the year, ABV declined in the
second half as customers mixed into lower ASP product categories
such as loungewear. The reduction in ABV in the second half was
partially mitigated by changes in delivery thresholds following
significant increases in airfreight costs following COVID-19.
Our active customer base grew by 3.1m to 23.4m active customers,
up 15% from the previous year. We saw particularly strong growth in
the EU as we focused on rebuilding customer momentum following
disruption in the prior year. Equally as pleasing, ROW active customer
base grew by 18% on the year, underpinned by strong growth in key
markets Russia and Australia, as well as strong new customer growth.
Profit before tax increased by 329% to £142.1m. A significant
proportion of this increase is due, as previously mentioned, to the
focus on removing non-strategic costs from the business. This was
the single biggest underlying driver of improved profitability on the
year. Alongside this we have annualised efficiency benefits from Euro
Hub automation, reversing a significant proportion of the transition
costs experienced in prior years, partially offset by a full year of fixed
costs and manual operations in Atlanta.
To truly understand our profit delivery, particularly in H2, two more
impacts are especially relevant. Firstly, without remedial action, both
a reduction in sales volume post lockdown as well as new incremental
costs as a result of COVID-19, would have significantly impacted
profitability in the second half. We pivoted quickly to mitigate
potential profit drags and realised savings in occupancy, payroll costs
and through our supply chain. Secondly, it is more efficient to deliver
sales growth from fewer orders and fewer associated returns as we
saw during the pandemic. Where we saw intentional purchasing
post lockdown, the impact this had on the profile of returns and sales
provided a one-off profit benefit which more than offset other one-off
COVID-19 cost drags resulting in a net positive impact of c.£45m.
Although returns rates trended back towards expectation at the end of
the period, the impact on the second half of the year was significant.
Gross margin
Gross margin reduced by 140bps in the year driven by three
principal factors: increased freight and duty costs reflecting the
go-live in our US warehouse impacting the first part of the year
(which is largely offset by savings in delivery costs), changes in
product mix as customer demand shifted away from occasion
wear into more casual product categories during lockdown and
8
Operating expenses
£m
Distribution costs
Warehousing
Marketing
Other operating costs
Depreciation and amortisation
Total operating costs
IFRS 16 impact
£m
Warehousing
Other operating costs
Depreciation and amortisation
Finance expense
PBT
Taxation
Profit after tax
Diluted EPS
Year to 31 August
2020
% of sales
Year to 31 August
2019
% of sales
Change
(444.6)
(313.5)
(119.4)
(401.4)
(117.4)
(1,396.3)
13.6%
9.6%
3.7%
12.3%
3.6%
42.8%
(415.6)
(301.4)
(121.8)
(389.1)
(71.3)
(1,299.2)
15.2%
11.0%
4.4%
14.3%
2.6%
47.5%
(7%)
(4%)
2%
(3%)
(65%)
(7%)
Year to 31 August
2020 (incl IFRS 16)
% of sales
IFRS 16 impact
Year to 31 August
2020 (excl IFRS 16)
% of sales
Change
9.6%
12.3%
3.6%
0.2%
4.4%
(313.5)
(401.4)
(117.4)
(9.0)
142.1
(28.8)
113.3
125.6p
14.1
13.5
(25.0)
(5.0)
(2.4)
0.5
(1.9)
(2.2p)
(327.6)
(414.9)
(92.4)
(4.0)
144.5
(29.3)
115.2
127.8p
10.0%
12.7%
2.8%
0.2%
4.4%
40bps
40bps
(80bps)
(0bps)
(0bps)
finally our planned investment into promotional activity to stimulate
demand for occasion product during lockdown. These were
partially offset by a significant improvement in our underlying
buying margin.
Operating expenses increased 7% to £1.4bn and total operating
costs decreased by 470bps as a percentage of sales. The year on
year reduction in distribution costs was principally driven by the
change to local fulfilment for the US market from our US warehouse
and the benefit from lower returns rates driving lower return parcel
volumes. The improvement in warehousing costs was driven by a
reduction in returned items to be processed as well as increasing
efficiency from Euro Hub automation and the IFRS 16 transition.
These were partly offset by inefficiency due to capacity restrictions
implemented during the lockdown period. Our US warehouse also
continues to represent a cost drag year on year, with US orders now
being processed on a manual basis from this facility rather than our
automated UK warehouse. Payroll costs, within other operating costs,
improved materially as a percentage of sales driven by ongoing work
to improve the efficiency of our operational structure. Marketing costs
also decreased by 70bps as a percentage of sales as we drove
greater efficiency during the first half and reduced performance
marketing spend in the third quarter to ensure we weren’t stimulating
demand we couldn’t effectively service whilst our warehouses worked
at reduced capacity due to social distancing. This decrease was
partially offset by higher depreciation costs following the cycle of
elevated capital investment in transformation over the last three years
and the transition to IFRS 16.
Interest
Interest costs rose to £9.0m in the year as we transitioned to IFRS 16
and also incurred costs from drawing down on our credit facility
which supported our working capital cycle and capital investment
in the period.
IFRS 16 impact
During the year we implemented IFRS 16, as required by International
Financial Reporting Standards. As we adopted the simplified transition
approach we have not restated any comparatives. To enable a year
on year comparison we have demonstrated above the impact that this
has on our current year profit. Although it has no impact on the FY20
PBT margin, it has decreased warehousing costs (mainly warehousing
leases) by 40bps, other operating costs (mainly office leases) by
40bps, whilst increasing depreciation by 80bps and keeping net
finance expense flat.
Taxation
The effective tax rate reduced by 540bps to 20.3% (2019: 25.7%).
This is due to the absence of the one-off adjusting factors which
arose in FY19. Going forward, ASOS expects the effective tax rate
to continue to be approximately 100bps higher than the prevailing
rate of UK corporation tax due to permanently disallowable items.
Earnings per share
Basic and diluted earnings per share increased by 330% to 126.3p
and by 327% to 125.6p respectively (2019: 29.4p and 29.4p).
This was driven by the increase in profit before tax during the year.
Cash flow
There was a £498.0m increase in net cash (cash and cash equivalents
less borrowings) in the year, including the cash proceeds associated
with the equity placing in April 2020 of £239.4m. This compares with
a £133.2m increase in net debt in the previous year. The cash inflow
in the year, excluding the equity raise, was driven by EBITDA of
£268.5m and an improvement in working capital of £140.3m. Of this
working capital inflow we benefited from COVID-19 related supply
chain impacts causing the peak stock build to be later than usual.
Capital expenditure of £115.6m is seen in cash capital expenditure
of £116.6m and a capital creditor decrease of £1.0m associated with
our FY20 investment.
Nick Beighton
Chief Executive Officer
Mat Dunn
Chief Financial Officer
9
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020
Performance
by market
UK
Retail sales grew by 18% to £1,175.9m during the year
as we continued to take share in our home market. The
customer facing improvements we made in product and
customer engagement have resonated well and proven
the appeal of the ASOS proposition. We now have over
7m active customers in the UK and saw growth of over
30% in Premier subscriptions this year. UK customers
showed a pronounced shift towards more deliberate
purchasing during lockdown, and when adjusting for
this change in underlying returns rate, we delivered
consistent sales growth across this year despite the
reduction in demand for the ‘going out’ product we
are best known for.
EU
We delivered a consistently strong performance across
the course of the year as we rebuilt customer momentum
following disruption from the go-live of our Euro Hub
warehouse automation last year. Retail sales growth for
the year was 22% as our active customer base grew
18%. This year our EU customers saw a much improved
stock pool with greater choice and availability and
benefited from a more dynamic trading stance. The
enhancements to delivery proposition unlocked by
automation have also supported performance in this
region, as we have rolled out later cut off times across
standard and next day delivery in France and in
Germany where our delivery proposition is now
industry-leading. France performed particularly well
during lockdown with lower relative online penetration
generating further opportunity for customer acquisition
during the year.
Our model is resonating well with fashion focused
20-somethings in Europe, and we have taken share
through the year. We are targeting further improvements
to continue enhancing our competitive positioning and
customer proposition including investment into localised
pricing on ASOS DESIGN.
10
UK performance
UK KPIs
Retail sales
Visits
Orders
Conversion
ABV
Active customers
Year to 31 August 2020
+18%
+17%
+10%
-30bps
Flat
7.1m (+11%)
UK retail sales grew 18% in the year, particularly pleasing in light
of the prolonged COVID-19 demand impact, demonstrating the
resilience of our model, appeal of our proposition and ability to pivot
in response to changing demand. Our performance was supported
by improvements in product, presentation and social media
engagement which were key focus areas this year. We have grown
the total UK customer base to over 7m, up 11% on the year.
ABV remained flat on the year, with the pronounced skew towards
lower ASP lockdown category mix in the second half offsetting the
ABV growth achieved in the first half.
EU performance
EU KPIs
Retail sales
Visits
Orders
Conversion
ABV
Active customers
Year to 31 August 2020
+22% (22% CC)
+20%
+14%
-20bps
(1%)
9.2m (+18%)
EU retail sales grew 22% (22% in constant currency) and represented
a consistent improvement in performance following last year’s
warehouse disruption and stock availability issues. The improved
delivery proposition and a more dynamic trading stance unlocked
by automation supported this strong sales performance. EU also saw
a less pronounced lockdown impact on customer behaviour and
purchasing behaviour began to return to more normal levels ahead
of the UK and US.
Active customer growth of 18%, with 1.4m customers added to
the base, demonstrates the progress made in rebuilding customer
momentum. New customer acquisition was particularly strong in
the second half, notably across territories with lower levels of online
penetration including Italy and France, with ‘Lockdown’ product a
particular appeal for these new customers. Traffic growth was strong
at +20% and ahead of orders growth of 14% as conversion stepped
back 20bps due to a greater mix of mobile web visitors with lower
initial conversion.
US
Performance in the US started the year well and
reflected the improvements we made to the stock profile
in our Atlanta warehouse. We added 0.3m customers
in the first half and sales growth of 25% was supported
by better conversion and strong order growth.
Performance in the second half slowed as this region
experienced the most severe disruption from COVID-19.
We saw a significant reduction in consumer demand,
and recovery did not come through at the same speed
as we saw in other markets. This has been driven by a
combination of market and ASOS specific factors. The US
20-something consumer has not benefited from the same
support measures for financial security as European
consumers, and the degree to which consumer lifestyles
have normalised also remains behind Europe. In addition
to this, we have also experienced challenges with our
stock pool in the US. The reduction in commercial flights
inhibited our ability to airfreight product into the US
at a time when this developing stock pool still requires
distribution from our other facilities. Whilst our product
offer is much enhanced, we still have further opportunity
to build out our localised stock offer, branded relationships
and in country sourcing, which will continue to be a focus
in FY21.
US performance
US KPIs
Retail sales
Visits
Orders
Conversion
ABV
Active customers
Year to 31 August 2020
+18% (16% CC)
+19%
+9%
-20bps
(2%)
3.2m (+14%)
US retail sales grew by 18% (16% in constant currency). We made a
strong start to the year in the first half, with growth of 25% supported
by better stock availability driving stronger order growth and
conversion. Performance slowed in the second half as we experienced
significant disruption from COVID-19. This was reflective of a divergent
approach to lockdown restrictions in the US and the higher mix of
occasion wear ASOS has in this market. The reduction in available
airfreight also disrupted stock availability in the US in the second half.
Despite the challenges experienced, the US total active customer
base grew at 14% in the year to 3.2m, with particularly strong new
customer growth. Traffic growth of 19% was particularly pleasing,
with the growth rate improving into the second half driven in part by
increased performance marketing spend and a positive customer
response to the launch of customer acquisition initiatives including
increased student discount activity.
Rest of World
Retail sales in our ROW territory grew 18% in the year.
This region is still fulfilled from our UK Hub in Barnsley
and the global restrictions on airfreight caused significant
disruption to our proposition for these countries. We
managed the impact through changes to delivery
thresholds to ensure we balanced basket profitability
with the customer experience. The changes we made
to thresholds supported growth in our ABV in the region
through an increase in items per basket. Australia
pleasingly grew at over 20% this year despite the
disruption from bush fires and the challenges we
experienced with fulfilment owing to airfreight restrictions.
The MENA region continued to perform extremely well
during the year, with Saudi Arabia the standout country
growing over 50%. Growth was supported by a more
locally relevant promotional calendar as well as
strong activity through Ramadan which resonated well.
Within Russia, performance was more constrained driven
by a challenging promotional environment. However,
our core proposition continues to resonate and we grew
our active customer base by 28%, which was ahead of
our sales growth.
ROW performance
ROW KPIs
Retail sales
Visits
Orders
Conversion
ABV
Active customers
Year to 31 August 2020
+18% (18% CC)
+19%
+5%
-20bps
+12%
3.9m (+18%)
ROW retail sales grew by 18% (18% in constant currency) with
particularly strong growth in Russia, Australia and the Middle East.
Performance was underpinned by a positive response to changes in
the rhythm of the trading calendar, more targeted promotional activity
and a quicker return towards a more normalised product mix in the
wake of COVID-19. Increased participation in Black Friday year on
year and a great response to Ramadan events in the Middle East
were particularly pleasing.
ABV increased 12% driven mainly by action taken to protect basket
economics in response to a significant increase in airfreight costs,
which drove a notable increase in items per basket. This also drove the
reduction in conversion as customers placed larger more considered
orders. Active customer growth of 18% was pleasing, driven by strong
new customer acquisition.
11
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Strengthened
foundations for growth
Delivery against six key priorities in FY20
has strengthened foundations for our
next stage of growth.
Leverage
benefits from transformational
investments
6
5
Optimise
approach to customer
acquisition
and retention
Strengthen
organisational capabilities
1
Our
key FY20
priorities
2
3
4
Continue to improve
presentation and social media
engagement
Remove
non-strategic cost
Further increase
product choice,
availability, price
and newness
12
1
Strengthening
organisational
capabilities
2
Removing
non-strategic cost
3
Further increasing
product choice, availability,
price and newness
We have made good progress this year
in building out the breadth and depth of
experience in our Executive team. During the
year, three new executives have joined the
business, Robert Birge as Chief Growth
Officer, Jo Butler as Chief People Officer and
Patrik Silén as Chief Strategy Officer. We will
announce our fourth and final appointment
to our new Executive team shortly. The Chief
Commercial Officer will take end-to-end
ownership of product, from design and
buying through to presentation. This new
Executive team will allow us to drive greater
end to end ownership and accountability of
product and customers as well as ensuring
we have the right capabilities as ASOS
continues to grow in terms of scale and
complexity. We have also reshaped our
organisation beyond the Executive team
building new structures, processes and ways
of working. This has enabled us to improve
our operational execution, whilst managing
significant organisational change and
building out our strategic framework to
support our future growth ambitions. As we
look forward there is still much for us to do to
improve our organisation but we have made
significant progress this year and have set the
foundations for the future.
As we set out this year, we had identified
a multi-year opportunity to drive greater
efficiency across our business allowing us to
maximise the benefit of our investment whilst
making sure we do that at minimum cost.
This opportunity is apparent in many areas
across the business, from the way we invest
into the customer experience and the return
generated from marketing, to the way our
teams are structured and our commercial
partner agreements. Whilst the opportunity
is potentially significant, this has been a new
challenge for us and we were rightly cautious
about how long it would take to capture
this opportunity. However, our progress in
removing c.£50m of non-strategic costs has
exceeded our initial expectations this year,
owing to the tenacity and adaptability of our
people, alongside the greater rigour instilled
in our financial discipline and operational
performance management processes. We
further leveraged the opportunity presented
by the disruption and operational change
required by COVID-19 to test and further
understand the return associated with
spend in a number of areas and took action
accordingly. Looking forward, there is further
opportunity but having taken these large
initial steps it will be more challenging to
access the next set of efficiencies. We are
clear what they are and what it will take,
but remain cautious about our rate and
speed of progress. However, we are
confident that this opportunity will support
continuing improvements in profitability, as
well as allowing for disciplined reinvestment
into the business.
We started the year well, backing our first
half trading plan with good availability and
a 13% year on year increase in newness.
This resonated well with customers and
was reflected in our strong first half sales
performance. The shape of customer
demand, and hence what resonated as the
most relevant product, shifted dramatically
from March onwards as COVID-19 related
lockdowns impacted customers’ lifestyles and
shopping habits. Product designed for ‘going
out’, especially dresses, have always been
central to our product offer and a point of
customer differentiation. Whilst demand
for ‘going out’ product has been severely
impacted by lifestyle restrictions, the strength
of our brand here remains a strategic
advantage for us in the medium term and we
have maintained our resource levels in this
area. We have adapted our product mix
to match this shift in 20-something lifestyles,
increasing our mix of casualwear, activewear
and Face + Body, but will not lose focus on
our core 20-something fashion audience
and the ‘going out’ product customers love
ASOS for.
This year, we have continued to build
momentum with our 13 strong family of
ASOS brands, a business that delivered sales
of over £1bn in the year. Collusion and ASOS
4505 both delivered great growth this year,
supported by how well the product resonated
with customers through lockdown. ASOS
4505 grew 89%, whilst Collusion grew 44%
and firmly established itself as a top 10 brand
on site.
ASOS Luxe and Dark Future were launched
as we developed further choice for our ‘glam
girl’ and ‘alpha male’ customer segments.
Both brands had good success with initial
launch ranges, but we have taken the
opportunity over the summer to further
develop customer engagement, increasing
choice in the range and backing the brands
with influencer led campaigns.
This September saw us launch our ‘ASOS
Must Haves’, key trend pieces of the season
at market leading price points to ensure
we are competitively positioned with our
younger customers. The initial collection
resonated well, with a focus on logos,
pastels, utility and checks, and two further
collections will launch in the coming months.
13
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Social media
Our inspirational product
presentation and relatable content
remain at the heart of how we
appeal to our 20-something
customers, ensuring strong levels
of engagement across all social
media channels. A highlight of this
year has been surpassing 10m
followers on Instagram. We also
demonstrated our ability to
resonate in key trading moments
over the Black Friday period,
when we generated 1.2bn
potential organic impressions,
landing ahead of many of
our peers. From 7am on the
Thursday before Black Friday
#ASOSBlackFriday was trending
worldwide. Our success was
driven by a surprise and delight
activation that got customers
talking about their bargain
purchases, increasing
impressions of our product.
Face + Body and activewear are two
strategic categories that we have entered
in a meaningful way within the last few
years. Both of these categories have seen
extremely strong customer demand through
lockdown and we have capitalised on the
opportunity to accelerate our ambitions in
these categories.
We have approached our Face + Body
category through a different lens and in a
way that resonates with our 20-something
customer, differentiating our positioning
and authority within the market. We have
consistently grown our offering of the most
relevant brands over the last two years,
highlights from the brands added this year
include Charlotte Tilbury and Urban Decay.
Whilst Face + Body compliments our core
fashion offering well, customer shopping
behaviour and expectations from this
category differ and we have therefore built
out a team of specialists to support our plans
to triple our sales over the next three years.
Sportswear is a huge market globally, and
we see clear opportunity to continue
increasing our share in this category. Growth
has been particularly strong this year driven
by lockdown, up c.50%, and we believe our
focus on curating and presenting the best edit
of sports lifestyle and activewear product for
our 20-something customer, from the most
globally relevant sports brands, will further
support our penetration in this category.
14
4
5
Continue improving
presentation and social
media engagement
Optimising
approach to customer
acquisition and retention
sharper, more targeted events. This has
allowed us to improve the return on these
events, drive incremental traffic from our
existing consumers, as well as increased
levels of customer acquisition.
Looking forward, we will continue with further
experimentation and a data-led approach
to ensure we are continually optimising
and building greater agility into the way
we deploy spend.
6
Leveraging
benefits from
transformational
investments
We built strong customer momentum through
the year increasing our active customer
base by 3.1m to 23.4m. This momentum
has been supported by the improvements
we have made in restoring our compelling
customer proposition across our product,
presentation, social media content and
dynamic trading stance, but it has been
amplified by progress in refining our
approach to the allocation of consumer-
facing investment.
We have deployed a more scientific
approach to testing to deepen our
understanding of customer behaviour and
to ensure we are driving the right return
from all investment. During the year we
have experimented with geo-targeting,
prospecting, retargeting, new social media
channels and deepened our understanding
of Pay Per Click (PPC). This drove efficiency
through our marketing spend, and a clearer
understanding of the incrementality
generated by investment through different
channels, allowing us to redirect our
investment as appropriate. We continue
to view our promotional calendar and
activations as an effective mechanism for
customer acquisition, retention and to
maximise the frequency with which customers
engage with ASOS. We adopted a more
dynamic approach this year – with shorter,
This year we made consistent progress on
further improving our product presentation
and social media engagement, with a
particular focus on developing video content
that feels native and organic to app channels.
The year had started well ahead of peak
trading and we maintained this momentum
through the second half by successfully
pivoting our content to reflect the realities
of lockdown lifestyles for our customers.
This translated into over 79m engagements
across social channels during the year,
with over 200m video views and over
275m story views.
We have continued to experiment with
different social media channels this year,
developing the most engaging content
and ensuring our presence is strong on the
platforms most relevant to our customers.
Our first major TikTok campaign,
“AySauceChallenge”, used a combination
of ASOS and creator commissioned content
to drive ASOS brand recognition and
awareness to great success. The challenge
hashtag generated over 1.6bn views, and
made ASOS the only European fashion
brand to break a billion views over the
campaign period in 2020. We have
also begun to experiment with content
on Twitch, the live streaming platform for
gamers, and are excited by the prospects
for reaching our target customers on new
and different channels.
Highlights from our influencer collaborations
this year have included Lottie Tomlinson
and Wes Nelson fronting the first drop of our
‘ASOS Must Haves’ collection, a campaign
which generated engaging content for
multiple channels and saw over 8.7m video
views. Sarah Ashcroft and Luke Trotman
acted as ambassadors for our latest ASOS
Luxe and Dark Future collections. The content
produced here resonated extremely well with
the influencer led activity generating over
10m engagements with a social reach of
almost 34m.
Logistics
COVID-19 caused significant disruption
to operations and efficiency across our
network as we re-engineered our processes
and made structural changes to ensure
our warehouses were compliant with best
practice social distancing requirements.
Perspex shielding was built to separate the
680 pack benches across our facilities,
additional sheltered space was created
outside to facilitate break times, sanitation
and temperature checking equipment was
installed as well as regulating the way
staff entered, exited and moved during
their shift across site. This was delivered
whilst continuing to keep our warehouses
operational, although it did require a
significant reduction in capacity as we
implemented this magnitude of change.
We have nearly concluded an incremental
£5m of investment this year to ensure that
our warehouses are compliant with best
practice social distancing on a permanent
basis. This includes improving ventilation,
increasing turnstiles and structural changes
to support the one way systems in place.
On an underlying basis we have driven
a significant step change in warehouse
efficiency, most notably through the pick
and pack KPIs in Euro Hub following
implementation of automation last year.
Pick units per man hour improved by 57%
whilst pack improved by 14%. We also
saw further efficiency in both our UK and
US hubs which drove improvements in
our network wide KPIs. This efficiency
has enabled us to keep investing into our
delivery proposition. Next day delivery is
now available to over 99% of US customers
and we reduced our Canadian standard
delivery proposition from 14 to 6 days.
Evening next day delivery is available with
a midnight cut off across urban Germany
and we were able to support the addition
of many other customer delivery options
including further pick up drop off points
and more specific delivery windows.
adidas X IVY
PARK launch
In January, we dropped
Beyoncé’s long-awaited adidas X
IVY PARK collaboration. This
gender-neutral capsule collection
comprised of sporty shapes,
high-tech materials, cute co-ords
and oversized outerwear.
Working closely with adidas on
the launch of this collection, our
collaborative marketing efforts
included an ASOS homepage
takeover, out-of-home advertising
in London and New York, and
social assets featuring Queen B
herself. The initial product range
sold out within a few hours, which
makes us even more excited for
the drops we have coming up
over the next few months.
This year will see commencement of
investment into our fourth fulfilment centre,
based in the UK to further support growth in
our home market, but also provide flexibility
for fulfilment globally. This facility will be
operational in the next financial year but
allows for a gradual ramp up and testing
ahead of the capacity requirement for peak
trade in 2023.
Tech
Investment in our technology platforms
has been central to delivery of an ever
improving ASOS customer experience.
Whilst we delayed implementation of our
TGR programme to FY21, to ensure we were
not taking undue execution risk through
lockdown, progress has continued across
all our platforms despite the disruption and
uncertainty in outlook COVID-19 created.
Multiple releases across the year supported
in driving and enhancing efficiency through
our outbound delivery and returns
operations. Highlights include rollout of
paperless online returns to the UK, US and
Germany, logic and functionality to support
parcel consolidation, and development of
flexible fulfilment across our network of
warehouses. Flexible fulfilment unlocks the
ability to service customers with brands and
product from across our warehouse network
if not available in the regional warehouse.
This October saw the release of customer
product reviews on site, which should
support in customer engagement and
also unlocks greater potential for strategic
growth in Face + Body. Further payment
methods have been rolled out across
the UK, US, Germany and Australia
and we have made changes to optimise
our payment acquiring, improving our
transaction costs and our local acceptance
rates. We have also delivered further
domain consolidation to enhance our SEO
and improved our page speed downloads
across the core customer journey to help
support conversion.
15
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Key Performance Indicators
Our key performance indicators allow us to
measure both the financial value we create
for our shareholders and the strategic value
in growing our business and delivering
our purpose.
Financial objectives
Key financial measures
Our key financial measures give us a clear
indication of the overall performance and
position of ASOS. In some cases, the figure
is an alternative performance measure,
i.e. not a statutory measure. In these cases,
information is shown in the definition to
cross-reference to the corresponding
statutory measure.
Revenue has grown by 19% and profit
before tax1 by 329%. Our EBITDA margin1
grew by 430bps and our cash generation2
increased by 294%.
Revenue Retail sales, delivery receipts and third-party revenues from
continuing operations
Gross margin Gross profit as a percentage of revenue
EBITDA margin1 Profit before interest, tax, depreciation and amortisation
as a percentage of revenue
EBIT margin1 Operating profit as a percentage of revenue
Profit before tax1
Diluted EPS Profit after tax divided by the weighted average number of shares in
issue during the period, adjusted for the effects of potentially dilutive share options
Cash generation2 The movement between opening and closing net cash/(debt)
position where net cash/(debt) is the cash and cash equivalents less borrowings
Strategic objectives
Key strategic measures
We are really pleased with the progress
of almost all of our key strategic measures
Active customers increased 15% to 23.4m.
Orders and visits are up 11% and 19%
respectively, and the trend to access our site
through mobile devices continues. Our Net
Promoter Score stepped back by two points
from last year.
Active customers Number of customers having shopped in the last 12 months
as at 31 August
Total orders Total orders placed
Total visits Number of visits to ASOS.com via any device
Average order frequency Last 12 months’ total orders divided by active
customers
ABV Average basket value, being total order value before returns and discounts,
including VAT, divided by total orders
Mobile device visits Number of visits to ASOS.com on any mobile device
divided by total visits
Group conversion Percentage of visits that convert to an order
NPS Net Promoter Score based on a customer pulse survey and this represents the
movement in the average score in the 12-month period to 31 August
1 FY20 figures include the transition to IFRS 16 ‘Leases’. The EBITDA margin excluding IFRS 16 would have
been 7.4%; +350bps year on year
2 FY20 figure excludes the net equity raise proceeds of £239.4m
2 020
2019
2 020
2019
2 020
2019
2 020
2019
2 020
2019
2 020
2019
2 020
2019
2 020
2019
2 020
2019
2 020
2019
2 020
2019
2 020
2019
2 020
2019
2 020
2019
2 020
2019
£3,263.5m
£2,733.5m
19%
47.4%
48.8%
8.2%1
140bps
430bps
4.6%
330bps
£142.1m
329%
125.6p
327%
3.9%
1.3%
£33.1m
29.4p
(£132.2m)
£258.6m2
294%
23.4m
20.3m
80.2m
72.3m
15%
11%
2,691.2m
2,266.5m
19%
3.43
3.56
£71.92
£71.29
4%
1%
85.5%
81.9%
360bps
3.0%
3.2%
20bps
57
59
2
16
17
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Looking to
the future
Strategic focus and execution
Our vision is to become the number one
destination for fashion-loving 20-somethings
worldwide and we began our journey
towards becoming a truly global retailer
some years ago. Initially this was through
building a strong product portfolio for global
markets. More recently we have deployed
fulfilment centres in the US and Europe, to
enhance our proposition and set the physical
foundations for the next stage of the journey.
We have made good progress and have
learnt a lot. This year we needed to build on
our physical infrastructure to ensure we had
the right processes and ways of working
appropriate for a business of global scale
and complexity. The focus on our six key
priorities in this financial year has allowed
us to do this and ensure we have the right
capabilities and financial strength for us to
begin the next phase of our growth.
We know that to make our vision a reality
we need to meet all the fashion needs of
20-somethings in a way that inspires, excites
and engages. The next stage of our journey
will require us to continue building towards
becoming a truly global retailer supported
by three key strategic pillars:
– Further develop the range of unique
design only we offer to grow the ASOS
brands which are already a £1bn
business
– Develop the ASOS platform, enhancing
our category breadth and flexibility to
ensure we have more of the products
20-somethings want whenever they
want it
– Improve the ASOS customer experience
to make it more inspiring, exciting,
personalised and friction free
These will be enabled by an efficient,
effective and sustainable model.
18
These pillars and priorities will serve us well
for the next stage of growth, providing the
strategic framework as our initiatives evolve
each year.
This will take time to build out but will
broaden our appeal to a wider range of
consumers and meet a gap in our portfolio
for lower-priced fashion-forward product.
In the current fiscal year, we will take a
further leap forward in becoming a truly
global retailer with the deployment of our
TGR programme – which will give us the
enhanced buying, merchandising, planning
and stock management capabilities we need
to underpin our global growth aspirations.
These capabilities will enable our retail
teams to deliver a more consistent product
experience to our consumers across
the globe.
Within the ASOS brands, our focus for the
year will be to continue to enhance the range
of our core ASOS DESIGN product whilst
we further develop our ranges in Dark Future,
ASOS Luxe, Collusion and ASOS 4505.
We will also launch a new brand, AsYou,
at a typically lower price point which will stay
true to our ethos and design-led approach.
The priorities for the ASOS platform will
be to further enhance the customer offer
broadening its appeal in the strategic growth
categories of activewear and Face + Body.
We made much progress in FY20 but there
is much more opportunity for us to build these
categories. We will also start to use a more
flexible approach to fulfilment, increasing
both range and availability by giving
consumers access to product from across the
ASOS warehouse network. We will begin
this, starting in the US, in the first half of the
year. This will start to enhance our offering
and we will work with key brand partners
to build the capability to deliver to our
consumers directly from their warehouses
in the coming years.
In terms of the ASOS customer experience
we will continue to improve the range and
flexibility of our customer offer, giving
them a compelling reason to shop with us
more frequently by making our offer more
differentiated by geography and consumer
type. We will also enhance our on-site
experience, with the recently introduced
customer reviews capability being the
first enhancement. We will also continue
to develop our payment and delivery
propositions, particularly in Europe and
the US. As part of this we will look to
leverage the warehouse investments we
have already made, looking to push cut-off
times later as we build scale and increasing
the range of ways consumers can receive
and return products.
With the top team now in place and much
work done to develop our core processes
and ways of working, our focus will shift to
building out the depth of our organisational
capabilities whilst looking for further
efficiencies across our business. This will
involve a particular focus on enhancing our
geographical capabilities, building out our
category teams and improving our sourcing
capabilities, whilst enhancing our consumer
interaction by a broader range of marketing
skills. Results will not be immediate, but we
are confident that we will continue to evolve
our model to make it more global and with
a greater range and depth of subject matter
expertise.
This level of change will require a more robust
model for delivering strategic change at
ASOS and we are building a newly formed
cross-functional team to co-ordinate change
and projects across the business. This will
support in driving alignment and momentum
on the many initiatives we have in-flight and
to support our next stage of growth.
Outlook
Looking ahead, we remain well positioned
to capture the global opportunity through the
continued development of the ASOS brands,
the ASOS platform and the ASOS customer
experience. We have demonstrated and
enhanced our operational flexibility this year,
and are emerging a stronger, more resilient
and agile business.
However, whilst we are well positioned for
peak trading and the year ahead, we are
cautious on the outlook for consumer
demand, and will remain so until lifestyles
and financial stability for our 20-something
customers start to normalise. Timelines for
containment of the virus and a vaccine still
look uncertain and a number of our major
territories are facing into the prospect of
a second wave of cases and increasing
lockdown measures. It is clear that a normal
pattern of social events is not going to resume
in the short term so whilst we have confidence
in our ability to continue growing our market
share globally, we are cognisant of the
economic impact this crisis is having on our
20-something customers and the pressure
on their disposable incomes.
The rigorous performance management and
operational grip demonstrated over the last
12 months gives us confidence in our ability
to navigate the uncertain year ahead.
Excluding the favourable COVID-19 related
cost and cash impacts experienced this
year, we expect to continue to grow our
profitability whilst sustaining positive cash
generation. However, we remain conscious
of the potential financial consequences
associated with Brexit, and whilst we are
comfortable with our business readiness
and the precautions taken, the scale and
nature of the impact remains outside of our
control. Despite the uncertainty ahead,
the operational rigour and flexibility proven
in our model and the strong customer
momentum we have built will support our
progression as one of the few truly global
leaders in fashion retail.
Nick Beighton
Chief Executive Officer
Mat Dunn
Chief Financial Officer
19
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Our five strategic
priorities for the future
Our strategic pillars provide
the framework for our global
business model…
1.
2.
Truly global retailer for
fashion-loving 20-somethings
3.
4.
The ASOS
brands
The ASOS
platform
The ASOS
customer
experience
5.
Effective, efficient and
sustainable model
…and are underpinned
by our corresponding
strategic priorities
1.
Expand our
global reach
and local scale
by accelerating
growth in key
markets
2.
Grow our
unique ASOS
brands
by launching
new brands and
improving on both
speed to market
and price
3.
Enhance our
flexible and
multi-brand
platform
by growing
high potential
categories,
implementing
flexible fulfilment
and improving
proposition
4.
5.
Improve our personalised
customer experience
through the application of data
science and experimentation
to deliver the most engaging
experience
Develop our effective,
efficient and sustainable
model by transforming
our organisation including
upgrading talent and
capabilities, improving
cross-functional ways of
working and further driving
responsibility for everything
we do
20
21
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Stakeholder
engagement
Strong engagement with our
stakeholders helps us to build a better
business for the future.
The Board understands the importance of
engaging with our stakeholders and ensuring
that they are an important part of the Board’s
discussions and decision-making.
The following pages comprise our section
172 statement, outlining how the Directors
have, in performing their duties over the
course of the year, had regard to the matters
set out in Section 172(1)(a) to (f) of the
Companies Act 2006.
Our key
stakeholders… Why they are important… How we engaged…
Our Customers
Our ASOSers
Our goal is to create and curate
products and experiences to
inspire fashion-loving
20-somethings. To stay relevant
to our 20-something audience,
it is essential that we never lose
touch with what matters to them,
whoever and wherever they
are. It’s vital that we engage
frequently with our customers
to ensure we can provide them
with what they want, when
they want it. The rapid shift in
customer habits during
COVID-19 demonstrates why
it is so important for us to be
in constant contact with our
customers and to be able to
pivot our content to stay relevant
to our customers. Ensuring we
stay relevant to our customers
is key to the long-term success
of the business.
Our ASOSers are the people
behind the brand. Our purpose
is “to give you the confidence
to be whoever you want to be”
and we want to ensure we
allow our employees to do
just that. We are committed to
ensuring our employees work
in an innovative, entrepreneurial
and enjoyable working
environment, with a diverse
and inclusive workforce, where
every voice is heard throughout
the Group. Having motivated
and engaged ASOSers will
drive us to achieve our strategy
and ultimately our long-term
success.
– At the beginning of the year, the Board set out the Company’s priorities for FY20, to ensure
we restored the strength of our customer facing offer, rebuilding momentum and executing
our strategy consistently.
– Throughout the year, the Board has prioritised discussions on the Company’s strategy, to ensure
we continue advancing our mission to be the number one destination for fashion-loving
20-somethings globally.
– Our curated selection of fashion and Face+Body products are desirable and relevant to our
20-something customers and our distinctively designed and sustainably sourced own brand
offer gives our customers a unique reason to shop with us.
– We provide inspirational and engaging content to our customers, through our inclusive social
media channels and our carefully presented product imagery. We now have 10.6m followers
on Instagram and a recent TikTok campaign surpassed 1.6bn views. We are constantly looking
for new and innovative ways to engage with our customers.
– The investments we make in technology, operations and people reflect the needs of our target
customers. Our app and website create a friction-free and user-friendly experience for our
customers and our dedicated Customer Care Team aim to deliver exceptional levels of
customer service to our customers.
– During COVID-19, our strategy was to provide engagement, support, reassurance, confidence
and optimism to our customers through our social media channels. We remained relevant to our
customers’ needs by pivoting our product mix during COVID-19 to respond to customers’
shifting lifestyles.
– The Board has appointed Karen Geary as our Designated Non-executive Director for
employee engagement. During the year, Karen met with the Chairs of our employee forum,
InTouch, to discuss employee sentiment, the key challenges facing employees, how to further
elevate InTouch within the business and the Company’s response to COVID-19. The outcomes
of the meeting were fed back to the Board and with the support of our Chief People Officer,
work is underway to elevate the role of InTouch further within the business. Our Chairman,
Adam Crozier, also attended an InTouch forum during the year.
– The Executive Committee engage with employees through ASOS Voices, a monthly, all
company town hall, which provides the Executive Committee the opportunity to update
employees on recent activities and performance, and provides an opportunity for ASOSers
to ask questions.
– Throughout the COVID-19 pandemic, our senior leaders dialled up their live events and drop-in
sessions to keep ASOSers informed and engaged.
– During COVID-19, the Board’s priority was the health and wellbeing of our ASOSers. We
transformed our ways of working in response to COVID-19 and created our ‘RE-Assembles’
programme to bring our employees back to our COVID-secure workplace when the time
was right.
– All ASOSers were invited to complete a wellbeing survey during the lockdown in the UK to
understand concerns and overall sentiment, the results of which were fed back to the Executive
Committee and Board.
Our key
stakeholders… Why they are important… How we engaged…
Our
Shareholders
A key objective of the Board is
to create value for shareholders
and our purpose, values and
strategy strive to deliver long-
term, sustainable growth.
Our Suppliers
Maintaining close working
relationships and open
dialogue with our suppliers and
brands is key to ensuring that
we continue to create and
curate the most relevant product
range for fashion-loving
20-somethings around the
globe, which is key to the
long-term success of the Group.
Our Community Operating responsibly in
everything we do is of great
importance to us. From the way
we manage our supply chain
to how we serve and speak to
our customers: it all matters.
We also want to go further to
find solutions to the challenges
that we, our industry, and our
customers face. As we continue
to grow, it is imperative for the
long-term success of the Group
that we continue to manage
our impact on universal issues
such as climate change and
plastic waste.
– The Board receives regular updates on shareholder and analyst sentiment and peer analysis.
– Throughout the year our Investor Relations team regularly engaged with our larger
shareholders.
– Our CEO, CFO and Director of Investor Relations held a roadshow after our FY19 results
announcement and will hold a virtual roadshow following our FY20 results announcement.
– The Chair, Senior Independent Director and Committee Chairs are all available to meet with
shareholders, where requested. During the year, Karen Geary, Chair of the Remuneration
Committee, engaged in consultation exercises with our largest shareholders to discuss our
approach to remuneration.
– Our AGM is usually a key way for shareholders to meet face-to-face to discuss the our annual
performance and strategy. As per government guidance on preventing the spread of
COVID-19, we will be holding a closed meeting this year, but we look forward to welcoming
shareholders at the AGM in 2021.
– The Board is committed to ensuring that ASOS continues to operate responsibly in everything
that we do as part of our Fashion with Integrity programme, including the way we manage our
supply chain. The Board receives regular briefings from management in respect of our supply
chain, particularly during COVID-19.
– During COVID-19, we committed to paying for all own-brand made product and ensuring we
upheld our standard payment terms, in order to protect our suppliers and workers in our global
supply chain. We have continued to place new orders with our suppliers, and we have worked
closely with them to agree appropriate supporting measures to ensure the health and safety
of workers.
– We have a dedicated ethical trade team who manage our Ethical Trade programme and work
with third-party auditors in key product regions to understand country-specific issues, ensuring
ethical standards are being upheld and regularly engage with local and international
stakeholders.
– During the year, we published our fifth in-depth Modern Slavery Statement and continue
to add depth to our human rights due diligence processes.
– Our Fashion with Integrity programme underpins our business model and ensures that we are
a part of finding solutions to shared global challenges and putting these into action across all
aspects of the business.
– In 2020, we became signatories of the Ellen MacArthur Foundation’s New Plastic Economy
Global Commitment, demonstrating our committed approach to our packaging and reducing
our contributions to global plastic pollution. We are constantly striving to decarbonise our
operations, for example by prioritising sea, road and rail freight, and working collaboratively
with our supply chain partners to advance low-carbon innovations.
– The ASOS Foundation partners with charities to provide infrastructure, training and support to
enable disadvantaged young people to reach their potential. Work is carried out in the UK,
Kenya and India, which has become even more critical as young people face the new and
difficult challenges caused by COVID-19. During the year, the Board approved a charitable
donation of £500k to the ASOS Foundation for FY21.
– During COVID-19, it was more important than ever for ASOS to support our local communities
through the pandemic. The Board supported the donation of over 4,000 care packages to
eight of our local NHS hospitals, and the creation of charity fundraising products to raise over
£500k for important causes.
Key Board decisions during FY20
A key consideration of the Board in making its decisions is to balance the sometimes conflicting needs of our stakeholders to ensure that they
are all treated consistently and fairly. This was demonstrated through the following key decisions made by the Board during FY20:
Placing of shares
When considering the non-pre-emptive placing of ordinary shares that was successfully completed in April 2020, the Directors unanimously
agreed that the equity raise would be in the best interests of all stakeholders, taking into consideration, among other things: the impact on our
ASOSers, suppliers and shareholders if we did not take action to provide sufficient liquidity and flexibility to manage the business through and
beyond the period of disruption caused by COVID-19; the protection of the long-term growth of the Company for all of our stakeholders and
our shareholders; our long-standing supplier base and how to work supportively with them to mutual advantage as the industry continued to
recover from the impacts of the pandemic; the ability to avoid decisions being made for short-term liquidity or cash management reasons
that may cause detriment to ASOS’ long-term prospects; and the maintenance of our Fashion with Integrity programme to enable the Company
to continue to operate responsibly and in the most sustainable way for the benefit of our communities.
ASOS Foundation donation
During the year, the Board approved a £500k donation to the ASOS Foundation for FY21. The Directors unanimously agreed that it would
be in the best interests of all stakeholders, taking into consideration, among other things: the impact to the ASOS Foundation’s long-standing
partnerships, which provide infrastructure, training and support to disadvantaged young people in the UK, Kenya and India; and the value the
ASOS Foundation creates in the eyes of our customers and our ASOSers.
22
23
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 The people
behind the brand
Over the last year we’ve continued to evolve
how we support our people, focusing on
positive wellbeing, resilience, building
community and inspiring growth and learning.
We know a focus on positive wellbeing is not
just important during crisis points. Our priority
remains to support wellbeing as a whole,
whether it be physical, mental, financial
or social, and through a suite of resources
we have:
– Supported Mental Health Awareness
week with 20 live events designed to
inspire and educate – over 1,000
ASOSers tuned in.
– Launched ‘Unmind’ our Mental Health
App, enabling our people to proactively
manage their health ‘all of the time’
– 42% of our workforce utilise this tool.
– Supported those affected by organisation
changes, with career transition
workshops, CV building skills, interview
techniques and helping them to build
their LinkedIn profiles.
– Continued to deliver existing resources
such as our employee assistance
programme (EAP), Mental Health First
Aider programme, new healthcare
benefits, and family and financial
wellbeing hubs.
– Our active network of employee
representatives – ASOS InTouch – have
supported ASOSers throughout this year,
ensuring employees’ voices are heard
and that important business decisions
are informed by employee feedback.
Our standout
moments from
2019/20
– Launching four new apprenticeship
programmes, increasing the number
of apprentices by over 200%
– Launching our first anti-racism toolkit,
designed to educate ASOSers
through digital resources, external
articles, videos and discussion points
– Creating the ‘RE-Assembles’ brand
and transforming our ways of
working in response to COVID-19
157,000
external applications
managed through our
career site – 24% increase
from the previous year
15%
increase in women hired
into leadership roles
Our focus on wellbeing
Wellbeing is embedded in our culture.
Unexpectedly, we faced unprecedented
times with the COVID-19 global pandemic,
and it was even more important for us to
check in regularly with our people, put
minds at ease and help them feel safe,
both physically and mentally.
During the pandemic, we switched our
all-employee communication sessions
‘ASOS Voices’ to virtual sessions and our
senior leaders dialled up their live events
and drop-in sessions, keeping our people
informed and engaged, and providing
transparency and encouraging open
dialogue.
A bespoke edit of virtual wellbeing events
and activities were delivered between March
and June, offering something for everyone,
from yoga classes, DJ sets and baking, to
mindfulness webinars and art classes, which
complemented more targeted workshops to
help our people to adapt to the new ways of
working, managing their teams remotely and
making the best use of technology. Sessions
enabled ASOSers to dial in at a time that
suited them best, with new working patterns
to assist those with caring responsibilities.
We know that high levels of employee
engagement lead to lower levels of attrition,
higher levels of productivity and a more
enjoyable work environment, where people
thrive. We have worked hard at building
employee engagement, and 70% of
ASOSers reported that they felt supported
by leaders and connected to the business
throughout lockdown.
When the time was right, and with new safety
measures in place, we led the way in bringing
our people back to our COVID-19 secure
workplace, through our ‘RE-Assembles’
programme. As part of this programme 13
interactive live events were organised and
watched by over 1,500 ASOSers.
24
Since signing the Charter, we have:
– Appointed an Executive Sponsor for
Race who will chair the ‘Race at Work’
Committee, which is made up of elected
representatives from the BAME Colleague
Forum, and will provide visible leadership
on race and ethnicity at ASOS. Our
Executive Sponsor will drive key actions
such as setting targets for ethnic minority
representation and supporting mentoring
and sponsorship programmes.
– Created a BAME Reverse Mentor
programme for our Executive team.
– Introduced D&I indicators into our
resourcing systems, enabling us to
capture and report on ethnicity and
other D&I indicators of job applicants.
– Held a D&I focused week on anti-racism
with interactive events.
– Held a Stand By Me allyship workshop
that was attended by 120 ASOSers, with
a week of thought-provoking talks and
webinars from leading BAME influencers
on subjects such as Black Minds Matter,
Black entrepreneurs and Dope Black
Moms and Dads, supporting black
parents in the workplace.
– Launched our Anti-Racism Toolkit.
– Demonstrated our commitment to
support ethnic minority career
progression with the introduction of the
ILM Level 5 in Coaching and Mentoring
for all BAME ASOSers taking on the
role of Reverse Mentors to a member
of the Executive team.
– Committed to launching a fast track
leadership programme for BAME
Talent in FY21.
– Committed at ASOS Plc Board Level
to a zero-tolerance policy on harassment
and bullying in a new policy statement
on anti-racism, with all instances of
discrimination escalated to the Board.
Attracting amazing talent
ASOS remains a destination of choice for
external job seekers, with our employer
brand attracting c.157,000 external
applications through our careers site in the
past year. Our LinkedIn following has grown
by 25%, reaching over 440,000 globally.
Our focus remained on attracting amazing
talent, with Diversity & Inclusion (D&I) at the
heart of our resourcing initiatives, reaching
diverse talent pools and removing barriers
to entry.
We strengthened our Executive team with the
appointment of a new Chief People Officer,
Chief Strategy Officer, Chief Growth Officer
and Chief Commercial Officer. And at
leadership level, 47% of our hires were
females, in comparison to 32% in the
previous year – a 15% increase. We also
saw an increase in hiring women into STEM
roles, with 35% of all technology hires being
women, up 5% from the previous year.
In addition to external hiring, we also placed
a greater emphasis on internal mobility,
talent management and succession planning,
increasing internal hiring by 8%.
Building our foundations by
developing talent
Whilst key dates for emerging talent, such
as Graduate Fashion Week, were paused,
we held a series of online presentations and
workshops with universities and colleges
to connect with students. We also contributed
to a project run by the Centre for Sustainable
Fashion on the future skills required in
Sustainable Fashion Design in higher
education.
For the third year in a row we were awarded
Graduate Employer of Choice for Buying
and Purchasing at the Times Graduate
Recruitment Awards 2020, and we have
seen a record number of applications for
opportunities to join our buying teams.
During the year, we continued to proudly
support our partnerships and invest in
specialist training with:
– Ada – the National College for Digital
Skills in Tottenham
– University College London (UCL) –
Global Leaders in Computer Sciences
and Artificial Intelligence
– Imperial College London and University
of Oxford – Global Leaders in Modern
Statistics and Statistical Machine Learning
– Microsoft – Azure and ‘Kubernauts’ Next
Gen Compute programme
These partnerships yielded world-class AI
research in topics such as experimentation,
demand forecasting, computer vision and
natural language processing which have
been applied to our business. It has also
connected Tech ASOSers to the best thinking
and development of new skills, to create
experiences on our technology platforms
that delight our customers.
In terms of wider initiatives, business specific
development programmes were designed
and delivered. An example of this was
‘Finance Develops’, whereby the ASOS
Academy and Finance development
ambassadors shared knowledge, delivered
technical training, created digital learning,
enabled personal development and best
practice ways of working in a virtual
environment.
A significant focus for us going forward,
across all parts of our business, will be
continuing to invest in apprenticeships,
becoming a dedicated employer of choice,
growing our talent from within, whilst
maximising utilisation of the levy pot.
Our commitment to diversity
and removing bias
We have seen a 9% increase in the number of
senior leadership roles held by female leaders.
We continue to close the gender pay gap
which stands at 26.6% down from 29.7%.
We have taken further steps to address the
gap, maintaining our generous family friendly
policies, a review of our talent attraction
strategy and by emphasising gender
inclusivity through diversity training.
The Black Lives Matter movement shone a
spotlight and gave the BAME community at
ASOS a much louder voice on the inequities
and prejudices that are evident in our every
day lives. A BAME Colleague Forum was set
up, providing a rich source of feedback
in order to take some demonstrable actions
internally, following on from our ‘We Are
Anti-Racist’ social media post. A new home
for D&I was created with the appointment
of a D&I partner and soon to be appointed
Head of Belonging & Engagement who will
take the lead on this important agenda to
create change, transparency and momentum.
In addition, we signed the BITC Race at
Work Charter, demonstrating our public
commitment to not only being anti-racist,
but also to bring about positive change.
25
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Fashion with
Integrity
The turbulent events of the past year have highlighted how
important it is for ASOS to continue to operate responsibly in
everything we do, from the way we manage our supply chain to
how we serve and speak to our customers. It has also made it clear
that we must go further to find solutions to the challenges that we,
our industry and our customers face.
Our products
We work hard to produce and sell great products that are also responsibly produced and
sustainably sourced. We focus on three main areas: ethical trade, sustainable sourcing and
engaging with third-party brands.
We’re committed to using our growing global reach to respect people, animals and the planet,
with great products that our customers can trust. With approximately 896 factories and 173
suppliers in 24 countries, tracking the journey of an ASOS garment – and reducing exposure
to environmental and social risks along the way – is critical to our business. So far, we’ve fully
mapped tiers 1, 2 and 3 of our supply chain and partially mapped tiers 4 and 5.
Tier
Tier 1
Tier 2
Tier 3
Tier 4
Definition
Example
Main production
sites
Factory which cuts, sews, finishes ASOS
Brands product and ships to ASOS
Process integral
to production
Provider of one or more processes, e.g.
stitching, cutting, packing, quality
control, warehouses
Status
Fully mapped
Fully mapped
Enhancements
to product
Fabric and
components
Provider of one or more processes, e.g.
printing, dyeing, laundry, embroidery
Fully mapped
Fabric mills, tanneries, hardware and
trims
Partially mapped
Tier 5
Raw materials
Textile fibres, natural and man-made
materials
Partially mapped
Case study: ‘Preventing modern
slavery in Mauritius’
In 2019, ASOS joined Anti-Slavery International, IndustriALL Global Union and
local organisations from Bangladesh and Madagascar in a project to tackle
modern slavery risks in global supply chains in Mauritius. Bringing together NGOs,
trade unions and corporate partners, the project uses innovative technological
solutions to tackle risks facing migrant workers in or travelling to Mauritius, backed
by funding from the UK Home Office under its Modern Slavery Innovation Fund.
In September 2019, millions around the
world marched for climate action, underlining
the need for us to continue to strive for
environmental sustainability in the way our
products are made and the way our business
operates. Nearly nine months later, the tragic
death of George Floyd inspired a global
wave of support for the Black Lives Matter
movement and showed that there is much
we can do to scrutinise and improve our
own efforts in this area. In the midst of these
events, and as we have written elsewhere in
this report, the COVID-19 pandemic has also
encouraged us to work even more closely
with our local communities and charities, and
shown the role we can play in being there for
our customers and working together with our
supply chain partners, whose continued
support is critical to our success.
Much has changed in the past 12 months
but the need to work together to find solutions
to our shared global challenges has never
been greater. Our Fashion with Integrity
programme ensures that we are a part of
finding these solutions, putting them into
action across all aspects of the business.
Our work within Fashion with Integrity is
divided into four key pillars: our products, our
business, our customers and our communities.
Ethical trade
Our Ethical Trade programme holds us to
account when it comes to human rights
impacts associated with producing our
garments. We share factory information
with our customers and other stakeholders
such as IndustriALL Global Union through
an interactive supply chain map and factory
list, which are updated every two months.
In the last 12 months, we have conducted
690 unannounced factory audits against our
Supplier Ethical Code with expert third-party
auditors. Our audit programme has started
to expand to include tier 2 (see above) in all
regions. More detail on our Ethical Trade
programme is available at asosplc.com.
26
Responding to COVID-19
Garment workers in the global supply chain
face significant economic risk as a result of
unpaid wages due to COVID-19. We have
supported these workers by committing
to pay for all own-brand orders, and by
ensuring our standard payment terms –
which are aligned with the ACT Purchasing
Practices guidelines – have not been
changed or extended as a result of the
pandemic. Additionally, we have continued
to place new orders with our suppliers,
ensuring they can continue to do business,
provide employment and pay wages, and
have been in constant dialogue with them
to ensure that adequate health and safety
measures are in place to protect workers.
The pandemic has illustrated the need for
long-term sector-wide improvements in order
to protect workers, and to achieve this, we
are committed to continuing to collaborate
with our suppliers, partners, NGOs and
the wider industry to achieve real and
lasting change.
Sustainable sourcing
More sustainable fibres
40% of all our textiles are now produced
through more sustainable farming practices
or using recycled materials. 85% of the
cotton we use is verified sustainably sourced
– keeping us on track to meet our 2025
commitment to source 100% more
sustainable cotton in the next five years.
All of our more sustainable products come
from verified supply chains, using third-party
certification standards that cover farming
practices, organic, recycled, and better
fibre manufacturing processes.
Responsible Edit
In June 2019, ASOS launched our
Responsible Edit, providing customers with
easy access to our range of environmentally-
conscious fashion. It allows customers to
filter products by whether they are recycled
(made from, or partially made from, recycled
materials) or use sustainable materials, which
includes organic and responsibly sourced
fabrics, fibres and other materials.
For our ASOS brands such as ASOS
DESIGN, we require these products to
contain a minimum of 50% recycled or
sustainable fibres, except for recycled
cotton where we require a minimum of 20%,
and for suppliers to provide us with relevant
validations or certifications to confirm
compliance with our responsible edit criteria.
Each product description includes
sustainability information to help consumers
understand the credentials and raise
awareness of sustainable materials.
Circular fashion
We continue to increase the recycled fibre
content in our products, with an emphasis on
synthetic fibres like polyester and nylon, as
well as recycled cotton. We have trained
100% of our designers on circular design
principles, which have now been translated
into a fully circular collection, with the ASOS
look and feel, minimum use of materials and
waste generation. Jointly with the Centre for
Sustainable Fashion, part of the London
College of Fashion, we have now finalised
a set of circular design guides that will be
shared with partners and peers as part of
a collective effort to close the loop in
affordable fashion.
In early 2020, we also launched a YouTube
series dedicated to product aftercare, that
works with talent to educate our audience
on ways to update existing fashion items in
their wardrobe.
Improving processes in our supply chain
To identify environmental risks in our supply
chain, we use the Higg Index. This helps
us improve our purchasing decisions
and reward those suppliers with high
environmental standards, as well as address
risks in our supply chain. Currently 43% of the
ASOS DESIGN product on our site has been
produced by a supplier that has completed
the Higg Index within the last two years and
we continue to work with our supplier base
to increase this to 100%.
Worker welfare
Worker rights: As part of the
implementation of our Global
Framework Agreement with IndustriALL
Global Union in our Turkish supply
chain, in 2018 we launched an app
which allows workers to instantly and
anonymously report rights violations to
an independent complaints handler
employed by IndustriALL Global Union.
As of December 2019, the app has
been downloaded 3,348 times and we
continue to work in collaboration with
our partners on the ground to remediate
any grievances raised.
Purchasing practices and living
wage: As an active participant in the
Action, Collaboration, Transformation
(ACT) initiative, we assessed our
purchasing practices within the ACT
framework and became the first ACT
brand to survey our suppliers against
ACT’s Supplier Purchasing Practices
Assessment.
Modern slavery: We published our
fifth in-depth Modern Slavery
Statement and continued our critical
friend partnership with Anti-Slavery
International, which supports us with our
human rights due diligence processes.
Child labour: We continue to work
closely with our NGO partners KADAV
in Turkey and CCR CSR in China to
remediate incidences of child labour
we’ve previously identified in both
countries. We’ve now discovered and
remediated 15 cases of child labour
since 2016. No cases were identified in
the last year, but we remain vigilant and
alert to possible risks worldwide.
Supplier engagement: In the last
reporting period, we conducted modern
slavery training in collaboration with the
Ethical Trading Initiative in China. Three
webinar sessions were held for 62
factories and 29 suppliers, enhancing
suppliers’ knowledge on modern
slavery. In the UK, all suppliers and
factories are required to attend a
face-to-face or online Fast Forward
training session. Training provides
information for employers on how to
embed good management systems for
legal and ethical compliance and
includes a session on modern slavery.
27
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 We are also signatories to the Sustainable
Clothing Action Plan and in our 2019 report
we demonstrated a reduction in our water
footprint of 10%, our carbon footprint of
20% and 4% waste reduction for every
tonne of clothing sold in the UK (against
a 2012 baseline).
Engaging with third-party brands
Our Third-Party Brands Programme allows us
to extend our ethical trading practices and
sustainable sourcing principles to the 850+
brands on the ASOS site, with the aim of
influencing their approach in these areas
and encouraging collaboration to transform
the industry.
Self-assessments give us a clear picture of
the ethical and sustainable practices of the
overwhelming majority of our third-party
brands. With our Minimum Requirements
acting as the core of our Programme, we’ve
issued training materials on key topics and
have hosted ethical trade workshops to
support non-compliant brands in meeting
our expectations. We’re also committed
to encouraging brands to move beyond
compliance by engaging them through events
to promote knowledge-sharing and create
opportunities for collaboration.
In August 2020, we took our Third-Party
Brands Programme one step further, and
asked our partner brands that manufacture
in the UK to sign up to four commitments,
including signing the Transparency Pledge
– requiring them to regularly and publicly
disclose their supply chains – and joining
the Fast Forward auditing programme, which
we co-founded with other UK retailers in
2014 in order to tackle ethical trade and
modern slavery issues in the UK fashion
supply chain. We co-hosted a workshop
with the Fast Forward organisation in
September 2020 and we will continue
to support our brand partners further in
meeting these new commitments over
the coming months.
Sustainable packaging
In 2020 we became signatories of the Ellen MacArthur Foundation’s New Plastic Economy
Global Commitment, demonstrating our commitment to improving the environmental
performance of our packaging and reducing our contribution to global plastic pollution.
As signatories we are committed to the following goals:
Commitment
Progress
By 2025, we aim to have removed at least
50% of the range of our own-brand
packaging when compared to a 2018
baseline
100% of plastic packaging to be reusable,
recyclable, or compostable by 2025
At least 30% post-consumer recycled
content and 100% recycled/renewable
content used in plastic packaging by 2025
To date we have reduced the range of
own-brand packaging we use by 40%
Our packaging is recyclable in principle,
however we continue to work to improve the
level of packaging successfully recycled
ASOS garment bags currently contain 90%
recycled content, and ASOS outer mailing
bags currently contain 80% recycled
content, with post-consumer recycled
content, returned from ASOS customers,
making up at least 10% of this figure in both
Take action to move from single-use towards
reuse models where relevant by 2025
We have developed a prototype reusable
mailbag and have started preliminary trials
As we continue to grow as a company,
we recognise the role that we can play in
mitigating our impact on global issues such
as climate change and plastic pollution.
We are committed to sustainable operations
and doing business the right way, by finding
solutions to the global challenges that
we face.
Carbon 2020
This year saw the end of our long-term
carbon emission reduction strategy:
Carbon 2020. Announced in 2015,
this strategy set the goal of reducing our
operational carbon emissions every year
until 2020. The programme was a success:
we’ve reduced our emissions every year and
cut our emissions intensity (tCO2e/customer
order) by 30% in this time. This is the
equivalent of avoiding 110,000 tonnes
of carbon emissions.
We are constantly striving to decarbonise
our operations, for example by prioritising
sea, road and rail freight, and working
collaboratively with our supply chain
partners to advance low-carbon innovations.
These range from using electric vehicles for
delivery, to the implementation of 100%
renewable energy throughout our office
portfolio and maximising the amount of
recycled content in our packaging.
With Carbon 2020 now coming to a close,
we’re in the process of setting even more
ambitious, long-term targets to reduce
ASOS’ carbon footprint, which we’ll be
announcing soon.
Our customers
Our purpose is to give young people the
confidence to be whoever they want to be,
and this is something we’re always striving
to achieve. We aim to reflect the needs and
expectations of our customers by ensuring
that our products and communications are
responsible, inclusive and celebrate diversity.
Case study: Low emission deliveries
With a significant share of our operational emissions originating from deliveries
and returns, we work closely with our wide network of international carriers to
support and foster sustainable or low-carbon innovations. These include alternative
fuel vehicles, switching from higher carbon vehicles to those with a reduced
intensity such as electric bikes, route optimisation and increased vehicle efficacy,
all of which result in carbon savings.
One project we’ve been working on this year is a new fleet of electric vehicles from
one of our German carrier partners, Liefery. Since the project launched in March
2020, Liefery has driven more than 15,000km and delivered over 2,000 ASOS
orders in zero emissions vans, saving three tonnes of carbon in a few short months.
These savings will only increase as the partnership continues.
28
Supporting at home
Throughout the COVID-19 pandemic many
of our customers went through experiences
that were completely new to them, required
to stay home and miss loved ones. We
wanted to support our customers throughout
this period and we used our social media
channels to reach out and engage with them.
Our collaboration with charity Ditch the Label
sought to help our customers by providing
inspiration and ideas for how to manage their
days positively and perhaps try something
new in an effort to support them and their
mental health. We also launched a new
franchise called At Home With ASOS where
we shared tips for mindfulness, yoga sessions
and other things to engage our followers and
customers going through a strange time
during lockdown.
Our communities
We invest time and resources to make a real
difference to our local communities. We do
this directly as a brand but also through our
charity, the ASOS Foundation.
COVID-19 pandemic
It’s been more important than ever during
this year to support our local communities
through the pandemic, and to be there for
the people who have been most affected by
it. In March and April it became clear the stress
that many of our local hospitals were under
and the incredible work that NHS staff across
the UK were doing. We understood that
many key workers would benefit from care
packages and basics such as sweatshirts,
underwear, moisturiser, and tote bags to carry
their PPE in. In total we sent out over 4,000
of these packages to eight of our local NHS
hospitals in an effort to support those who
were working so hard to protect us.
Community partnerships
We donated £10k to our charity partner FAD
to fund their 2020 Fashion Futures project.
The charity aims to diversify the fashion
industry by campaigning for change and
supporting underrepresented young people
who want to access creative industries. The
Fashion Futures programme upskills these
young people by providing fashion-focused
programmes that equip them with the
technical and professional skills needed
for a career in fashion.
Additionally, we created charity fundraising
products such as our Heroes range and our
collaboration with Help Refugees on our
Choose Our NHS and Carers products to
raise money for important causes. We have
also partnered with Oxfam to donate £1
from every pack of ASOS face coverings
sold to their Coronavirus Emergency Relief
Fund. In total we have donated over
£500,000 to local NHS Trusts and front
line charities through this activity.
ASOS Foundation
We open doors, we remove barriers. We help
young people change their lives for the better.
This is the purpose of the ASOS Foundation
and our partnerships in the UK, Kenya and
India are critical as young people face the
new and difficult challenges caused by
COVID-19. With support from ASOS, our
suppliers, colleagues and customers,
we partner with charities to provide
infrastructure, training and support to
enable disadvantaged young people
to reach their potential.
UK: We work with Centrepoint to support
young people at risk of homelessness. The
ASOS Foundation is the headline funder
of the Centrepoint Helpline which has now
reached more than 15,000 vulnerable young
people, providing them with the information
and support they need to help reduce the
risk of homelessness. The Helpline has seen
a 50% increase in call volume as a result
of COVID-19 and its work to help young
people newly at risk of becoming homeless
continues to be vital.
The ASOS Foundation tackles barriers to
employment through our partnership with The
Prince’s Trust and its work to support young
people into training and employment has
never been more important. Workplace
programmes funded by the ASOS
Foundation give young people the skills and
confidence they need to help them move into
work, further education or training. Over
600 young people have completed an
ASOS programme in Retail, Technology
and Customer Care since 2009, and 44
graduates have been offered permanent
roles since the partnership began. This year
we have developed our first ever online
training course for Customer Care, delivered
remotely, enabling young people to gain
new skills and experience whilst complying
with social distancing requirements.
Kenya: The SOKO Community Trust was
established in 2013 with the goal of
providing local people with the practical skills
needed to see sustainable improvements in
their lives and lift themselves out of poverty.
Together we launched Stitching Academy
Kenya in 2014, delivering a two-month
course teaching advanced, expert-standard
tailoring skills. Since opening, 183 graduates
have passed through the Academy with
two-thirds subsequently moving into
permanent employment. 20 graduates now
work within the main SOKO factory (20% of
the workforce) which produces the ASOS
Made In Kenya range. Funding also supports
the Kujuwa Initiative, which works with
schools to provide education and washable,
reusable sanitary pads, produced by the
SOKO factory, to local students.
India: In partnership with Udayan Care,
we’re enabling orphaned and abandoned
children to grow up in a safe and stable
family environment. Since 2009, we’ve
sponsored family homes for over 70 children,
along with access to high quality education
and vocational training. The ASOS
Foundation also funds the construction
of bespoke properties for the charity
and in 2019 launched its third home.
29
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Managing risk
at ASOS
Everything we do at ASOS revolves around our
purpose and mission – we are mission led,
purpose driven – and that purpose and mission
can only truly be secured through effective
risk management.
Our Risk Management Framework applies
to every part of our business in the manner
needed to be effective within our own
unique culture. It empowers us to identify and
determine what our key risks and opportunities
are and how to manage them appropriately.
This in turn enables us to meet our day-to-day
objectives and our strategic objectives which
underpin the sustainable growth and
long-term viability of our business.
Our approach to risk
Identifying risks and opportunities is a
continual process which plays an integral
part in our decision-making and day-to-day
operations. Sometimes without risk there is no
reward, so a proactive approach is taken to
risk management in accordance with our risk
appetite. Creating a culture that is risk aware
while opportunity driven enables us to
continue to move at the pace that we do.
We recognise that failure to quickly identify
risks before they crystallise could stop us from
achieving our mission, to be the world’s
number one online destination for fashion-
loving 20-somethings.
Our risk management process
Risks are owned, managed and officially
reviewed across ASOS using the following
process:
Identify
– Risks are identified across all business areas and in relation to
our business objectives and strategic plans.
– The ASOS Executive Committee and leadership team are
engaged to provide their views and perceptions of risk within
their business area and collectively across ASOS as a whole.
Assess
– Risks are assessed and monitored through our risk assessment
methodology, which includes rating the likelihood and impact
of the risk materialising.
– Controls, and the effectiveness of those controls, are regularly
reviewed.
– ‘Horizon scanning’ takes place, as it provides a forward-facing
– The status of ongoing mitigations is evaluated, as well as
view enabling the identification of emerging risks and focus areas.
assessing the need for new mitigations.
– Every formal risk review facilitated by the Business Assurance
– Deeper dives take place on our key principal risks.
team has an exercise which seeks to trigger fresh and instinctive
thinking about risk.
– Risks are categorised by tolerance which shows us how acceptable
the risk is, with current controls and mitigation efforts in place.
Report
– Regular dialogue with our
Executive Committee and PLC
Board on how effectively the risks
are being managed.
– A comprehensive risk review is
prepared for and reported to the
Audit Committee every six months,
highlighting key and emerging risks
along with any significant changes
to existing risks.
Risk
Management
Embed
– Ongoing and proactive
conversations about risk help
promote a positive risk culture.
– Continuity and consistency in our
risk framework and our approach
to risk helps to create a risk aware
culture within ASOS and to embed
risk management into the
day-to-day operations of the
business.
Manage and Monitor
– Risk assessments assist in identifying
controls to reduce material risk.
– Mitigation and action plans are the main
focus for us to proactively manage the
risk so that we can prevent it from
crystallising.
– Risk owners and mitigation owners
are appointed.
– The status of risk mitigations, including
any target dates for implementation, are
regularly reviewed, and developments
and movements in risks are monitored.
– Risk development and movement
is monitored.
Assurance and oversight of our risks and opportunities
Top-Down Review
Macroeconomic and business risks
and opportunities associated with
our operating environment and our
strategic plans are assessed by the
Executive Committee, Operating
Board, Audit Committee and ASOS
Plc Board to ensure there is the
appropriate level of oversight.
Top-Down Approach
ASOS Plc Board
Audit Committee
Executive Committee
Operating Board
Bottom-Up Review
Day-to-day operational risks that
influence daily decision-making and
strategic objectives are assessed
across the business. Risks are
escalated in accordance with our
risk assessment framework.
Bottom-Up Approach
Business area risk
workshops and risk reviews
Project risk reviews
Group-wide business risk
register review
Third Line of Defence
Internal and External Audit
Risk responsibility
The ASOS Plc Board has overall
responsibility for risk management and
application of controls. This includes
reviewing the robustness of our risk
management and internal controls framework
so that they remain fit for purpose and evolve
in our dynamic business. Responsibility for
reviewing specific risks and controls is
delegated to the Audit Committee, while
the Executive Committee, Operating Board
and senior leadership are responsible for
implementing processes, mitigations and
controls on the ground.
The General Counsel & Company Secretary
has executive responsibility for risk
management. The Business Assurance team
facilitate the day-to-day and strategic
application of our risk management
framework and process by providing a
rigorous assessment of risk, while ensuring
that the approach is dynamic and engaging
to influence our ASOSers. While continuity
in our risk management approach is valuable
to ensure a consistent assessment of risk year
on year, the Risk Management Framework
and the processes that underpin it are
reviewed regularly by Business Assurance to
ensure it appropriately evolves in line with
business change.
Assurance and oversight of our risks
and opportunities
Our assurance and oversight echoes the
‘Three Lines of Defence model’:
First Line: Practical Assurance
– day-to-day risk management within
ASOS, engaging the breadth of ASOS
leadership, including defined
accountability through ownership and
application of controls and mitigation.
Second Line: Management Oversight
– Business Assurance facilitate the risk
management process by providing
oversight, guidance and challenge.
The Operating Board, Executive
Committee and Audit Committee also
support the second line, ultimately
reporting to the ASOS Plc Board.
Third Line: Independent Assurance
– internal and external audit provide
independent assurance on our
risk management activities and
internal controls.
30
31
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Principal risks
and opportunities
Like all businesses ASOS faces a variety of
risks, many of which will equally unlock
opportunities. As we operate globally, we
recognise that our principal and emerging risks
can be dynamic and influenced by the
macroeconomic environment.
Strategic risks
Macroeconomic Trends
Risk movement
Increased risk
Risk owner
CFO
What’s the risk?
Specific macroeconomic and geopolitical factors and changes
due to geopolitical uncertainty can influence our business,
ability to trade across borders and customer behaviours
and lead to operational disruptions, diminished customer
proposition and impact our overall financial performance.
How do we manage the risk?
We continue to monitor the shift in macroeconomic risks
linked to geopolitical uncertainties around COVID-19 and
Brexit to put in place mitigating measures to help prepare
for any further volatility, including:
– The Executive Committee, Operating Board and cross-
functional Brexit and COVID-19 Steering Committees
continue to monitor, model and assess the potential
outcomes and supply and demand implications of
COVID-19 and Brexit, enabling changes or adaptations to
be made to our business operations to address and mitigate
perceived risks.
Shift In E-commerce Market Dynamics
– We have a knowledgeable Tax and Customs team who
engage with authorities and regulators in key markets to
keep abreast of local changes or developments globally
and recommend changes or adaptations to our business
operations to mitigate the impact.
– We have a diverse, multifaceted sourcing and supply chain
involving multiple suppliers in multiple locations. This helps
to minimise an over-reliance on an individual country and/
or supplier or brand, and allows us to utilise our extensive
network in the event of capacity or capability changes.
Risk movement
Stable
Risk owner
Chief Strategy Officer (CSO)
What’s the risk?
Customers for whom ASOS was always front of mind are now
exposed to an increasingly global and competitive e-commerce
environment. Failure to evolve our business model, enhance
our proposition, and be top of mind for our audience in an
increasingly competitive environment, could result in ASOS
losing opportunity and market share. We need to stay ahead
of the game and relevant despite customers having more choice
in front of them. Customers being swayed by the propositions of
competitors with more nimble and agile business models could
impact our longer-term growth and profitability.
How do we manage the risk?
– Evolving our business model is fundamental to achieving
our 10 year vision and 3 Year Plan, and to maintaining
our growth trajectory. We need to strengthen our core
offering, expand into adjacent growth areas, and
improve profitability to unlock a greater catalogue of
customers and to ensure we are delivering our mission
to be the number one destination for fashion-loving
20-somethings worldwide.
– We continue to drive the uniqueness of our product offering
via unique ranges only available on ASOS.com such as
ASOS DESIGN, ASOS EDITION, ASOS 4505,Collusion
and style edits and exclusive products from brands on site.
This is alongside our expanding diverse and inclusive
product offering with sustainable and modest ranges.
– We continue to develop our marketing and studio
production strategies to make sure that our product
and customer communications look amazing.
– We invest significantly in logistics, fulfilment, delivery,
marketing, brand and customer experience to ensure our
offer is compelling – to keep our existing customers loyal,
to re-activate customers and to attract new customers most
effectively.
– We are using technology and data to optimise and be more
targeted and strategic in how we drive acquisition of new
customers and maximise the loyalty and lifetime value
of existing customers.
– We continue to work with brands in promoting products that
are only exclusively available to buy on ASOS.com, leveraging
our scale and first mover advantage to curate a broad and
diverse fast-moving product offering, with newness at its heart.
Risk movement key
Increased risk
Reduced risk
Stable
New risk
32
Operational risks
Pandemic Second Wave
Risk movement
New risk
Risk owners
CEO, General Counsel
Stock Shortage
Risk movement
Increased risk
Risk owners
Retail Directors
What’s the risk?
The risk of a second and deeper COVID-19 wave causing a
longer, stricter and/or more sustained lockdown. Particularly
in the UK, USA and Germany (where we have our Fulfilment
Centres), our other key trading territories, but also at a
global scale.
We are seeing signs of potential local lockdowns which could
impact ASOS, but in a worst-case scenario, a second wave
could be deeper and longer than the first one, meaning
a stricter and longer lockdown in the UK and/or other
key territories.
We continue to closely monitor and respond to the situation
as the health, safety and welfare of our ASOSers, colleagues
and customers remains our number one priority.
How do we manage the risk?
– Our cross-functional business response teams continue
to closely monitor the situation and respond dynamically
to the rapidly changing situation.
– We have evolved our current Business Continuity
Plans (BCPs) and developed new, COVID-19 specific
response plans.
– We have carried out a thorough lessons learned process
following the first pandemic peak between March and June,
and captured key lessons learnt and areas for improvement
from our three response teams – Strategic, Tactical and
Operational.
– We have conducted a third-party review of our response
processes, pandemic BCPs and emergency plans to ensure
that we are aligned with best practice and prepared to
manage a second wave in the best way possible.
What’s the risk?
The current uncertainties around COVID-19 could cause
operational disruptions in our supply chain and our suppliers’
supply chains, leading to an inability or reluctance from our
suppliers to invest in future orders, as well as financial distress
that could lead to supplier insolvency. This increases the risk
of the business not having enough stock of either in-house
or third-party brands.
How do we manage the risk?
– We maintain close working relationships with suppliers
and brands to ensure that we are aware of their specific
circumstances and can react quickly should we need
to support them or pivot to alternatives.
– We continue to closely monitor the situation for risks,
as well as potential opportunities.
Foreign Exchange Rate Exposure
Risk movement
Stable
Risk owner
CFO
What’s the risk?
We are a UK-based global retailer and sell products to
customers across the world in many different currencies,
whilst recognising revenues in our Financial Accounts in
pounds sterling. Global growth and the increasing proportion
of customers shopping with us from international markets will
continue to drive greater foreign exchange exposure. This
could lead to lost opportunities and any potential exposure
to volatility in foreign exchange rates creates increased risk
on our profitability.
How do we manage the risk?
– We have evolved our hedging policy to ensure it remains
robust while we continue to increase our business operating
model complexity and share of international customers.
– We continue to perform horizon scanning and monitor the
implications of emerging macroeconomic risks to help
prepare for any volatility in foreign exchange movements.
– We have increased the level of rigour in our financial
planning, including strengthening our lead indicators,
which helps build contingency and sensitivity against
any adverse movements in foreign exchange rates.
– We continue to drive profitability through natural hedging
in local fulfilment currencies.
Key Technical Third-Party Supplier or Service Provider Disruptions
Risk movement
Decreased risk
Risk owner
Chief Information Officer
(CIO)
What’s the risk?
We are reliant on multiple third-party suppliers and service
providers throughout the customer journey, from website to
fulfilment, to the product itself. This means that if there is a
failure on their part, we may suffer from a disruption to our
operations and overall business.
Any failure in day-to-day operations risks negatively
impacting our ability to process or fulfil customer orders,
resulting in reduced customer proposition, lost opportunity
and a loss of customer confidence.
How do we manage the risk?
– As our internal tech and cyber resiliency continues to mature,
focus has increasingly shifted towards assurance on our key
third-party suppliers and service providers, with tactical and
strategic audits and, if necessary, mitigation or remediation
plans in place with those service providers deemed as ‘higher
risk’ (be that due to over-reliance or concerns over the
security of their systems, or risk of business failure).
– The use of a diverse, multifaceted sourcing and supply chain
involving many different suppliers across multiple jurisdictions
helps spread the risk and make us less dependent on
exporting from specific countries and/or over-reliance on
key suppliers/brands. This is continuously monitored.
– We have continued to enhance ASOS’ Business Continuity
capabilities in ASOS’ head office, customer care operations
and supply chain, including our fulfilment centres. This
includes greater assurance on incident notification,
escalation, and incident and crisis management.
– All new suppliers go through a rigorous selection and
on-boarding process and our Procurement team monitor
supplier performance on an ongoing basis.
33
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Operational risks – continued
Transformation Project Delays or Failure to Deliver
Risk movement
Stable
Risk owner
CIO, CSO, Chief Operating
Officer (COO)
What’s the risk?
Continuously adapting and evolving our infrastructure,
capacity and capability is critical if ASOS is to achieve its
mission of being the world’s number one fashion destination
for 20-somethings. New technology, systems and processes
enable ASOS to keep evolving at pace with the growth of the
business. However, transformation is complex and creates
dependencies and execution issues that can cause
programme delays and risk projects failing to deliver the
required outcome. This can lead to business disruption and
impact on customer proposition, increased costs and inability
to capitalise on efficiencies, and lost opportunities.
Cyber Security Threat
Risk movement
Stable
Risk owners
CIO, Chief Information
Security Officer (CISO)
What’s the risk?
The cyber security landscape is continuously evolving,
with threats becoming more sophisticated, aggressive and
continuing to increase in frequency. During this financial
year, our Cyber Security team have continued to enhance
our security policies, procedures and security capabilities
to reduce the risks associated with confidential data loss,
prolonged disruption to our service and ransomware.
How do we manage the risk?
– Governance boards such as the Change Board,
Transformation & Investment Board, and Design Authority
work alongside ASOS’ Transformation Office to support
and monitor transformation programmes, including
managing transformation risks.
– Each programme is supported by a cross-functional
Steering Committee, including at least one Executive
Sponsor, that meets regularly to review the status of
the project, including progress, risks, dependencies
and impacts.
– Internal and/or external assurance review exercises are
used to validate progress and project readiness.
– The delayed implementation of our Retail transformation
project, Truly Global Retail, which is being rephased into
FY21, has provided additional time to prepare and parallel
run systems in advance of cut-over to test and provide
confidence that the new system is stable and capable of
running as expected.
– Regular updates on progress and key issues and risks for
the major programmes are provided to the ASOS Plc Board
and Audit Committee.
How do we manage the risk?
– We have increased the size of our internal Cyber Security
team, led by our CISO, and enhanced our monitoring
of both internal and external cyber threats.
– Invested in new security tooling that has improved the
effectiveness and efficiency of our security and fraud
operations.
– Continue to seek out and work with independent third-party
security specialists that we rely on for periodic penetration
and red team tests.
– Multi factor authentication (MFA) across ASOS increases
our protection against phishing and malware attacks, while
cyber awareness campaigns continue to positively engage
ASOSers on the topic of cyber security.
Data Protection Requirements
Risk movement
Stable
Risk owners
CIO, CISO and Data
Protection Officer (DPO)
What’s the risk?
As a pure play online retailer, ASOS uses data for a diverse
number of reasons, including to process orders, receive
payment and effectively engage with our customers on a
regular basis. With more than 23m active customers
worldwide, we work with a variety of third-party suppliers,
and employ thousands of ASOSers – with that comes a lot of
responsibility to protect the integrity of data being used and
processed, and it means that we will always be a target for
cyber threats.
Deliberate or accidental loss of data – either from external
attack or an internal control weakness – could lead to
reputational damage, regulatory and compliance issues,
and a loss of employee or customer confidence.
How do we manage the risk?
– Our DPO is an independent role and can audit any
information store used by ASOS or its contracted third parties.
– The Data Protection team actively engage across ASOS
teams to ensure we have visibility of the collection, use
and reuse of data and any new projects that require
customer or employee data, while ensuring the right training
and awareness is in place. A data breach response plan
is in place for use in a major incident.
– Our CISO and DPO work collaboratively to ensure
cross-functional alignment on key issues and to share
intelligence on risk areas and opportunities.
– Security controls and processes are assessed and updated
continuously. The Cyber Security team continuously monitor
for any internal or external signs of confidential data loss.
– Data and security requirements are embedded within our
Procurement and Legal processes.
Operational risks – continued
Ethical Trade Issues
Risk movement
Stable
Risk owner
Retail & Sourcing Directors
What’s the risk?
Ultimately ASOS’ success is defined by the products it sells.
Having an engaging, exciting customer experience and
first-class proposition can only get us so far if the products
we sell fall short of our customers’ expectations. We know
that our customers care about integrity and want to be
confident about where their clothes come from and the
standards under which they are produced, with the assurance
that workers and the environment are not exploited in the
process. Regulatory scrutiny is also increasing in this area
across the globe driving us to be even more diligent when
monitoring risks in our supply chain.
How do we manage the risk?
– We continue to make substantial progress mitigating our
ethical trade and sourcing risks by developing our expertise
around product quality and ethical trading standards, led
by our Sourcing Director and with ultimate responsibility
resting with our Retail Directors.
– We continue to deliver an audit programme in line with
our Fashion with Integrity (FWI) programme. FWI is actively
championed by our CEO and cascaded through the
business, which helps to push forward the agenda internally
and drive focus on our ethical standards and corporate
responsibility commitments.
– Improved technical capacity in our Garment Technology
teams, overseen by our product Technical Director, to
provide increased surety that the products that we receive
from our suppliers meet our product quality standards
and expectations before they go on our website.
– We have implemented in-country compliance testing
and quality control facilities, with enhanced testing and
reporting capabilities and to identify issues at source.
Brexit
Risk movement
Increased risk
Risk owner
Brexit Steering Committee,
Operating Board
What’s the risk?
The Operating Board and cross-functional Brexit Steering
Committee continue to review the implications of Brexit, and
while there is still an element of uncertainty, risks and impacts
are being assessed for a range of possible scenarios,
including a Hard Brexit which is viewed as the most likely
outcome.
The following key risks have been identified:
– Increase of duty levels exposure with our own
manufactured products and product delivered by
third-party brands;
– Citizenship implications on workforce, particularly within
our UK fulfilment and returns centres, and within our
carrier network. It is worth noting that this will be an
industry-wide challenge; and
– Potential disruption caused by congestion at European
ports which could impact our inbound carrier network.
How do we manage the risk?
– While we are a UK based business, we have a global
logistics footprint and our fulfilment centre in Berlin in
particular removes the requirement for our UK fulfilment
centre to service our EU customers. This not only helps
insulate us against trading risks in the EU, but is also
designed to minimise EU proposition impact in the event
of a Hard Brexit.
– The Brexit Steering Committee continues to monitor and
assess the outcome of the ongoing negotiations, whilst
simultaneously preparing for a Hard Brexit and other
outcomes. Mitigation and contingency plans are being
put in place to address the key risks in preparation for
31 December 2020, regardless of the outcome.
Emerging risks
Sustainability and Climate Change
Risk movement
Stable
Risk owner
CFO, CSO, COO,
Retail Directors
What’s the risk?
The topic of sustainability and the impact our operations have
on the environment is shifting more and more into the spotlight.
Our Fashion with Integrity programme has been central to
how ASOS operates for many years now. However, we know
that there is always more that we need to do in this area to
meet our own expectations and those of our stakeholders in
order to ensure the long-term viability of ASOS.
How do we manage the risk?
– Sustainability at ASOS focuses on both our products –
how we make them and what materials we use – and our
business operations – how we get our products to our
customers and how we run our Head Office and supply
chain network. We consider the entire lifecycle of our
products, our use of plastic and packaging, energy usage
and procurement, logistics and our wider carbon footprint.
– Some of our sourcing regions, and our dependence
on natural commodities to produce our products, are
particularly vulnerable to the impacts of climate change.
By building greater transparency and securing supply routes
for more sustainable materials we increase our resilience.
Continuous engagement with our supply base encourages
a proactive approach to building resilience, for example
in addressing waste and energy management. When we
look at new sourcing regions, environmental risk is a key
consideration.
34
35
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Board of Directors
Key
Audit Committee
Nomination Committee
Remuneration Committee
01
02
03
04
05
06
07
08
09
36
01 Adam Crozier
Chairman
Appointed November 2018
External Appointments Chair of Kantar
and Whitbread plc, non-executive director
of Sony Corporation
Experience Adam was previously
chairman of Vue International and previous
non-executive directorships include Stage
Entertainment BV, G4S plc, Debenhams plc
and Camelot Group plc.
Adam has had over 20 years’ experience as
a chief executive officer across four different
industries, most recently as the chief
executive officer of ITV plc from April 2010
to June 2017. Over that time he has built
a strong track record in turning around
troubled organisations and for his ability
to build and lead successful management
teams. Under Adam’s leadership, ITV was
transformed into one of the most successful
and dynamic media and content companies
in the world and its financial performance
improved dramatically.
Before joining ITV, Adam was chief
executive of Royal Mail, where over
seven years he led its modernisation and
transformed it from a heavily loss-making
position to profitability. Prior to Royal Mail
he was chief executive officer of The
Football Association between 2000 and
2002 and joint chief executive officer of
Saatchi & Saatchi from 1995 to 2000.
02 Nick Beighton
Chief Executive Officer
Before ASOS, Nick was head of finance
at Matalan in 1999, later moving into the
role of business change and IT director.
He joined the Matalan retail board in 2003.
In 2005, Nick joined the board of Luminar
Entertainment Group as finance director,
and became a member of the EU
eCommerce Task Force and the Future Fifty
Programme Advisory Panel. Nick is also
a member of the Retail Sector Council
and is a trustee of the ASOS Foundation.
03 Mat Dunn
Chief Financial Officer
Appointed April 2019
External Appointments None
Experience Mat is a chartered
management accountant with over 15 years
of post-qualification experience. He has
significant international experience in both
developed and developing markets, as well
as experience leading major commercial
and functional improvement and
transformation programmes.
Before ASOS, Mat held various financial
planning, management and leadership
positions at SABMiller plc from 2002,
before joining EMI Music Limited as chief
financial officer of their Global Catalogue
division in 2009. He returned to SABMiller
plc in 2010, where he held the role of chief
financial officer of Asia until 2014 before
becoming chief financial officer of South
African Breweries Limited from 2014 until
2015. In 2015, Mat joined the board of
Britvic plc as chief financial officer.
Appointed Chief Financial Officer in
April 2009 and Chief Executive Officer
in September 2015
04 Ian Dyson
Senior Independent Director and Chair
of the Audit Committee
External Appointments None
Appointed October 2013
Experience Nick is a chartered
accountant, who qualified at KPMG and
has been Chief Executive Officer of ASOS
since 2015. He joined the Company as
Chief Financial Officer in 2009 and took
the expanded role of Chief Operating
Officer in 2014. During his tenure, ASOS
has grown both in the UK and around the
world. Today, ASOS is one of the leading
fashion destinations for 20-somethings
globally, trading in almost every country
in the world.
External Appointments Non-executive
director of Flutter Entertainment plc (formerly
Paddy Power Betfair plc) and chair of the
audit committees of Intercontinental Hotels
Group plc and SSP Group plc
Experience He has more than 20 years of
experience in the public market arena and
has held both executive and non-executive
directorships at FTSE 100 and FTSE 250
companies. He was group finance and
operations director of Marks & Spencer
Group plc from 2005 to 2010 before
becoming chief executive of Punch Taverns
plc in 2010. Before that, Ian was group
finance director of Rank Group Plc and was
formerly a non-executive director and chair
of the audit committee of Misys Plc.
05 Mai Fyfield
Independent Non-executive Director
Appointed November 2019
External Appointments
Non-executive director of Roku, a US listed
entity, Nationwide Building Society and
BBC Commercial Holdings
Experience Mai was chief strategy and
commercial officer at Sky plc until October
2018, responsible for leading strategy and
Sky’s commercial partnerships across the
Sky Group. During her time at Sky, she was a
key player in the growth and diversification of
the business and has extensive international
and digital experience. Prior to joining Sky
in 1999, Mai spent eight years working as
an economic advisor to blue-chip companies
in a number of different industries, both in the
UK and the US.
06 Karen Geary
Independent Non-executive Director and
Chair of the Remuneration Committee
Appointed October 2019
External Appointments
Non-executive director of National Express
Group plc
Experience Karen is a former FTSE 100
HR director with an extensive track record in
the technology industry. Between 1998 and
2013, Karen was with The Sage Group plc,
where she built the HR function and was a
member of the executive committee from
2004. Between 2014 and 2016, Karen
was chief people officer at Wandisco, Inc.,
based in the US. She was most recently with
Micro Focus International, the FTSE 100
software company, as chief human
resources officer, having initially joined
the business as a non-executive director
and chair of the remuneration committee
in 2016.
Karen brings over 20 years of executive
leadership experience across start-up and
listed blue-chip organisations, as well as
international HR and business
transformation experience across a variety
of industries, particularly in Europe and
the US.
37
GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 07 Luke Jensen
Independent Non-executive Director
09 Eugenia Ulasewicz
Independent Non-executive Director
Appointed November 2019
Appointed April 2020
External Appointments Executive
director of Ocado Group plc,
chief executive officer of Ocado Solutions
Limited and non-executive director of
Hana Group
Experience Luke is currently chief
executive officer of Ocado Solutions,
a position he has held since 2017 and
joined the Board of Ocado Group plc,
the FTSE 100 listed online grocer and
technology company, in 2018. Prior to
this, Luke was a senior advisor at Boston
Consulting Group between 2015 and
2017, and between 2008 and 2014,
Luke held various roles at J Sainsbury plc,
including group development director,
where he was responsible for online and
all customer-facing digital activities.
Luke has extensive experience in logistics,
strategy and technology in the retail
sector, on an international scale.
08 Nick Robertson
Founder and Non-executive Director
Appointed Co-founded ASOS.com Ltd
in 2000, and served as its Chief Executive
Officer until September 2015, when he
became a Non-executive Director
External Appointments: None
Experience Nick’s career began in 1987
at the advertising agency Young & Rubicam.
In 1991, he moved to Carat, the UK’s
largest media planning and buying agency.
In 1995, he co-founded Entertainment
Marketing Ltd, a marketing services business.
He is Chairman of the ASOS Foundation, a
registered charity funded by ASOS which
works to improve the lives of young people
in the UK and overseas through long-term
partnerships with established local charities.
Nick was awarded an OBE in 2011 for his
achievements in the world of fashion retailing.
External Appointments Non-executive
director of Signet Jewelers Limited, Vince
Holding Group and Hudson Limited
Experience After holding a number of
senior retail positions with Bloomingdale’s,
Galeries Lafayette and Saks Fifth Avenue,
Eugenia joined Burberry Group plc and was
President of Burberry, Americas, one of
three global regions of Burberry Group plc
which includes North and Latin Americas,
from 1998 to 2013. After leaving Burberry
in 2013, Eugenia took on a number of
board engagements and serves as a
non-executive director for Signet Jewelers,
Hudson Limited and Vince Holding Group.
She was a non-executive director on Bunzl
plc, a global distribution and outsourcing
group based in the UK with substantial
operations in the US and continental
Europe, until April 2020. Eugenia has
extensive experience in brand management,
technology, digital and social media
marketing and general management,
particularly in the US and the broader
Americas.
Anna Suchopar
General Counsel & Company Secretary
Appointed June 2019
Changes during the year
Hilary Riva
Non-executive Director
(Stepped down from the Board on
31 March 2020)
Rita Clifton
Non-executive Director
(Stepped down from the Board on
31 March 2020)
Corporate Governance Report
In addition to our Board changes, we also significantly
strengthened our senior management team during the year with
the appointment of a Chief Growth Officer, Chief People Officer,
Chief Strategy Officer and Chief Commercial Officer to our
Executive Committee. Each appointment has further strengthened
our leadership team and internal capabilities to support our
global ambitions and set us up for our next stage of growth.
Stakeholder engagement
The Board understands the importance of engaging with our
key stakeholders and we have continued to keep their interests
at the forefront of our decision-making throughout the year.
As part of this effort, Karen Geary replaced Rita Clifton as our
Designated Non-executive Director for employee engagement.
During the year Karen met with the Chairs of our employee
forum, InTouch, providing feedback to the Board on employee
sentiment. More information on how the Board engages with
stakeholders can be found on page 22.
Governance
Maintaining appropriate standards of corporate governance
is essential for good management of the business. As a Board,
we recognise the need for ensuring an effective corporate
governance framework is in place to give our stakeholders
the confidence that the business is being run effectively.
The 2018 UK Corporate Governance Code (the Code) became
applicable to ASOS from 1 September 2019. During the year,
we have applied the principles of, and complied with the
provisions of, the Code, with the exception of Provisions 36 and
38, post-employment shareholding requirements and aligning
executive director pension contributions with the workforce. After
a review of post cessation shareholdings for Executive Directors,
the Remuneration Committee and the Board concluded that
sufficiently robust retention measures exist under the current plan
rules to ensure a significant number of shares are held post
cessation and therefore it was not recommended to introduce a
formal policy (this is discussed in more detail in the Remuneration
Report on page 63). An explanation of how we will comply with
Provision 38 in the future is set out on page 53 in the Directors’
Remuneration Report. A full version of the Code is available from
the Financial Reporting Council website at www.frc.org.uk.
Adam Crozier
Chair
13 October 2020
Chairman’s Governance
Statement
Dear Shareholder,
I’m pleased to present this year’s Corporate Governance
Report. For ASOS Plc ‘Doing the Right Thing’ underpins every
part of our business model, and the Board is committed to
maintaining the highest levels of corporate governance to
support the creation of long-term sustainable value for our
shareholders, employees, suppliers and other key stakeholders.
The Board started the year focused on ensuring that the
business got back on track, following a challenging prior year,
and continued to deliver against the commitments we made
last year. ASOS had a solid start to the financial year, but in the
second half of the year, the impact of the COVID-19 pandemic
meant that the Board’s focus shifted to ensuring the health,
safety and wellbeing of our people, while also taking steps
to protect the business financially and adapt at speed to the
changing landscape. Although the outlook is uncertain, these
steps, combined with the rigorous cost management and
organisational changes we have put in place, mean that we
have been able to deliver a strong performance in difficult
circumstances. The Board is confident that we have emerged
from this year a stronger, more agile and resilient business.
Board and Executive Committee strengthening
To help position the Group for its future growth aspirations, we
welcomed four new Non-executive Directors during the year:
Karen Geary, Luke Jensen, Mai Fyfield and Eugenia Ulasewicz.
These additions have strengthened the Board, and have brought
a wealth of knowledge from across retail, technology, logistics,
international markets and people management to the Board.
Full biographies can be found on pages 37 to 38.
Hilary Riva and Rita Clifton stepped down from the Board in
March 2020. Both made extremely valuable contributions
to ASOS and I would like to thank them both on behalf of the
Board for their work and wish them every success in the future.
38
39
GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Corporate Governance Report continued
Corporate governance framework
Board structure
The table below sets out our governance framework and outlines the
division of responsibilities between the Chair and the CEO, as
agreed by the Board, along with a summary of the roles of the
Senior Independent Director, the Executive Directors and the
Non-executive Directors, and our Committees.
The Board
The Board is responsible for the long-term sustainable success of
the Company, by ensuring that ASOS, its subsidiaries and all its
businesses (the Group) are managed for the long-term benefit of
all shareholders, while having regard for employees, customers,
suppliers, and our operational impact on the community and
environment. It sets the Group’s purpose, strategy and values
and is accountable to shareholders for ensuring that the Group
is appropriately managed and achieves its objectives in a way that
is supported by the right culture and behaviours. The Board sets the
Group’s risk appetite, and reviews the controls applied to operate
the business in line with that appetite. It determines, monitors and
oversees risk management processes, financial controls and audit
processes to ensure ASOS operates effectively and sustainably
n the long term.
Chair
Chief Executive
Senior Independent Director
Non-executive Directors
— Responsible for running the
business of the Board
— Ensures the effectiveness of
the Board and appropriate
strategic focus and direction
— Promotes high standards of
corporate governance
— Encourages open debate
between the Executive and
Non-executive Directors
— Responsible for proposing the
strategic focus to the Board
— Implementation and execution
of strategy
— Leading the engagement
of ASOS through the
Executive Committee
— Trusted intermediary for other
— Scrutinise and constructively
Non-executive Directors
— Supports the Chair
— Appraises the Chair’s
performance
— Available to shareholders
where concerns arise
challenge the performance of
management in the execution
of our strategy
— Provide sound independent
judgement to Board
discussions
— Protect long-term
shareholder value
The Board has delegated specific responsibilities to the Board
Committees: Audit, Nomination and Remuneration. The duties of
each Committee are set out in the Committees’ Terms of Reference,
which are available at www.asosplc.com. Details of each of the
Committee’s activities during the year are set out in the Committee
reports on pages 45 to 70. The minutes of Committee meetings are
shared with all Directors and each Committee Chair provides a
verbal report on Committee activities to the Board following each
Committee meeting. Each Committee has access, at the cost of the
Group, to the resources, information and advice that it deems
necessary to enable the Committee to discharge its duties.
Audit Committee
Nomination Committee
Remuneration Committee
More information on the composition,
responsibilities and activities of the Audit
Committee are set out in the separate Audit
Committee Report on pages 45 to 48.
More information on the composition,
responsibilities and activities of the
Nomination Committee are set out in the
separate Nomination Committee Report
on pages 49 to 50.
The composition, responsibilities and
activities of the Remuneration Committee
are set out in the Directors’ Remuneration
Report on pages 51 to 70, along with our
Remuneration Policy and details of how that
policy was implemented during the year to
31 August 2020.
Disclosure Committee
To verify the accuracy and oversee the
timeliness of Group disclosures and
material information as per the regulatory
framework.
Executive Committee The Board delegates responsibility for the day-to-day management of
the Group to the Executive Committee. Led by the CEO, the Executive Committee is collectively
responsible for developing and implementing the strategy, operational plans and budgets;
monitoring overall operational and financial performance; overseeing key risks; and
management development. The Executive Committee meets formally on a monthly basis.
Operating Board The Executive Committee delegates authority to the Operating Board to
manage short-term activities related to trading, retail performance, customer acquisition and
operational execution, to drive profitability and the ASOS vision. The Operating Board meets
on a weekly basis.
Plc Board meetings
Committee meetings
Audit
Remuneration
Nomination
Eligible
to attend
Attended
Eligible
to attend
Attended
Eligible
to attend
Attended
Eligible
to attend
Attended
9
9
9
9
6
7
6
8
2
5
5
9
9
9
9
6
6
6
8
2
5
5
–
–
–
4
3
4
3
–
1
2
2
–
–
–
4
3
4
3
–
1
2
2
–
–
–
5
3
4
–
–
–
4
4
–
–
–
5
3
4
–
–
–
4
4
2
–
–
2
–
1
1
–
1
1
1
2
–
–
2
–
1
1
–
1
1
1
Adam Crozier
Nick Beighton
Mat Dunn
Ian Dyson
Mai Fyfield1
Karen Geary2
Luke Jensen3
Nick Robertson
Eugenia Ulasewicz4
Rita Clifton5
Hilary Riva5
1 Mai Fyfield was appointed as Non-executive Director on 1 November 2019.
2 Karen Geary was appointed as Non-executive Director on 1 October 2019. Karen was unable to attend the Board Meeting on 25 February 2020 due to a pre-existing
commitment agreed before joining the Board.
3 Luke Jensen was appointed as Non-executive Director on 1 November 2019.
4 Eugenia Ulasewicz was appointed as Non-executive Director on 16 April 2020.
5 Rita Clifton and Hilary Riva stepped down as Non-executive Directors on 31 March 2020.
Our purpose, culture and strategy
The Board has overall responsibility for
establishing the Group’s purpose, culture
and strategy to deliver the long-term growth
of the Group and generate value for
shareholders.
The Board is committed to the delivery of
our clear strategy and mission to be the
number one online destination globally for
fashion-loving 20-somethings. At ASOS
we recognise the importance of effective
corporate governance in supporting the
long-term success and growth of the Group.
Good corporate governance facilitates
clear delegation of authority from the Board
through to our Executive Committee and
Operating Board, and beyond, to promote
clear disciplined decision-making and
ensure the effective execution of our
strategic priorities. During the year, the
Board was focused on the delivery of six
key priorities to reset the business and
prime us for our next stage of global growth
(see page 12). The Board has overseen
the strengthening of our organisational
capabilities and enhanced governance
framework with the development of
our Executive Committee through the
appointments of a Chief Growth Officer,
Chief People Officer, Chief Strategy Officer
and Chief Commercial Officer. These
appointments have ensured that the Group
has the right capabilities in terms of scale
and complexity, as we continue to grow.
Another focus has been on removing
non-strategic cost from the business, in order
to drive greater efficiencies across the
business. Our progress on this priority
exceeded our expectations, leveraged by
the greater rigour instilled in our financial
discipline and operational governance. Our
next stage of our growth will seek to build
our global scale, particularly in the US and
Europe, driven by five key strategic pillars
(see page 20). Over the next year, the
Board will be focused on ensuring we
deliver on the strategic priorities that
underpin our five strategic pillars.
The Board acknowledges that it is
accountable to stakeholders for ensuring
that the Group is appropriately managed
and achieves its objectives in a way that
is supported by the right culture and
behaviours. The Board is responsible for
ensuring that its activities reflect the culture
of the Group, set the tone from the top and
drive the right behaviours with our ASOSers.
Our ASOS behaviours are recognised by all
ASOSers and support our culture and
ensure that every ASOSer lives our purpose.
During the year, Karen Geary took on the
role of Designated Non-executive Director
for employee engagement and met with the
Chairs of our employee forum, InTouch.
More information on this can be found on
page 22. Our Chairman, Adam Crozier,
also attended an InTouch Forum during
the year, giving InTouch members the
opportunity to ask him questions.
Board meetings
The Board held eight scheduled meetings
during the year. The Chairman and the Senior
Independent Director held an additional
meeting with the CEO and CFO to discuss the
stress tests that had been conducted on cash
flow in response to COVID-19, as well as a
wider update on the business and business
continuity proposals. Directors are expected
to attend all scheduled Board and relevant
Committee meetings. The table above
sets out attendance at all Board and
Committee meetings held during the year
to 31 August 2020.
The Board and its Committees receive
appropriate and timely information
before each meeting, a formal agenda is
produced for each meeting, and Board
and Committee papers are distributed
several days before meetings take place
allowing all Board members to contribute,
even if they cannot attend. In response to
the COVID-19 pandemic, the Board were
provided with information on the Group’s
response in terms of business continuity,
trading, our supply chain, logistics, fulfilment
centres and delivery solutions, as well as
how we ensured the health, safety and
wellbeing of our employes during
40
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GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Corporate Governance Report continued
lockdown, and continued to provide
relevant and engaging content with our
customers. Any Director can challenge
proposals, and decisions are taken
democratically after discussion. Any
Director who feels that any concern remains
unresolved after discussion may ask for that
concern to be noted in the minutes of the
meeting, which are then circulated to all
Directors. Specific actions arising from
such meetings are agreed by the Board
or relevant Committee and then followed
up by management.
The Directors have access to the advice and
services of the Company Secretarial team,
including the General Counsel & Company
Secretary, who is responsible for ensuring
that all Board procedures have been
complied with. The appointment and
removal of the Company Secretary is a
matter reserved for the Board as a whole.
Individual Directors are also able to take
independent legal and financial advice at
the Group’s expense when necessary to
support the performance of their duties as
directors. During the year, the Chair met
with the Non-executive Directors without
the Executive Directors being present.
Throughout their period in office, the
Directors are also updated on the Group’s
business areas and the regulatory and
industry-specific environments in which they
operate by way of written briefings and
meetings with senior executives and, where
appropriate, external parties. Appropriate
training is also available to all Directors to
develop their knowledge and ensure they
stay up to date on matters for which they
have responsibility as a Board member.
In addition, a Directors’ and Officers’
Liability insurance policy is maintained
for all Directors.
Key Board actions during the year
– C-Suite recruitment
– Monitored progress with TGR
– Group’s response to COVID-19
– The placing of non-pre-emptive shares
in April 2020
– Repayment of funds received from UK
Government’s furlough scheme and the
Bank of England’s Covid Corporate
Financing Facility
– Approved Three-Year Strategy & Plan
– Approved ASOS Foundation funding
42
Board composition
The Board is currently composed of the
Chair, two Executive Directors (the CEO &
CFO) and six Non-executive Directors, five
of whom are considered to be independent.
There were some changes to the composition
of the Board of Directors during the year with
the appointment of four Non-executive
Directors, who joined us throughout FY20.
Biographies for the Directors that are
appointed as at the date of this report are
set out on pages 37 to 38. The Board is
satisfied that all Non-executive Directors
have sufficient time to commit to their role
on the Board.
The Board is satisfied that its Directors have
an appropriate balance of skills and
experience, and there is a suitable balance
between independence of character and
judgement, and knowledge of the Group,
to enable it to discharge its duties and
responsibilities effectively. All Directors are
encouraged to use their independent
judgement and to constructively challenge
all matters, whether strategic or operational.
We have effective procedures in place to
monitor and deal with conflicts of interest.
Any changes to the time commitments and
interests of its Directors are reported to and,
where appropriate, agreed with the rest of
the Board.
Board diversity
33%
67%
Women
Men
ASOS recognises the importance of
diversity across the organisation and see it
as a key driver of business success. We are
an organisation that is committed to creating
an inclusive culture where our people reflect
the diversity of the customers we serve. We
are passionate about creating an
environment where every ASOS employee
is given the opportunity to contribute and
use their talents, skills and experiences to
participate in making ASOS the number one
online destination for fashion-loving
20-somethings. We believe that a diverse
Board, with a broad range of skills,
backgrounds, knowledge and experience,
is an essential element to maintain Board
effectiveness and competitive advantage.
Diversity of skills, background, knowledge
and gender are all taken into consideration
when making new appointments to the
Board. All appointments are made on merit,
taking into account suitability for the role,
composition and balance of the Board, to
ensure that the Group has the right mix of
skills, experience, independence and
knowledge to perform effectively and drive
our next stage of growth. The Board consider
suitably qualified applicants from as wide
a range as possible, with no restrictions on
age, gender, religion or ethnic background
and the Group will only engage with
executive search firms who have signed up
to the voluntary Code of Conduct on gender
diversity and best practice to ensure that the
pool of candidates is as wide and diverse as
possible. We endeavour to maintain a level
of at least 30% female Directors on the
ASOS Plc Board over the short to medium
term. The Board ensures that procedures are
in place to underpin this policy on diversity,
including in its succession planning for senior
management.
Board appointments
The Board, on the recommendation of the
Nomination Committee, makes decisions
regarding the appointment and removal of
Directors and there is a formal, rigorous and
transparent procedure for appointments. To
facilitate their understanding of ASOS and
provide an insight into the experience of an
ASOS employee, all new Directors receive
a comprehensive, formal induction tailored
to their needs, including site visits, briefings
from senior managers on key areas of the
business and meetings with external advisers.
In accordance with the UK Corporate
Governance Code, all of our Directors
stand for re-election annually at every
AGM. The Board unanimously believes that
the contributions of each Director standing
for re-election continue to be effective.
We therefore encourage shareholders to
support their re-election and, in the case
of Eugenia Ulasewicz, election at the AGM
on 26 November 2020.
Board effectiveness review
An effective Board is vital to the success
of ASOS and, in order to ensure that the
Board continues to operate as efficiently as
possible, and that each Director is sufficiently
committed to their role, the Board conducts
regular evaluations of its performance, as
The table below sets out the key institutional shareholder engagement activities carried out during the year.
Month
Conference name
Where
October 2019
Full Year Results Roadshow
London, Boston, New York
November 2019
JP Morgan Best of British Conference
London
Berenberg West Coast Consumer Conference
California
Morgan Stanley Global TMT Conference
Barcelona
January 2020
Berenberg Benelux Roadshow
Amsterdam, Rotterdam, Brussels
April 2020
May 2020
June 2020
Exane Retail Store Tour
London
Virtual Half Year Results & Placement Roadshow
Global
Exane Frankfurt IR Virtual Roadshow
Frankfurt
Wells Fargo Bricks to Clicks Virtual Conference
New York
well as that of its Committees and individual
Directors, usually annually and led by
the Chair.
Given the changes in the composition of
the Board during the year, the decision
was made to conduct this year’s Board
effectiveness review internally, by way of
an online questionnaire. The Chair and the
General Counsel & Company Secretary
agreed the approach and the specific topics
that would be covered, and the Directors were
invited to comment anonymously on Board
composition and succession, performance
of the Chair, Senior Independent Director
and the Committees, risk management
and stakeholder engagement, as well as the
culture of the Board.
The results of the questionnaire were collated,
and recommended actions were presented to
the Board for discussion. The Board agreed
that it was satisfied with the overall
performance of the Board during the year,
that the Directors had worked well together
and that the Board and its Committees had
discharged their duties effectively. The review
identified some opportunities for the Board
and some of the areas of focus for the year
ahead include continuing to enhance the
engagement between Board members and
senior leadership, increase the Board’s
engagement with how the business evaluates
and monitors its culture, and continue to
develop the operation of the Nomination
Committee and its focus on succession
planning, diversity and inclusion. The recently
appointed Chief People Officer will play an
integral role in facilitating the latter two areas
of focus.
Relations with shareholders
ASOS is committed to communicating
openly with its shareholders to ensure that
its strategy and performance are clearly
understood. During the year, numerous
activities were undertaken to engage with
our shareholders. More information about
our engagement with shareholders can be
found on page 22.
Results and routine announcements
We communicate with shareholders through
our full-year and half-year announcements
and trading updates. We invite institutional
shareholders and analysts to attend
presentations either in person or virtually,
following our full-year and half-year
announcements. The presentation slides and
webcasts of the presentations are made
available at www.asosplc.com.
Shareholder meetings
The AGM is the principal forum for dialogue
with private shareholders. The AGM was
held on Wednesday 27 November 2019
at our head office in London. The Chair and
the Chair of each Committee, as well as all
other Directors, attended the AGM and
were available to answer questions raised
by shareholders. Shareholders vote on each
resolution by way of a poll, and the results
of voting were published on our website
www.asosplc.com.
This year’s AGM will be held at 12 noon
on Thursday 26 November 2020 at our
head office in London. We are continuing
to monitor developments relating to the
outbreak of COVID-19, including the related
public health guidance and legislation issued
by the UK Government. In light of the
continuously changing developments with
respect to the COVID-19 pandemic and, in
particular, the UK Government’s response
(including the use of local lockdowns and
guidance on working from home and
gatherings), the Board has concluded that
the interests of all our stakeholders would be
best served by running this year’s AGM as a
closed meeting. Shareholders will therefore
not be able to attend in person. Full details
are included in the Notice of Meeting, which
is sent to shareholders at least 21 days before
the meeting.
Website and shareholder
communications
Our website www.asosplc.com provides a
range of corporate information on our
business, results and financial performance,
including copies of our Annual Report and
Accounts, announcements and presentations.
43
GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Corporate Governance Report continued
Audit Committee Report
Appropriate assistance: each year,
Deloitte, our internal auditors, carry out
reviews of our internal processes in a
number of different areas to assist with
our risk management processes, provide
an objective independent view of the
effectiveness of various procedures and
policies, and identify where improvements
could be made. Deloitte report to the Audit
Committee; and the day-to-day relationship
is managed by our General Counsel &
Company Secretary with links into the
Business Assurance function, and with input
from the CFO. The internal audit plan for
each year is compiled after consultation
with the Executive Committee members,
approved by the Audit Committee and the
reports and recommendations from each
audit are reviewed by the relevant business
department, the Executive Committee, Audit
Committee and Business Assurance.
Appropriate internal disclosure: with
a business as large as ASOS, we know we
rely on our people to be our eyes and ears
on what’s happening across the organisation.
So we have a number of ways in which
ASOSers can provide us with feedback
on any matter, including anything that just
doesn’t feel right. One of those is through
our independent, third-party whistleblowing
service, Spot, which anyone connected to
ASOS can contact through a website portal
to share concerns about the business. The
Audit Committee is advised of any significant
concerns raised through this service and
subsequent investigations, while the Board
has oversight of investigations of serious
wrongdoing and is responsible for reviewing
and approving our Whistleblowing Policy
and processes. We seek to ensure that all
ASOSers, new and long-serving, know of
these feedback channels and encourage
their use across ASOS.
Non-financial controls
ASOS has a number of non-financial controls
covering areas such as legal and regulatory
compliance, business integrity, health and
safety, risk management, business continuity
and corporate responsibility (including
ethical trading, supplier standards,
environmental concerns and employment
diversity). The key elements of those
non-financial controls are set out below and
remain consistent with the previous financial
year in order to provide important continuity
across our fast-moving business.
Appropriate standards and policies:
the Board is committed to maintaining
appropriate standards for all our business
activities and ensuring that these standards
are set out in written policies. Key examples
of such standards and policies include Do
The Right Thing, our Code of Integrity; our
Fashion with Integrity programme; and the
ASOS Supplier Standards.
Appropriate approvals: all material
contracts are reviewed by the Procurement
and Legal departments, and signed by a
senior executive of ASOS.
Appropriate oversight: as businesses
change, so do their challenges and risks.
Given ASOS’ continued growth, the Board
regularly reviews all standards and policies
to ensure they remain appropriate to ASOS
as its size and shape evolves. The most
significant of these is our risk management
process, which is based around our Risk
Register. The Business Assurance function
has primary responsibility for the Risk
Register. It has deep links with the Executive
Directors and Executive team in its oversight
of risk and its management.
Through its review, and the implementation
of business continuity plans to address key
risks with an immediate impact, risks facing
the business are re-assessed and potential
actions are considered and implemented to
mitigate those risks and prepare the business
to handle them should they arise. The Risk
Register is reviewed on a regular basis and
presented to the Audit Committee twice
a year.
Meetings, roadshows and
conferences
The Directors actively seek to build a mutual
understanding of objectives with institutional
shareholders. Shareholder relations are
managed primarily by the CEO, CFO and
Director of Investor Relations, supported
by our Chair as appropriate. A calendar
of events is set out above. In addition, we
review analysts’ notes and brokers’ briefings
to achieve a wide understanding of investors’
views. The Board is kept informed of the
views and concerns of major shareholders
through briefings from the Director of
Investor Relations, and investment reports
from analysts. The Non-executive
Directors, including the Senior Independent
Director, are available to meet with major
shareholders whenever required to discuss
issues as they arise.
Financial controls
ASOS has an established framework of
internal financial controls, the effectiveness
of which is regularly reviewed by the
Executive Committee, the Audit Committee
and the Board as an ongoing assessment
of significant risks facing the Group.
– The Board is responsible for reviewing
and approving overall Group strategy,
approving revenue and capital budgets
and plans, and for determining the
financial structure of ASOS including
treasury, tax and dividend policy.
Monthly results and variances from plans
and forecasts are reported to the Board.
– The Audit Committee assists the Board
in discharging its duties regarding the
financial statements and accounting
policies, as well as with the maintenance
of proper internal business and
operational and financial controls,
including the results of work performed by
the internal audit function. The Committee
provides a direct link between the Board
and the external and internal auditors
through regular meetings.
– The Board has established an
organisational authority structure, with
clearly defined lines of responsibility
and approval thresholds, to specify the
transactions requiring its approval.
– There are comprehensive procedures for
budgeting and planning, for monitoring
and reporting to the Board business
performance against those budgets
and plans, and for forecasting expected
performance over the remainder of the
financial period.
44
Committee Chair
Ian Dyson
Members
Mai Fyfield
Eugenia Ulasewicz
Karen Geary
Luke Jensen
Responsibilities
The Committee’s principal responsibilities are to:
– Monitor the integrity of ASOS’ financial statements
in relation to the Group’s financial performance.
– Review the effectiveness of the internal and external
audit processes.
– Review the effectiveness of the Group’s financial and internal
controls, including the process for the evaluation, assessment
and management of risk.
Terms of reference
The full Terms of Reference for the Committee are available
on our corporate website, www.asosplc.com. They were last
reviewed on 8 October 2020.
Committee attendance
Role
Attendance record
Committee
member
Ian Dyson
Committee Chair
Mai Fyfield1
Non-executive Director
Karen Geary
Non-executive Director
Luke Jensen1
Non-executive Director
Eugenia Ulasewicz2 Non-executive Director
Rita Clifton3
Hilary Riva3
Non-executive Director
Non-executive Director
4/4
3/3
4/4
3/3
1/1
2/2
2/2
1 Mai Fyfield and Luke Jensen were appointed as Non-executive Directors
and joined the Audit Committee on 1 November 2019.
2 Eugenia Ulasewicz was appointed as Non-executive Director and joined
the Audit Committee on 16 April 2020.
3 Rita Clifton and Hilary Riva stepped down from the Audit Committee and
as Non-executive Directors on 31 March 2020.
Audit Committee
Chair’s statement
During the year, the Committee has continued
to assist the Board in fulfilling its oversight
responsibilities by monitoring and reviewing the
integrity of the Group’s financial reporting and
the effectiveness of the Internal and External
Audit functions, risk management framework
and cyber security. As well as the ‘business as
usual’ items, the Committee was particularly
focused on the impact of the COVID-19
pandemic on the business, in terms of financial
performance, new and emerging risks, and crisis
management, business continuity and resilience.
The Committee’s priorities for the next financial
year will be to consider the ongoing impact
of COVID-19 on the Group in terms of future
planning and the evolution of Group-wide
business continuity arrangements, monitor the
implementation of the business strategy and its
impact on the Group’s internal control and risk
management processes, and continue to ensure
appropriate focus is given to the critical topics
of cyber security and the controls programme
for ASOS’ sourcing supply chain.
45
GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Audit Committee Report continued
Committee membership and activities
The members of the Committee are independent Non-executive Directors who possess the necessary depth of financial and commercial
expertise to fulfil their role. Detailed information on the experience, skills and qualifications of all Committee members can be found
on pages 37 to 38. The Board is satisfied that the Committee Chair, Ian Dyson, has recent and relevant financial experience.
Although not members of the Audit Committee, our Company Chair, CEO, CFO and General Counsel & Company Secretary are also
invited to attend meetings, unless they have a conflict of interest. Other senior members of the business are invited to attend meetings
as appropriate. The Audit Committee met four times for scheduled meetings during the year.
Key activities during the year
Financial reporting
– Reviewed the Annual Report and Accounts, including whether they were fair, balanced and
understandable, the material judgements and estimates, going concern and viability statements.
– Considered the external auditor’s report on the full- and half-year audits.
– Reviewed the full- and half-year results announcements.
External audit
– Appraised the effectiveness and performance of our external auditors, assessed their independence
and objectivity, and recommended their reappointment.
– Considered the external audit fees and terms of engagement.
– Reviewed the non-audit services and fees of the external auditor.
Risk and internal
controls
– Monitored the Group’s Risk Register, including the completeness of the process to identify the Group’s
principal and emerging risks and movements in such exposures, particularly in relation to new and
emerging risks connected to the COVID-19 pandemic.
– Reviewed the effectiveness of the Group’s risk management and internal control systems.
– Received updates on material litigation and whistleblowing matters.
– Considered reports on the Group’s Gifts & Hospitality Policy.
Internal audit
– Monitored and reviewed the effectiveness and independence of the internal audit function.
– Reviewed internal audit reports and monitored the implementation of internal audit recommendations.
Other matters
– Approved revised Terms of Reference for the Committee.
– Received updates on tax matters and approved the Group’s Tax Strategy.
– Reviewed progress with Business Continuity planning.
– Reviewed the robustness of the cyber security processes and systems, the work of the Cyber Security
team and the ASOS Security Strategy for the next three years.
The Committee has engaged the following external advisers to help it meet its responsibilities, both of whom are invited to attend Committee
meetings unless they have a conflict of interest: PricewaterhouseCoopers LLP (PwC) act as external auditors to ASOS and Deloitte LLP act
as our internal auditors. The Audit Committee Chair and members regularly meet with both the external and internal auditors, without the
Executive Directors or members of the Finance team being present. ASOS also receives advice as needed from KPMG, EY and Slaughter
and May LLP on tax and legal issues relating to corporate matters.
Financial reporting
The Committee’s primary responsibility in relation to the Group’s financial reporting is to review, with management and the external auditor,
the quality and appropriateness of the annual and half-yearly financial statements. The Committee focuses on the quality of accounting
policies and practices, the appropriateness of underlying assumptions, judgements and estimates made by management, key audit matters
identified by the external auditor, the clarity of the disclosures and compliance with financial reporting standards, an assessment of whether
the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to
assess the Group’s position and performance, business model and strategy, and advising the Board on the form and basis underlying the
long-term Viability Statement. The Committee received reports from management in relation to the identification of critical accounting
judgements, significant accounting policies and the adoption of IFRS 16 during the current financial year.
46
The Board has discussed areas of risk with
the auditors and agreed for the following
areas of heightened risk to be reviewed and
assessed in the audit of ASOS’ performance
in the financial year to 31 August 2020:
– Capitalisation of costs may not be
appropriate: given the high level of
internal development of software there is
a risk that staff costs are inappropriately
capitalised.
– Revenue may not be correctly recorded:
as revenue is recognised on despatch and
the returns provision is based on estimates
there is a risk that revenue may not be
accurately recorded.
– Inventory not recorded correctly: having
regard to the significant level of inventory
holdings in both the UK and overseas
warehouses, and the fast-moving
nature of the fashion market, there is an
increased risk that the closing inventory
is not accurately recorded or that the
inventory provisioning is not complete
in the financial statements.
– Consideration of the impact of COVID-19:
given the significance of the impact of
COVID-19 on the global economy,
customer behaviours and associated cash
flows, the carrying amount of assets and
projected future cash flows in the context
of going concern and impairment
assessments.
The Committee reviewed the
appropriateness of management’s
accounting in relation to each of these
significant risks and PwC reported to the
Committee on the work performed in
assessing each during their audit. Details
of this work are provided in PwC’s Audit
Report on pages 76 to 80.
External audit
The external auditors, PwC, were first
appointed in the financial year to 31 March
2008. The fees paid to PwC for the financial
year to 31 August 2020 were £420,325
(2019: £374,161). In line with its Terms of
Reference, the Audit Committee undertakes
a thorough assessment of the quality,
effectiveness, value and independence
of the audit provided by PwC each year,
seeking the views of the Board, together
with those of relevant members of the
Executive Committee.
The Board is satisfied that the Group has
adequate policies and safeguards in place
to ensure PwC maintain their objectivity and
independence. The external auditors report
to the Audit Committee annually on their
independence from ASOS. Periodic rotation
of key audit partners is also required.
Current PwC audit partner Andrew Latham
first started overseeing ASOS’ external audit
with effect from the financial year ended
31 August 2017. A new audit partner will
need to be appointed for financial year
ended 31 August 2022.
The Board has a formal policy on the
Group’s relationship with PwC in respect of
non-audit work. Proposals for all non-audit
services above £50,000 must be approved
by the Audit Committee before being
carried out, and PwC may only provide
such services if their advice doesn’t conflict
with their statutory responsibilities and
ethical guidance.
Following the most recent review, the Audit
Committee recommended the reappointment
of PwC as auditors of ASOS, and PwC
expressed their willingness to continue.
A resolution to reappoint PwC and a resolution
to enable the Directors to determine their
remuneration will be proposed at the
2020 AGM.
Risk management and internal
controls
The Board has delegated responsibility for
overseeing the effectiveness of the Group’s
internal controls and risk management
systems to the Audit Committee. The
Committee has a policy of continuous
identification and review of principal
business risks and considers how those risks
may affect the achievement of business
objectives and determines appropriate
mitigation, taking into account the Group’s
risk appetite.
The Executive Committee implements the
internal controls and processes to put the
Committee’s policies on risk and control
into effect and provides assurance on
compliance with these policies and
processes. On a day-to-day basis, the
Group risk management process is managed
and co-ordinated by the General Counsel
& Company Secretary, supported by the
Business Assurance team, to ensure there is a
more integrated, deeper focus on applying
and evolving risk management and internal
controls throughout the business.
Our Business Risk Register is formally
reviewed every six months using a consistent
process to identify the likelihood and business
impact of any material or emerging risk, as
well as any mitigating factors or controls, and
a robust assessment of the principal and
emerging risks facing the Group has been
carried out during the year. Progress and key
themes coming out of the ongoing Risk
Register review are reported to the Executive
Committee and the Audit Committee. More
details on our risk management processes
and Risk Register can be found in the Risk
Report on pages 30 to 35.
COVID-19 caused us to re-evaluate systems
of risk management and internal control.
The business quickly had to adapt to new
ways of working during the pandemic,
switching the majority of our workforce to
remote working, including our Customer
Care centre. This brought new risks with
it and, at the same time, mitigated others,
and whilst we have a number of systems
controls which are unaffected by location
of work, we performed a full review of what
additional risks might exist. This risk review
involved cross-functional information
gathering, with input from specialists across
the business, which was discussed and
refined by our Operating Board. In addition
to the bi-annual business risk review,
a COVID-19 specific risk register was
established to capture these risks but also
changes or movement in existing risks due
to the pandemic. The COVID-19 risk register
is reviewed by the Executive Committee
on a quarterly basis and reported to the
Audit Committee as part of the bi-annual
risk review.
Our business continuity response teams
have been monitoring the development
of the pandemic since the onset in January
to allow for a swift response to any changes
or new guidance. Our Business Continuity
Plans (‘BCP’) were updated to include
the specific scenario of a forced office,
website or fulfilment centre closure for
an extended period. Whilst COVID-19 has
been a serious test of the Group’s resilience
and limits, the Group has maintained
operations throughout and much has been
learnt with regards to business continuity.
These learnings have been captured and
incorporated into updated and new BCP for
a full operational shutdown of the Group’s
fulfilment centres and website, and the
ASOS Studios, and the rigour and resilience
of both of these BCP are being assessed
and tested pursuant to the Group’s Internal
47
GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 schedule of planned internal audits to be
undertaken during the year, which focused
on providing re-assurance over core
processes and risks relating to ASOS’
largest change programmes. In response
to the COVID-19 pandemic, and the
significant logistical, organisational and
decision-making challenges this presented,
Internal Audit reassessed the existing plan
for FY20 and amended the timings for the
majority of the audits that were due to be
completed in this financial year, including
deferring a number of audits to FY21.
The following key internal audits were
completed during the year: TGR Assurance,
Business Continuity and Disaster Recovery,
Data Security incidents, Treasury, Digital
Marketing and Data Protection Key Controls
and the Committee will monitor the timely
implementation of any resulting actions
required by management. A revised
schedule of internal audit review projects
for the financial year to 31 August 2021
was approved by the Audit Committee
in October 2020.
Ian Dyson
Audit Committee Chair
13 October 2020
Audit Committee Report continued
Audit Plan for FY21. Beyond COVID-19, the
focus for the next financial year will be on
reviewing and refreshing the full suite of
Group BCP to improve resilience and
robustness, as well as to incorporate
COVID-19 learnings, and improve
scenario-specific plans. An annual BCP
management cycle will also be embedded,
to better track, review and evolve BCP.
During the year, the Committee continued to
monitor the progress being made to further
strengthen and develop the Group’s cyber
security measures, including a review of
ASOS’ Security Strategy for the next three
years. ASOS’ approach to cyber security,
and the level of security controls and
processes that have been put in place over
the last few years, continues to be essential
to our fast-moving high-growth business,
and has been particularly necessary as the
Group adopted to the change in security
threats caused by the COVID-19 pandemic.
The Board is satisfied that the risk
management and internal controls systems
for all parts of the business operated
effectively for the financial year to
31 August 2020 and up to and including
the date of this report.
Internal audit
Our internal audit function provides
independent assurance as to the adequacy
and effectiveness of the Group’s internal
controls and risk management systems.
Our internal audit function is outsourced to
Deloitte LLP, who report on their ongoing
reviews at each Committee meeting.
The Executive Committee has responsibility
for ensuring the timely implementation of
any recommendations and actions resulting
from the completion of an audit. The
Committee continues to monitor the
effectiveness of the internal audit function.
Prior to the start of the financial year, the
Committee reviewed and approved the
Nomination Committee Report
Committee Chair
Adam Crozier
Members
Ian Dyson
Eugenia Ulasewicz
Karen Geary
Luke Jensen
Responsibilities
The Committee’s principal responsibilities are to:
– Monitor the structure, size and composition of the Board
and its Committees.
– Identify the balance of skills, knowledge, diversity and
experience on the Board and recommend new Board and/or
Committee members to the Board as appropriate.
– Review the time commitment and independence of the
Non-executive Directors, including potential conflicts of
interest.
– Oversee talent and succession plans for senior management.
– Ensure that an appropriate and tailored induction is
undertaken by all new Board members and that training and
development is available to existing Board members.
Terms of reference
The full Terms of Reference for the Committee are available on
our corporate website, www.asosplc.com.
Committee attendance
Committee
member
Role
Adam Crozier
Committee Chair
Ian Dyson
Hilary Riva1
Rita Clifton1
Non-executive Director
Non-executive Director
Non-executive Director
Attendance record
1/1
1/1
1/1
1/1
Karen Geary2
Non-executive Director
Not applicable
Luke Jensen2
Non-executive Director
Not applicable
Eugenia Ulasewicz2 Non-executive Director
Not applicable
1 Rita Clifton and Hilary Riva stepped down from the Nomination Committee
and as Non-executive Directors on 31 March 2020.
2 A Nomination Committee meeting was not held during the year following
the appointment of Karen Geary, Luke Jensen and Eugenia Ulasewicz
to the Committee.
During the year, the main focus of the Committee
has been on the induction of the new Non-
executive Directors, the strengthening of the
Executive Committee, with key appointments
made during the year, succession planning for the
Executive Committee and senior management,
and the further development of the Group’s
approach to diversity and inclusion.
We welcomed Karen Geary, Mai Fyfield, Luke
Jensen and Eugenia Ulasewicz to the Board as
Non-executive Directors during the year. These
appointments ensure that we have the world-
class experience, skills and expertise necessary
to guide ASOS through its next stage of global
growth. The new Non-executive Directors were
provided with a comprehensive induction
programme to ensure that they were sufficiently
and efficiently onboarded to begin to perform
their duties as quickly and successfully as
possible. The induction programme included
one-to-one meetings with the Executive
Committee, other key members of the leadership
team and external advisors, a full suite of
documents including company information,
confirmation of their duties as directors, and
rules, regulations and guidance. They were also
provided with a tour of our UK Fulfilment Centre,
led by our Supply Chain Directors.
48
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GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Nomination Committee Report continued
Directors’ Remuneration Report
The Committee believes that diversity and
an inclusive culture is a key driver of business
success and is committed to having a diverse
leadership team, which provides a range
of perspectives, insights and the challenge
needed to support good decision-making.
The Committee is pleased that the Board
has exceeded the target recommended in
the Hampton-Alexander Review and, as
at the date of this report, 33% of the Board
is female. Following the recent changes to
the Executive Committee, one position is
currently held by a woman (12.5%), while
37.5% of senior leadership roles are
currently held by women (2019: 28.5%).
The Committee is committed to improving
the diversity in senior leadership roles and in
leading the way in developing the pipeline
of BAME candidates within ASOS and
this will be a key focus of FY21. More
information on ASOS’ diversity initiatives
can be found on page 25.
Adam Crozier
Nomination Committee Chair
13 October 2020
The new Non-executive Directors
have already made an impact on the
effectiveness of the Board and Committees
and we are now confident that we have the
appropriate balance of skills, knowledge,
experience and diversity on the Board,
capable of driving the Group forward
successfully to achieve its strategic goals.
The Committee considers all of the
Non-executive Directors, with the exception
of Nick Robertson, to be independent in
accordance with UK requirements and they
continue to make effective contributions and
effectively challenge management.
We have also made progress with
strengthening the Executive Committee,
following the appointment of Robert Birge
as Chief Growth Officer, Jo Butler as Chief
People Officer and Patrik Silén as Chief
Strategy Officer during the year. They sit
alongside our existing CEO, CFO, CIO
and COO and have been charged with
developing strategy and continuing to scale
the business at pace, to create a more diverse
and global team. The Executive Committee
has hit the ground running and are working
together effectively and forming solid
relationships. We have also appointed a
Chief Commercial Officer, who will play
a pivotal role in leading and transforming
our retail structure, to meet our three year
ambitions. In the coming year, the Committee
will turn its focus to ensuring that there is
a robust succession plan in place for the
Executive Committee and the wider senior
leadership team, in particular developing
cross-functional leaders of the future and
specialist subject matter experts.
Committee Chair
Karen Geary
Members
Ian Dyson
Mai Fyfield
Activities during the year
– Considered the alignment of executive remuneration with the
strategy of ASOS and the effectiveness of the current policy.
– Reviewed and confirmed the outcome of the 2020 annual
bonus and the 2018 three-year ASOS Long-Term Incentive
Scheme (ALTIS) awards for Executive Directors and senior
management.
– Undertook the 2021 salary review for Executive Directors
and senior management, having regard to a wide array of
internal and external factors.
– Reviewed and revised the TSR comparator group for 2021.
– Set targets and performance measures for the 2021 annual
bonus and ALTIS awards for Executive Directors and senior
management.
– Reviewed and approved the levels and structure of
remuneration for the appointment of three Executive
Committee members during the year.
– Considered the relationship between executive pay and
wider workforce pay.
– Considered corporate governance developments and market
practice relating to executive and wider workforce pay.
Terms of reference
The full Terms of Reference for the Committee, which are
reviewed and approved annually, are available on our
corporate website, www.asosplc.com. These were last updated
on 17 September 2020.
Committee attendance
Committee
member
Role
Karen Geary1
Committee Chair
Mai Fyfield2
Non-executive Director
Ian Dyson
Non-executive Director
Hilary Riva3
Non-executive Director
Rita Clifton3
Non-executive Director
Attendance record
4/4
3/3
5/5
3/3
3/3
1 Karen Geary was appointed to the Remuneration Committee on 1 October
2019 and was appointed Chair of the Committee on 1 December 2019.
2 Mai Fyfield was appointed to the Remuneration Committee on 1 November 2019.
3 Hilary Riva stepped down as Chair of the Remuneration Committee on
1 December 2019 and, along with Rita Clifton, stepped down from the
Remuneration Committee and the ASOS Plc Board on 31 March 2020.
Remuneration Committee
Chair’s statement
Dear Shareholder,
On behalf of the Board, I am pleased to present the
Remuneration Committee’s report for the year to
31 August 2020. This was my first year as Chair and
I would like to thank my predecessor, Hilary Riva,
for her support and guidance during the transition.
This has undoubtedly been a very challenging year
for many UK companies. With the outbreak of
COVID-19 in January, ASOS’ main priority has
been to protect the health and wellbeing of our
people and our customers, as shown in our strict
social distancing protocols implemented and
adhered to across our business.
In spite of the challenging economic environment and
uncertain landscape, ASOS continued to deliver a
strong operational performance and year on year
improvements in profitability this financial year,
requiring significant operational change. We
maintained a focus on trading dynamically and
managing the business rigorously to deliver final year
performance well ahead of expectations at the start
of the year. Revenue grew 19% year on year and a
record level of PBT of £142.1m was achieved. PBT
performance includes a one-off positive benefit of
c.£45m from COVID-19 (resulting from a beneficial
returns profile offset by additional cost).
Given our strong performance, the Board decided
it was appropriate to repay in full the support we
received from the UK Government Coronavirus Job
Retention Scheme, as well as to repay early the total
amount drawn down from the Covid Corporate
Financing Facility (CCFF). The CEO has also taken
the initiative to personally make charitable donations
as part of his own response to the pandemic.
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GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Directors’ Remuneration Report continued
Remuneration for the year ended
31 August 2020
Following a review of the performance
measures last year, the annual bonus for
2019/20 was based 30% on revenue, 30%
on PBT, 15% on free cash flow and 25% on
strategic performance objectives. Maximum
performance was achieved against the
revenue, PBT and free cash flow measures. In
respect of performance against the strategic
and personal objectives, an overall strong set
of results was delivered. Net promoter score
(NPS) performance was at on-target levels,
EU revenue growth performance exceeded
the maximum target and US revenue growth
performance was between threshold and
target. For the personal objectives, the CEO’s
performance against a number of people
measures was judged to be between target
and maximum, while the CFO achieved
maximum performance relative to cost
management targets. This resulted in an
overall bonus of 93.7% and 96.5% of
maximum for the CEO and CFO. Full details
are provided on page 65.
ASOS Long-Term Incentive Scheme (ALTIS)
awards granted in 2017 were subject to
performance measured from 1 September
2017 to 31 August 2020. Performance was
measured based 30% on sales growth,
30% on EPS growth, 30% on relative total
shareholder return (TSR) and 10% on NPS
targets. The three-year annual compound
growth in EPS and sales was 17.9% and
19.3% respectively demonstrating the
strong recovery performance delivered,
particularly over the last year. EPS and sales
growth performance resulted in 14.1% and
17.1% vesting. TSR performance was below
median and NPS was 57, which was below
threshold, therefore neither the TSR nor the
NPS portions of the award vested. This
resulted in an overall vesting level of 31.2%
of maximum for this award for the CEO. The
Group’s performance for these four metrics
and the vesting calculation were audited
and approved by our auditors, PwC. The
CFO joined in 2019 and did not participate
in this award. Full details are provided on
page 66.
The Committee carefully considered
whether incentive outcomes fairly reflected
the underlying performance of the business
as well as the experience of shareholders
and stakeholders during the period.
During the year, we developed a discretion
framework to support the year-end
decision-making process to determine
whether any discretion should be exercised.
52
In relation to the annual bonus, the
Committee was mindful that the annual
bonus outcomes were close to maximum,
in a year that has been very challenging
formany people.
When determining bonus outcomes we
considered overall company performance
over the period and particularly the impact
of COVID-19 on our business and the
broader market. The Committee noted the
excellent revenue, PBT and free cash flow
performance delivered over 2019/20
which was significantly above market
expectations at the start of the year, and
commended the commitment and focus of
the senior team on trading dynamically and
managing business performance rigorously
to deliver these results in very challenging
circumstances. The Committee noted that
even if the c.£45m one-off benefit from
COVID-19 was removed PBT performance
would still have significantly exceeded the
maximum target. The Committee also noted
that the share price has more than doubled
over the course of the last year. Overall,
therefore, the Committee’s view was that the
bonus outcome was fair and no discretion
was exercised on the bonus outcome.
A similar exercise was carried out for
the ALTIS awards granted in 2017. The
Committee considers that the ALTIS vesting
outcome of 31.2% of maximum fairly reflects
performance delivered over the three-year
period, and therefore no discretion was
exercised on the ALTIS outcome either.
Remuneration for the year ending
31 August 2021
This year, the Committee further reviewed
the executive remuneration framework,
particularly in the context of the evolving
economic environment, and the significant
increase in the size, scale and complexity
of the business. Our underpinning
philosophy is that the remuneration
framework should support the execution
of our ambitious growth strategy and the
creation of value for shareholders and other
stakeholders in a way that is consistent with
ASOS’ culture and values.
As part of this process the Committee
reviewed market data prepared by Deloitte
(our independent advisors) to understand
the positioning of Executive Director pay
compared to other companies of a similar
size and complexity. This was the first such
exercise the Committee had carried out for
a number of years during which time the
financial size, international reach and
complexity of the organisation increased
significantly. The market data showed that
the CEO’s base salary and total remuneration
opportunity was positioned in the lower
quartile compared to similar sized
companies. Similarly the CFO’s total
remuneration opportunity was positioned
between lower quartile and median. The
Committee was mindful of the potential
ratchetting effect of an over-reliance on pay
benchmarking. However, given the current
positioning is significantly behind market the
Committee and Board believe that a failure
now to better align pay with the remuneration
arrangements at other companies of a
comparable size and complexity for
considerably improved performance could
present challenges around retention of the
current Executive team and the ability to
recruit high quality executives in the future.
The review of remuneration arrangements
was carried out with proper consideration
for the external business and social
environment. In view of this, we determined
it was prudent not to make any changes to
our overall framework at this time, although
this remains under review and the Committee
will be considering further whether our
reward structure is appropriate during
the forthcoming year.
Taking into account a range of factors, the
Committee recommended to the Board, and
the Board approved, the following changes
to Executive Directors’ remuneration for
2021, as follows:
– CEO salary The CEO’s salary will
increase from £573,000 to £620,000 (an
increase of 8.2%) effective 1 December
2020. Since his appointment in September
2015, the business has grown significantly
in terms of revenue, profitability,
international presence and complexity.
Revenue for 2019/20 increased by 186%
compared to 2014/15, and PBT by 206%
over the same period. In 2014/15, ASOS
was a predominantly UK-based business
and today we are an increasingly complex
international business managing trade and
infrastructure on a global basis.
Prior to the review this year, the CEO’s
salary has increased by only c.4% since
2015. Last year the Committee decided
against re-positioning the CEO’s salary
in light of the prior year business
performance, despite the CEO’s
remuneration remaining at the lower end
of the market. For reasons of retention,
incentive, and to recognise the significant
growth rates at our competitors and
believes these targets are positioned
strongly in that context. The relative TSR
vesting schedule is unchanged; however,
following feedback from a number of our
large shareholders, we have refreshed the
TSR comparator group this year to include
additional online and fashion competitors
in Europe and the US to ensure we are
measuring our performance relative to key
global peers. We have also refined the UK
comparators within the group to provide
an increased focus on fashion retailers,
particularly those with an established or
growing online presence. The new group is
shown on page 59.
The Committee and I are extremely mindful
of the current market sentiment regarding
executive pay levels and the expectation that
remuneration committees should exercise
restraint. We believe that this proposal
balances the need for prudence whilst
recognising the changes that ASOS has
undergone.
Annual remuneration votes 2019
Total votes cast
Votes for
Votes against
74,217,325
63,419,733
10,795,497
Votes withheld (abstentions)
2,095
Historic annual remuneration
votes
2019
2018
2017
2016
2015
85.45%
97.03%
98.10%
66.72%
83.62%
improvements in the last year, the
Committee considers that this position
now needs to be addressed in the context
of the CEO’s contribution to the strong
recovery in performance, the increased
complexity of the business, and a reward
package that lags the market. The
Committee is also mindful that, in a
distressed retail market with digital
retailing skills being hugely in demand,
ASOS talent is highly sought after.
Following the increase outlined above,
the salary for the CEO position will
continue to be towards the lower end of
market practice compared to similar sized
companies. It is the Committee’s intention
to position the salary for the role of CEO
more in line with market practice and
continue to make above average
increases in order to achieve this in future
years. Given the current environment, it is
felt that it is better to do this in a phased
way rather than in one single move. The
Committee will therefore keep the salary
under review and look to make further
increases over time subject to continued
strong performance and contribution
from the CEO combined with sustainable
Group performance.
– CFO salary The Chief Financial
Officer’s salary will increase from
£431,000 to £461,000 (an increase of
7.0%) effective 1 December 2020. He
joined ASOS last year and has made a
strong start. During the year the scope
and responsibility of his role has
broadened, encompassing the current
programme of transformation and driving
key operational improvements. These
initiatives have directly translated into
enhanced margin and profitability.
The Committee therefore considered it
appropriate to increase the CFO’s salary
to recognise the expanded scope of
his role.
– Pension In line with the UK Corporate
Governance Code, which ASOS has
chosen to adopt, pension contributions
for incumbent Directors will be reduced to
be in-line with the wider workforce rate of
5% of salary. From 1 December 2021,
contributions will reduce from 15% to
10% of salary for the CEO and from
12.5% to 10% of salary for the CFO.
From 1 December 2022, they will be
further reduced to 5% of salary for both
Directors.
– Bonus opportunity Currently the CEO
is entitled to a maximum bonus of 150%
of salary and the CFO is entitled to a
maximum bonus of 100% of salary. The
CFO’s bonus opportunity will increase
to 150% of salary. Given the significant
increase in the operational scope and
responsibilities of the CFO role previously
described, the Committee considers it
appropriate that the CFO receives the
same bonus opportunity as the CEO.
There will be no change to the CEO’s
bonus. Bonuses will continue to be based
30% on revenue, 30% on PBT, 15% on
free cash flow and 25% on strategic
performance objectives.
– ALTIS (ASOS Long Term Incentive
Scheme) The ALTIS opportunity for the
CEO and CFO will increase from 200% to
250% of salary. The Committee and the
rest of the Board are delighted that ASOS
has continued to deliver strong results in
spite of the economic uncertainty caused
by COVID-19. It is important that our
incentive plans continue to offer the
opportunity and the motivation to the
senior team to drive exceptional growth
over the coming years. There will be no
change to the performance measures with
awards continuing to be based 30% on
relative TSR, 35% on EPS growth and 35%
on revenue growth. The stretch of the EPS
and Revenue targets have been increased
to reflect the increase in the award level
and to reflect feedback from shareholders.
The next 12 months are likely to be
challenging with the continuing market and
economic disruption related to the
COVID-19 pandemic as well as the
significant uncertainty around the impact
of Brexit. However, we remain confident
that in the long term our strategy, business
model and operations position us strongly
to exploit future growth opportunities and
targets have been set in this context. For
EPS, threshold vesting will be achieved for
FY23 EPS of 138.6p and maximum vesting
will be achieved for FY23 EPS of 179.9p
(14.3% p.a. and 24.7% p.a. growth
compared to EPS excluding the one-off
COVID-19 benefit for FY20). For revenue
threshold, vesting will be delivered for
growth of 10% p.a. and maximum vesting
for growth of 20% p.a. For both measures,
significant outperformance of FY23
consensus is required to achieve
maximum vesting. When setting targets
the Committee also considered expected
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GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Directors’ Remuneration Report continued
CEO pay ratios
This is the first year in which the Group is
publishing its CEO pay ratios, comparing the
Group Chief Executive’s total remuneration
with that of our UK employees whose full time
equivalent remuneration ranks them at the
25th, 50th and 75th percentile of UK
employee pay. These ratios are, respectively,
73:1,38:1 and 24:1. Following careful
consideration, the Committee is satisfied
that the median pay ratio is consistent with
the Group’s pay, reward and progression
policies. When setting the CEO’s pay,
the Committee has regard to the same
fundamental considerations as those taken
into account by the UK management team
when setting pay for all other UK employees.
These include the Group’s policy to pay
market rates of pay that reward employees
fairly for work done and have due regard
to individual performance and Group
performance where the individual has
the ability to influence wider Group
performance. The CEO has ultimate
responsibility for, and the greatest ability
to influence, the Group’s performance and
returns to shareholders. To reflect this, the
CEO’s remuneration package has a higher
weighting on performance related pay
(including the annual bonus and ALTIS)
compared with the majority of the workforce.
This means the pay ratios are likely to
fluctuate depending on the outcomes of
incentive plans in each year.
Corporate governance
developments
In 2020, we considered the Principles and
Provisions of the 2018 Code and we kept
market practice in response to them and
other executive pay developments under
review. The Directors’ Remuneration Report
explains how the Principles and Provisions
of the 2018 Code relating to remuneration
have been applied and complied with, save
for those areas where non-compliance has
been explained. The Group has remained
wholly compliant with its remuneration
policy summarised in the 2019 Directors’
Remuneration Report.
Committee composition and
effectiveness
As noted on page 51, during the year I
assumed chairmanship of the Committee
and Mai Fyfield also joined the Committee.
Details of our respective experience can be
found on pages 37 and 38. The Committee’s
membership was and remains fully compliant
with the 2018 Code. The outcome of the
Committee’s performance evaluation,
undertaken as part of the Group’s internal
evaluation of the effectiveness of the Board
and its Committees, was very positive and
highlighted as a particular strength the
open and transparent approach of the
Chair and the effective management of
Committee meetings.
Shareholder engagement
As an AIM-listed company, we voluntarily
seek shareholder approval for our
Remuneration Report to provide invaluable
public accountability for the Board over the
appropriateness of our Remuneration Policy
and its implementation. At the AGM last
year, 85% of shareholders voted in favour
of the Directors’ Remuneration Report.
While shareholder support for our
arrangements remained good, the
Committee is mindful that the level of
support was lower than in recent years.
Prior to the AGM in November 2019,
my predecessor and I engaged in a
consultation exercise with our largest
shareholders. I sought to explain the
approach taken to our remuneration
arrangements and to understand
shareholder feedback. I found the
process to be very useful to understand
shareholders’ views on our remuneration
structure in general and the decisions
made in respect of 2018/19. From the
engagement, it was clear that our investors
held different views rather than a single
common concern. During 2019/20, the
Committee reflected considerably on the
feedback received, including comments
from some of our largest shareholders on
the adoption of alternative structures, and
this was taken into account during the
remuneration review. The Committee will
continue to consider whether an alternative
structure would be appropriate for ASOS.
A further shareholder consultation exercise
was carried out in September 2020 to obtain
feedback on the changes I have outlined and
I want to thank our shareholders for the time
they have taken to engage with us. Our
shareholders continue to hold a range
of views in relation to our remuneration
framework and we shall take these views into
account as we further review remuneration
arrangements over the next 12 months.
The Committee and I are always pleased
to discuss our approach with our
shareholders and welcome your feedback
throughout the year. We look forward to
receiving your support for the arrangements
described in this report at the upcoming
AGM on 26 November 2020.
Karen Geary
Chair of the Remuneration Committee
13 October 2020
Remuneration Policy components
Each component forms part of an overall
competitive remuneration package
designed to attract and retain appropriate
talent with the necessary skills to implement
the Group’s strategy in order to create
long-term value for shareholders. The
following provides a summary of each
element of the Remuneration Policy,
along with details of how the Policy will
be implemented for the year ending
31 August 2021.
Remuneration Policy
The Remuneration Committee determines
ASOS’ policy on the remuneration of the
Executive Directors and other senior
executives. The principles that underpin
this Policy aim to:
– encourage strong performance and
engagement, both in the short and
long term;
– enable the Group to achieve its strategic
objectives and create sustainable
shareholder value;
– make sure high performance is required
to access high rewards; and
– ensure that the total reward cost to ASOS
is affordable and sustainable.
Our Remuneration Policy must help attract,
retain and motivate high-calibre, high
performing, engaged employees. It must
reward people for their contributions to the
success of ASOS in a fair and responsible
manner, over both the short and long term.
Our Remuneration Policy must also be
communicated in a way that is simple,
effective and clearly understood.
Over the past few months, the Committee
has been undertaking a review of the
executive remuneration framework at
ASOS. As the economic environment
continues to evolve, the Committee wishes to
ensure that the structure of pay remains fit
for purpose, incentivises Executive Directors
and continues to be aligned with the overall
strategy of the business. This work has been
done with proper consideration for the
external business and social environment.
As part of this review we considered a range
of potential approaches. Given the current
external environment, the Committee
determined that it was prudent not to make
any changes to our overall framework at this
time. The Committee will continue to keep
the current framework under review as our
strategy and the market continue to evolve,
including giving consideration to whether an
alternative structure would be appropriate
for ASOS.
In determining the practical application
of the Policy, the Remuneration Committee
considers a range of internal and external
factors to ensure that remuneration is
appropriate and proportionate. These
include pay and conditions for employees
generally, shareholder feedback and
appropriate market comparisons with
remuneration practices in FTSE-listed,
AIM-listed and other retail and internet/
technology-based companies. The
Remuneration Committee remains satisfied
that this Policy aligns the interests of
Executive Directors, senior managers and
other employees with the long-term interests
of shareholders; however, as noted above
we will continue to keep our approach
under review. An appropriate proportion
of total remuneration is directly linked to
the Group’s performance over both the
short and long term, with an emphasis for
Executive Directors and senior managers on
share-based remuneration and long-term
shareholding.
The Committee followed a detailed
decision-making process which included
discussions on the proposals for the Policy
at a number of Remuneration Committee
meetings. Where changes to elements of
the package were discussed, the Committee
considered multiple approaches before
reaching a decision. During this time the
Committee considered input from
management and its independent advisers,
and sought the views of ASOS’ major
shareholders to ensure that various
perspectives were considered. To avoid
any conflicts of interest, no Directors were
involved in conversations relating to their
own pay.
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GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Remuneration Policy continued
Fixed remuneration elements
Variable remuneration elements
Element
Purpose
How it operates
Maximum opportunity
Performance-related
framework
Approach to
implementation in FY21
Element
Purpose
How it operates
Maximum opportunity
150% of base salary for
the CEO and 100% of
base salary for other
Executive Directors.
60% of that maximum is
payable for on-target
performance.
Annual
bonus
Provides a link between
remuneration and both
short-term Group and
individual performance.
The annual bonus is
earned based on
performance against
targets set by the
Committee.
Targets are reviewed
annually. Bonus payments
are normally awarded
in cash and are not
pensionable.
The Committee will retain
the discretion to adjust
bonus payouts if it
considers that the
outcome does not reflect
the underlying
performance of the
business or participants
during the year, including
the Company’s
performance against set
metrics, or that the payout
is not appropriate in the
context of circumstances
that were unexpected or
unforeseen when the
targets were set.
Base
salary
Reflects an individual’s
responsibilities,
experience and
performance in
their role.
Pension
To contribute financially
post retirement.
Other
benefits
To support the personal
health and wellbeing of
employees.
To reflect and support
ASOS culture.
When reviewing salaries,
we consider the
performance of the
individual in the period
since the last review.
Not applicable.
Our annual salary review
date is 1 December 2020.
The CEO’s salary will be
increased by 8.2% to
£620,000 on 1 December
2020. This increase is to
reflect the significant
increase in the sales,
profitability, international
reach and complexity
since his appointment in
2015 and to bring his
salary more in line with
market practice for other
companies of a similar size
and complexity.
The CFO’s salary will
be increased by 7.0% to
£461,000 on 1 December
2020. This increase is to
reflect a broadening of the
scope and responsibility
of his role since joining.
In order to reflect best
practice and to comply
with the Code, pension
contributions for the
current Executive Directors
will reduce to 10% of
salary from 1 December
2021 and 5% of salary
from 1 December 2022,
at which point they
will align with the rate
available for the majority
of the workforce.
Not applicable.
A flex allowance was
introduced for the CEO
for FY20 to align with the
approach for the wider
workforce.
Reviewed annually.
Salaries are normally paid
monthly. When determining
salary levels the Committee
takes into account:
– Responsibilities, abilities,
experience and
performance of
an individual
– The performance of the
individual in the period
since the last review
– The Group’s salary and
pay structures and
general workforce
salary increases
Periodically the Committee
reviews market data for
FTSE-listed, AIM-listed and
other retail and internet/
technology-based
companies to ensure
salaries remain appropriate
in this context.
Defined contribution
arrangement or salary
supplement.
Only base salary is
pensionable.
ASOS’ contribution
depends on the employee’s
seniority and may be
matched to the level of
contributions the employee
chooses to make.
Package of taxable benefits
offered through our flexible
benefits scheme, ASOS
Extras, which offers all
employees a fixed value
depending upon their
seniority, and can be used
either to buy a variety of
benefits or be taken in cash.
Other benefits include
private medical insurance
and life assurance. Other
benefits may be added to
the package where
appropriate.
There is no prescribed
maximum annual base
salary or salary increase.
The Committee is guided
by the general increase for
the broader employee
population, but has
discretion to decide to
award a lower or higher
increase to Executive
Directors to recognise,
for example, an increase
in the scale, scope or
responsibility of the role. In
addition, if salaries are set
at a discount to a market
rate on appointment, it may
be appropriate to provide
one or more increases at a
higher rate than the broader
employee population
based on an individual’s
performance and
experience and/or take
account of relevant market
movements.
Currently ASOS may
contribute up to 15% of
base salary (in the case of
the CEO) and up to 12.5%
of base salary (in the case
of other Executive
Directors). A cash
allowance may also be
paid in lieu of a pension
contribution. The Committee
has discretion to amend the
contribution level should
market conditions change.
For any new Executive
Director appointed to the
Board, the pension
opportunity will be in line
with the rate available
for the majority of the
workforce.
There is no maximum level
of benefits provided to
Executive Directors, and
the level of some of these
benefits is not pre-
determined but may vary
from year to year based
on the overall cost to
ASOS.
The CEO and CFO
receive a flexible benefits
allowance of £12,500
per annum.
Performance-related
framework
Approach to
implementation in FY21
Normally measured over
a one-year performance
period, based on a mix
of financial targets (e.g.
profit), non-financial/
strategic performance
and personal objectives
relevant to the year,
which are set taking
into account the Group’s
strategic objectives over
that period.
The maximum opportunity
will continue to be 150%
of salary for the CEO. The
CFO’s opportunity will be
increased from 100% of
salary to 150% of salary
to reflect his broader role.
There are no changes to
the performance
measures for FY21. The
Bonus will be based on
the following:
– 30% revenue
– 30% PBT
– 15% free cash flow
– 25% strategic
objectives
For FY21 the strategic
objectives are:
CEO and CFO:
– US revenue growth
– EU revenue growth
– NPS
– Execute year one of
three-year stratgeic plan:
successful delivery of
TGR programme; and
successful trial of virtual
fulfilment.
CEO only:
– Continue to lead and
build effective senior
leadership team, develop
leadership capability and
diversity at the Lead level.
– Continued progress
against Fashion with
Integrity goals
CFO only:
– Cost management
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GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Remuneration Policy continued
Variable remuneration elements (continued)
Variable remuneration elements (continued)
Element
Purpose
How it operates
Maximum opportunity
Performance-related
framework
Approach to
implementation in FY21
Element
Purpose
How it operates
Maximum opportunity
Performance-related
framework
Approach to
implementation in FY21
ASOS
Long-Term
Incentive
Scheme
(ALTIS)
Supports the strategy
and business plan by
incentivising and
retaining the ASOS
senior management
team in a way that is
aligned with both ASOS’
long-term financial
performance and the
interests of shareholders.
Annual awards of shares
to selected employees,
which vest after three
years subject to the
achievement of
performance conditions.
Clawback and malus
provisions allow awards
to be recouped in certain
circumstances.
250% of base salary
(300% in exceptional
circumstances) in any
financial year.
The value of any
dividends paid by ASOS
over the vesting period
will be payable on
vesting, to the extent that
awards vest.
Subject to three-year
performance conditions
linked to the business
strategy and ensuring
strong alignment with the
long-term interests of
shareholders.
The normal maximum
opportunity will increase
from 200% of salary to
250% of salary to
incentivise superior
performance.
Performance measures for
FY21 awards will be
unchanged from last year:
– 30% based on relative
TSR
– 35% based on EPS
growth
– 35% based on revenue
growth
TSR will be measured
against a bespoke group
of UK and international
online and apparel retail
peers.
Targets for awards to be
granted in 2020/21 are
set out on page 60. The
maximum target has been
increased to reflect the
increase in award levels.
Not applicable.
Not applicable.
No change.
The Committee retains the
discretion to adjust the
vesting level if it considers
that the vesting outcome
does not reflect the
underlying performance
of the business or
participants during the
year, including the
Group’s performance
against customer metrics,
or that the payout is not
appropriate in the context
of circumstances that
were unexpected or
unforeseen when the
targets were set.
The Committee continues
to believe that a post-
vesting holding period
should not apply to ALTIS
awards, given this is not
common practice in
AIM-listed businesses.
The shareholding
guideline for the CEO and
other Executive Directors
is 500% and 200% of
salary respectively.
Guidelines require
Executive Directors to
hold 50% of any shares
acquired on vesting of the
ALTIS, and any
subsequent share awards
thereafter (net of tax),
until the required
shareholdings are
achieved.
Share
ownership
guidelines
Increases alignment
between the Board and
shareholders.
Shows a clear
commitment by all
Executive Directors to
creating value for
shareholders in the long
term.
All-
employee
share
plans
Increase alignment
between employees
and shareholders in a
tax-efficient manner.
Supports retention of
employees.
Non-
executive
Directors
Provide fees appropriate
to time commitments
and responsibilities of
each role.
An HMRC-approved
all-employee Save As You
Earn share option scheme
(SAYE) encourages
employees to take a stake
in the business, aligning
their interests with those of
shareholders.
Other all-employee plans
may be introduced if
appropriate.
Cash fee normally paid
on a monthly basis.
Fee levels are set taking
into account the
responsibilities of the
additional roles, for
example Committee
Chairs and the SID.
The Chair receives a
consolidated fee.
Fees are reviewed
periodically.
In addition, reasonable
business expenses
(together with any tax
thereon) may be
reimbursed.
Consistent with prevailing
HMRC limits.
Not applicable.
No change.
Not applicable.
There is no prescribed
maximum annual fee or
fee increase. The Board is
guided by the general
increase for the broader
employee population and
takes into account
relevant market
movements.
There was no increase
in fees with effect from
1 September 2020.
Non-executive fees
therefore remain as
follows:
Non-executive Chair
– £350,000
Non-executive Director
base – £55,000
SID and Audit Committee
Chair – £70,000
Remuneration Committee
Chair – £65,000
The TSR comparator group has been
updated for 2020 awards to reflect
feedback from shareholders and is focused
on fashion retailers including those with
established and growing presence online.
It includes the following companies: Boohoo
Group, Boozt, Brown Group, Farfetch,
Global Fashion Group, H&M, Inditex, JD
Sports Fashion, Joules Group, Marks and
Spencer, Next, Revolve Group, THG
Holdings, Zalando.
Remuneration policy for other
employees
The Remuneration Policy for Executive
Directors has been developed with
consideration of the reward philosophy,
strategy and policy for ASOSers across
the whole organisation. Where possible,
we aim to create alignment between the
way executive remuneration is structured
and the way ASOSers more generally
are rewarded. Inevitably, there are some
differences between our management and
the rest of the business. This is typically a
result of developing reward arrangements
that are competitive for the different talent
markets from which we recruit or to which
we risk losing staff. The policy for Executive
Directors and the senior levels within ASOS’
leadership group also places a larger
emphasis on pay-at-risk through incentives
and long-term remuneration through the
ALTIS programme.
All employees are entitled to base pay,
benefits and pension contributions, and
during the financial year 195 employees
received an award under the ALTIS.
ASOS operates a Save As You Earn scheme
for all employees. More information about
the Scheme is given above. We encourage
a strong culture of ownership across the
organisation and encourage all ASOSers
to behave and think like owners.
For FY20, the general salary increase across
the workforce was 1.5%. For FY21, salary
increases for all employees will be based on
a budget of 1.5% with the ability, as in FY20,
for higher performing employees to receive
increases of more than 1.5%.
Pay gap reporting
During the year, the Committee reviewed
the latest UK gender pay gap report which
was published in April 2020. It shows that
we continue to close the gender pay gap
which stands at 26.6% (mean) down from
29.7% (mean). We remain of the view that
the UK gender pay gap is not a symptom
of unequal pay for equal work among men
and women, but rather there being more
men than women in senior roles across the
relevant UK businesses.
In addition, ASOS carries out an annual
equal pay audit, checking the pay of men
and women doing the same or similar roles.
Our audits continue to show that our pay
policies and practices pay men and women
equally for equivalent roles. Our pay range
system ensures ASOSers are paid fairly
based on their skills, qualifications,
experience and performance.
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GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Remuneration Policy continued
Performance measure selection and approach to target setting
Committee discretion
For the ASOS annual bonus and ALTIS, our policy is to choose performance measures that help drive and reward the achievement of our
strategy and also provide alignment between Executives and shareholders. Our incentive awards are designed to align with ASOS’ strong
performance culture, driving outcomes that benefit our shareholders, customers and ASOSers.
The Committee reviews metrics each year to ensure they remain appropriate and reflect the strategic direction of ASOS. The measures used
in the FY21 annual bonus are unchanged from last year and reflect ASOS’ KPIs for the year. They are based on:
– Revenue achieved
– PBT
– Free cash flow
– Strategic objectives: US and EU revenue performance, to ensure reward is aligned with our strategic priority to deliver growth in these
areas, and Net Promoter Score (NPS) to ensure that we continue to reflect our customer experience. Completion of the strategy refresh
and the execution of year one of the three-year plan, including the successful delivery of the Truly Global Retail programme and the
successful trial of virtual fulfilment. In addition, the CEO’s performance will be assessed in relation to progress in continuing to lead and
build an effective senior leadership team, developing leadership capability and diversity at the Lead level to ensure that it is fit for ASOS’
future, and continued progress against our Fashion with Integrity goals. The CFO will be measured against our cost management
objectives, building on the progress made during the year to continue to reduce our cost base.
Revenue and PBT continue to be key measures of success for the business, while a free cash flow reflects the Group’s ongoing focus on
maintaining a cash-positive position to enable further growth and expansion. The strategic objectives reflect our evolving areas of business
focus and through NPS, reflect our continued focus on customers.
Long-term performance targets for FY21 are based on a combination of absolute and relative performance:
– TSR provides strong alignment with shareholders and will be measured against a bespoke group of online and retail competitors in Europe
and the US (companies are set out on page 59) as this provides a robust and relevant benchmark. Following feedback from various
stakeholders, the TSR comparator group for the FY21 award was reviewed to ensure it comprises companies of a reasonable size and similar
to ASOS in terms of business operations and activities. The group comprises a balance of UK, US and European companies who would
broadly speaking be seen to be relevant peers by our shareholders.
– EPS is considered an objective and well accepted measure of Group performance which reinforces the objective of achieving
profitable growth.
– Revenue captures top-line growth and is a key element of our progress towards our mission.
ALTIS targets for awards due to be granted in October 2020 are as follows:
Threshold performance (25% vesting)
Maximum performance (100% vesting)
EPS (FY23)
138.6p
Revenue growth (FY23 compared to FY20)
10% per annum
Relative TSR
Median
There will be straight-line vesting in between each point.
179.9p
20% per annum
Upper quartile
Targets for each performance measure are set by the Committee with consideration of an extensive set of reference points including internal
plans and budgets, forecasts for the sector, relevant sector benchmarks and external expectations. Given the increase in ALTIS opportunity
for the Executive Directors in FY21, the stretch of the maximum EPS and Revenue targets set has been increased. The next 12 months are
likely to be challenging with the continuing market and economic disruption related to the COVID-19 pandemic as well as the significant
uncertainty around the impact of Brexit. However, we remain confident that in the long-term our strategy, business model and operations
position us strongly to exploit future growth opportunities and targets have been set in this context.
For EPS threshold and maximum targets represent 14.3% p.a. and 24.7% p.a. growth compared to EPS for FY20 (excluding the one-off
COVID-19 benefit). The revenue target represent an increase from 15% p.a. growth to 20% p.a. growth. For both measures, significant
outperformance of FY23 consensus is required to achieve maximum vesting. When setting targets the Committee also considered expected
growth rates at our competitors and believes these targets are positioned strongly in that context. Performance is measured on a sliding scale,
so that incentive payouts increase pro rata for levels of performance between the threshold and maximum performance targets.
The Committee operates under the powers it has been delegated by the Board. In addition, it complies with rules that are either subject to
shareholder approval or by approval from the Board. These rules provide the Committee with certain discretions which serve to ensure that the
implementation of the Remuneration Policy is fair, both to the individual Director and to the shareholders. The Committee also has discretions to
vary the level of the various components of remuneration. This, together with malus and clawback provisions, enables the Committee to better
manage risks. The extent of such discretions is set out in the relevant rules, and the maximum opportunity for performance metrics is set out in the
Policy table on pages 56 to 59. To ensure the efficient administration of the variable incentive plans outlined, the Committee will apply certain
operational discretions.
These include the following:
– Selecting the participants in the plans on an annual basis.
– Determining the timing of grants of awards and/or payments.
– Determining the quantum of awards and/or payments (within the limits set out in the Policy table).
– Determining the extent of vesting based on the assessment of performance as well as taking into account the experience of shareholders
and other stakeholders over the vesting period.
– Determining whether malus or clawback shall be applied to any award in the relevant circumstances and, if so, the extent to which it shall
be applied.
– Making the appropriate adjustments required in certain circumstances, for instance for changes in capital structure, or to take into account
exceptional items.
– Determining ‘good leaver’ status for incentive plan purposes and applying the appropriate treatment.
– Undertaking the annual review of weighting of performance measures and setting targets for the annual bonus plan and other incentive
schemes, where applicable, from year to year.
If an event occurs which results in the annual bonus plan or ALTIS performance conditions and/or targets being deemed no longer
appropriate (e.g. material acquisition or divestment), the Committee will have the ability to amend the performance conditions and/or
targets, provided that the revised conditions are not materially less challenging than the original conditions. Any use of the above discretion
would, where relevant, be explained in the Annual Report on Remuneration and may, as appropriate, be the subject of consultation with the
Group’s major shareholders.
Total potential remuneration for Executive Directors in the 2021 financial year
Nick Beighton
Minimum
On-target
Maximum
Maximum and share
price appreciation
100%
44%
23%
18%
£736k
33%
29%
23%
23%
£1,682k
48%
39%
Fixed pay
Annual bonus
ALTIS
Share price appreciation
Mat Dunn
Minimum
On-target
Maximum
Maximum and share
price appreciation
100%
£538k
44%
23%
18%
33%
29%
23%
23%
£1,241k
48%
39%
Fixed pay
Annual bonus
ALTIS
Share price appreciation
£3,216k
20%
£3,991k
£2,382k
20%
£2,958k
The chart above shows the potential remuneration at different levels of performance for the CEO and CFO in the 2021 financial year from
the remuneration opportunity granted to them by ASOS’ Remuneration Policy.
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GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Remuneration Policy continued
Basis of calculation:
– Minimum – fixed pay only (salary + benefits + pension or pension allowance). Salary and pension are those effective from 1 December
2020 and benefits are based on actual figures for 2019/20.
– Target – fixed pay, plus target bonus opportunity of 90% of salary, plus 25% of the face value of the ALTIS award on grant (i.e. 62.5%
of salary).
ASOS also retains flexibility to pay reasonable legal fees and other costs incurred by the individual that are associated with the termination
(including the settlement of claims brought against ASOS) and to provide outplacement services. In circumstances in which a departing
Director may be entitled to pursue a legal claim, ASOS may negotiate settlement terms and, with the approval of the Remuneration
Committee on the remuneration elements therein, enter into a settlement agreement accordingly. In addition, ASOS would honour any legal
entitlements, such as statutory redundancy payments or awards made by any tribunal or court, which executives may have on, or in respect
of, termination.
– Maximum – fixed pay, plus maximum bonus opportunity of 150% of salary, plus the full face value of the ALTIS award on grant (i.e. 250%
The individual is expected to take reasonable steps to seek alternative income to mitigate the payments.
Post-employment shareholdings
The Committee believes that the leaver provisions currently in place ensure the alignment of the interests of our Executive Directors and our
shareholders post-cessation of employment. The Committee will keep this approach under review.
Non-executive Directors’ letters of appointment
Non-executive Directors do not have service contracts with ASOS. Instead, they have letters of appointment which provide for a maximum
of three months’ notice of termination by the Company or the individual at any time, with no pre-determined amounts of compensation.
of salary).
– Maximum plus 50% share price growth – as per the maximum scenario outlined above including an assumed 50% share price growth
for the ALTIS award.
Recruiting new Executive Directors and senior executives
When recruiting any Executive Director or senior executive, we seek to apply consistent policies on fixed and variable remuneration
components in line with the Remuneration Policy set out on pages 56 to 59. This helps to ensure that any new Executive Director or senior
executive is on the same remuneration footing as existing Executive Directors or senior executives respectively, while still taking into account
the skills and experience of the individual, the market rate for a candidate of that experience and the importance of securing the relevant
individual.
The granting of payments or share awards on joining in order to secure the appointment of an Executive Director or senior executive is
normally only considered where an individual forfeits outstanding variable pay opportunities or contractual rights at a previous employer as
a result of appointment. In these circumstances the Committee may offer compensatory payments or awards, in such form as the Committee
considers appropriate, taking into account all relevant factors including the form of awards, expected value and vesting timeframe of
forfeited opportunities. When determining any such “buyout”, the guiding principle would be that awards would generally be on a
“like-for-like” basis unless this is considered by the Committee not to be practical or appropriate. Any such proposal for Executive Directors
requires the prior approval of the Remuneration Committee. The Committee may also agree that ASOS will meet certain relocation and/or
incidental expenses as appropriate.
Consideration of shareholder and broader stakeholder views
The Remuneration Committee is committed to open dialogue with shareholders and our approach is to engage directly with them and their
representative bodies when considering any significant changes to Executive Director remuneration arrangements. The Committee considers
shareholder feedback received following the AGM as well as any additional feedback and guidance received from time to time, and this is
taken into account when developing the Group’s remuneration framework and practices. Assisted by its independent adviser, the Committee
also actively monitors developments in corporate governance and market practice to ensure the structure of executive remuneration remains
appropriate.
The employee forum is used to capture feedback from ASOSers and the proactive dialogue that exists with suppliers and customers means
that there are channels of communication with all stakeholders.
Executive Directors’ service contracts and payments for loss of office
It is our policy that all Executive Directors should have rolling service contracts with an indefinite term, but a fixed period of notice of
termination. The services of all Executive Directors may be terminated on a maximum of 12 months’ notice by the Company or the individual.
Our approach to remuneration in each of the circumstances in which an Executive Director may leave is set out in the table below, with an
individual’s status being determined by the Remuneration Committee in accordance with the rules of any applicable scheme.
Remuneration component
‘Bad’ leaver
‘Good’ leaver
Salary in lieu of notice
Provided up to the effective leaving date
Pension and other benefits
Provided up to the effective leaving date – no
benefits would be provided after that date, unless
this is in the interests of ASOS
Bonus
None
Long-term incentives
Awards lapse
Up to a maximum of one year’s salary; normal
practice is to make a phased payment
Up to one year’s worth of pension and benefits
Paid in accordance with bonus scheme terms
– normal practice is for payment to be time and
performance pro-rated to the effective leaving
date
May vest in accordance with scheme rules –
normal practice is for the vested award to be time
and performance pro-rated to the effective
leaving date
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GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Annual Report
on Remuneration
Details of how ASOS’ Remuneration Policy has been applied in the year
to 31 August 2020 are set out below. The Committee considers that the
Policy operated as intended in the year. Certain information within this
section has been audited as highlighted.
Directors’ remuneration table (audited)
Payments to past Directors
During the year to 31 August 2020, no payments were made to any past Directors.
Payments for loss of office
During the year to 31 August 2020, no payments were made for loss of office.
Annual bonus for the year ended 31 August 2020
The remuneration of the Directors for the year to 31 August 2020 and the year to 31 August 2019 is set out in the tables below.
For Nick Beighton and Mat Dunn, the annual bonus plan for the year ended 31 August 2020 was based on the following metrics:
Executive
Director
Nick
Beighton1
2020
2019
Non-executive
Director
Adam Crozier
Ian Dyson
Karen Geary4
Luke Jensen5
Mai Fyfield5
Eugenia
Ulasewicz6
Fixed remuneration
Variable remuneration
Total
remuneration
Base
salary
£
Benefits
£
Pensions
£
Total
fixed
£
Bonus
£
LTIP2
£
Buy out
award
£
Total variable
£
£
571,000 23,036 73,828
667,864
802,255 219,563
– 1,021,818
1,689,682
565,000
7,957
73,049
646,006
–
202,481
Mat Dunn
2020
429,500
19,383 53,687
502,570
414,468
2019
151,326
4,610
18,916
174,852
–
–
–
–
–
202,481
414,468
400,000
400,000
848,487
917,038
574,852
Total
2020
1,000,500
42,419 127,515 1,170,434
1,216,723 219,563
– 1,436,286
2,606,720
2019
716,326
12,567
91,965
820,858
–
202,481
400,000
602,481
1,423,339
Base fee
£
Additional fee
£
Taxable
expenses3
£
2020
2019
2020
2019
2020
2020
2020
2020
350,000
265,152
55,000
55,000
50,417
45,833
45,833
20,625
–
–
15,000
15,000
7,500
–
–
–
Total
remuneration
£
350,036
265,537
Basis for additional fee
70,036
SID and Audit Committee Chair
70,474
SID and Audit Committee Chair
57,953
Remuneration Committee Chair
45,869
45,869
20,661
34,619
Remuneration Committee Chair until
1 December 2019
65,201
Remuneration Committee Chair
32,448
57,010
55,036
56,041
712,527
514,263
36
385
36
474
36
36
36
36
36
201
365
2,010
36
1,041
653
4,111
Hilary Riva7
2020
32,083
2,500
Rita Clifton7
2019
2020
2019
Nick Robertson8
2020
2019
55,000
32,083
55,000
55,000
55,000
10,000
–
–
–
–
Total
2020
686,874
2019
485,152
25,000
25,000
Profit Before Tax (PBT)
Revenue growth
Free cash flow
Strategic objectives
Weighting
30%
30%
15%
25%
Target
£60.1m
£3,075m
£9.1m
US revenue performance
EU revenue performance
Net Promoter Score
Developing strength and depth in the
senior leadership team (CEO only)
Cost management (CFO only)
Maximum
Performance achieved
£75.2m
£3,144m
£24.1m
25%
17%
59
£142.1m
£3,264m
£258.6m
18%
22%
57
Outcome
Maximum
Maximum
Maximum
Between threshold and target
Maximum
Target
Between target and maximum
Maximum
The Committee reviewed performance against the strategic objectives. The Committee noted that excellent progress had been achieved in
growth revenue in the EU and solid performance has been delivered in the US, while NSP performance was at target. The CEO had
achieved strong progress in enhancing the strength and depth in the senior leadership team and the CFO exceeded his cost management
objectives. Overall the Committee determined that the CEO should be awarded 18.7% of maximum and that the CFO should be awarded
21.5% of maximum.
The maximum bonus opportunity for the CEO was 150% of base salary and for the CFO 100% of base salary. Based on the outcomes
shown above, a bonus of 93.7% of maximum was paid to the CEO and 96.5% of maximum was paid to the CFO, with a value of £802,255
for the CEO and £414,468 for the CFO.
When determining bonus outcomes the Committee considered overall Group performance over the period and particularly the impact of
COVID-19 on the business and the broader market. The Committee noted the excellent revenue and PBT performance delivered over FY20
which was significantly above market expectations at the start of the year, and commended the commitment and focus of the senior team
on trading dynamically and managing business performance rigorously to deliver these results in very challenging circumstances. The
Committee noted that even if the c.£45m one-off benefit from COVID-19 was removed, PBT performance would still have significantly
exceeded the maximum target. The Committee also noted that the share price had more than doubled over the course of the last year.
Overall the Committee’s view was that the bonus outcome was fair and no discretion was exercised on the bonus outcome.
1 The CEO has also taken the initiative to personally make charitable donations as part of his own response to the pandemic.
2 For 2020, this includes the FY18 ALTIS award as detailed on page 66. Based on a share price of £37.2015, being the average share price for the last quarter of the financial
year, from 1 June to 31 August 2020. The share price depreciated during the vesting period and therefore no portion of the award relates to share price gain. The figures for
2019 are the adjusted figures to show the actual share price of £35.30 at the vesting date on 31 October 2019 (previously £150,915).
3 The taxable expenses include travel and other expenses related to their role and have been grossed up for tax, where applicable.
4 Karen Geary was appointed as Non-executive Director on 1 October 2019 and Chair of the Remuneration Committee on 1 December 2019.
5 Luke Jensen and Mai Fyfield were appointed as Non-executive Directors on 1 November 2019.
6 Eugenia Ulasewicz was appointed as Non-executive Director on 16 April 2020.
7 Hilary Riva and Rita Clifton stepped down as Non-executive Directors on 31 March 2020.
8 Nick Robertson donated all of his base service fee to the ASOS Foundation.
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GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020
Annual Report on Remuneration continued
FY18 ALTIS awards vesting for performance to 31 August 2020
The ALTIS awards with a performance period ending on 31 August 2020 are due to vest on 31 October 2020. These awards were based
on sales growth, EPS, relative TSR versus the FTSE All-Share General Retailers Index and NPS over the three-year performance period from
1 September 2017 to 31 August 2020. The performance targets and level of achievement against those targets were as follows:
Measures
Weighting
Targets
Percentage vesting
Sales growth
30%
Compound annual
fully diluted EPS
growth
TSR versus FTSE
All-Share General
Retailers Index
NPS
30%
30%
10%
Below 15%
15%
Between 15% and 25%
25% or more
Below 15%
15%
Between 15% and 25%
25% or more
Below median
Median
Between median and upper quartile
Upper quartile or above
Below 67
67
Between 67 and 69
69 or more
*Straight-line interpolation between points in the range
Details of vesting for each individual Executive Director:
Actual
achievement
19.3% p.a.
Vesting
17.1%
17.9% p.a.
14.1%
0%
25%
Between 25% and 100%*
100%
0%
25%
Between 25% and 100%*
100%
0%
25%
Bottom quartile
Between 25% and 100%*
100%
0%
25%
57
Between 25% and 100%*
100%
0%
0%
Executive Director
Number of shares granted
Number of shares vesting
Date of vesting
Value of awards vesting1
Nick Beighton
18,899
5,902
31.10.2020
£219,563
1 Based on a share price of £37.2015, being the average share price for the last quarter of the financial year, from 1 June to 31 August 2020, as is normal practice.
The CFO joined in 2019 and as such did not receive an FY18 award.
The Committee considers that the ALTIS vesting outcome of 31.2% of maximum fairly reflects performance delivered over the three-year
period, and therefore no discretion was exercised on the ALTIS outcome.
ALTIS awards granted in the year
In the year under review, ALTIS awards were granted to the CEO and CFO on 20 November 2019. The CEO’s award was reduced from
200% to 175% of salary in light of the fall in share price since FY19’s awards were granted. The CFO’s award was not reduced given he
had only recently joined the Group at the time of grant. Details of the awards are as follows:
Executive Director
Basis of award
Number of shares
granted
Face value of award1
% vesting for target
performance
Nick Beighton
175% of salary
31,609
£988,730
Mat Dunn
200% of salary
27,173
£849,971
25%
25%
Performance period
1 September 2019
to 31 August 2022
1 September 2019
to 31 August 2022
1 Based on the five-day average share price of £31.28 as at 19 November 2019.
66
The performance conditions for these awards are in the table below, with performance measured over the three-year period from
1 September 2019 to 31 August 2022, and vesting on 31 October 2022:
Measures
Revenue growth (FY22 compared to
FY19)
Weighting
35%
Diluted EPS for FY22
Relative TSR
35%
30%
Targets
Percentage vesting
Below 10% p.a.
10% p.a.
Between 10% and 15% p.a.
15% p.a. or above
Below 71.0p
71.0p
Between 71.0p and 121.8p
121.8p or above
Below median
Median
Between median and upper quartile
Upper quartile or above
0%
25%
Between 25% and 100%*
100%
0%
25%
Between 25% and 100%*
100%
0%
25%
Between 25% and 100%*
100%
*Straight-line interpolation between points in the range
Directors’ interests in share plans (audited)
Director
Share
option
scheme
Date of
grant
31 August
2019
(no. of shares)
Granted
during the year
to 31 August
2020
(no. of shares)
Lapsed
during the year
to 31 August
2020
(no. of shares)
Exercised
during the year
to 31 August
2020
(no. of shares)
Nick Beighton
SAYE 08.06.17
ALTIS 16.12.16
ALTIS1 11.10.17
ALTIS1 24.10.18
369
21,245
18,899
21,027
–
–
–
–
ALTIS1 20.11.19
–
31,609
Mat Dunn
ALTIS1 28.06.19
Buy-out 30.08.19
22,216
17,236
–
–
ALTIS1 20.11.19
–
27,173
1 Performance conditions for these awards are set out on page 66.
–
15,509
–
5,736
–
–
–
–
–
–
–
–
–
–
17,236
–
31 August
2020
(no. of shares)
Exercise
price
(pence)
Exercise date/period
369
4,869.0 01.08.20-31.01.21
–
18,899
21,027
31,609
22,216
–
27,173
–
–
–
–
–
–
–
31.10.19
31.10.20
31.10.21
31.10.22
31.10.21
16.12.19
31.10.22
Directors’ shareholdings
The Directors who held office at 31 August 2020 had the following interests, including family interests, in the shares of ASOS Plc.
A shareholding guideline is in place for the Executive Directors; this is 500% of salary for the CEO and 200% of salary for the CFO.
Director
Adam Crozier
Nick Beighton
Mat Dunn
Ian Dyson
Karen Geary
Luke Jensen
Mai Fyfield
Nick Robertson
Eugenia Ulasewicz
Beneficially owned as at
31 August 2019 (no. of shares)
Beneficially owned as at
31 August 2020 (no. of shares)
Outstanding share options
(SAYE/ALTIS) (no. of shares)
Shareholding guideline met
7,950
169,903
994
–
–
–
–
4,636,414
–
20,770
180,538
12,002
1,500
641
9,800
2,000
3,636,414
–
–
71,535
49,389
–
–
–
–
–
–
N/A
Yes
No
N/A
N/A
N/A
N/A
N/A
N/A
67
GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 1200
1000
800
600
400
200
)
£
d
e
s
a
b
e
R
(
0
Year to
31 March
2010
Annual Report on Remuneration continued
Performance and CEO remuneration comparison
Percentage change in Directors’ remuneration
The market price of ordinary shares at 31 August 2020 was £49.09 (31 August 2019: £23.80) and the range during the year to 31 August
2020 was from £10.50 to £50.64 (year to 31 August 2019: £21.07 to £62.22).
This graph shows the value, by 31 August 2020, of £100 invested in ASOS Plc on 31 March 2010 compared with that of £100 invested in the
FTSE AIM 100 and the FTSE All-Share General Retail Indices. The other points plotted are the values at the intervening financial year ends,
including the five-month period to 31 August 2012.
The table below shows the percentage change in the Directors’ salary/fees, benefits and annual bonus between the financial years ended
31 August 2020 and 31 August 2019, compared with all employees of ASOS.
2019 to 2020
% change
All employees
Executive Directors
Nick Beighton
Mat Dunn
Non-executive Directors
Adam Crozier4
Ian Dyson
Karen Geary
Luke Jensen
Mai Fyfield
Nick Robertson
Eugenia Ulasewicz
Salary/Fees
+7.1%
+1%
+1%2
0%
0%
N/A
N/A
N/A
0%
N/A
Benefits
+13.2%
+19.6%1
+9.1%2
-91%5
-92%5
—
—
—
-97%5
—
Bonus3
+100%
+100%
+100%
—
—
—
—
—
—
—
Year to
31 March
2011
Year to
31 March
2012
Year to
31 August
2012
Year to
31 August
2013
Year to
31 August
2014
Year to
31 August
2015
Year to
31 August
2016
Year to
31 August
2017
Year to
31 August
2018
Year to
31 August
2019
Year to
31 August
2020
ASOS Plc
FTSE AIM 100 Index
FTSE All-Share General Retail Index
1 Nick Beighton was given a flexible benefits allowance of £12.5k in FY20.
2 Mat Dunn was appointed to the Board part way through FY19 on 23 April 2019, therefore his salary and benefits have been pro-rated for FY19 for the purpose of this
calculation.
3 Nick Beighton and Mat Dunn did not receive a bonus in FY19.
4 Adam Crozier was appointed to the Board part way through FY19 on 29 November 2018, therefore his fee has been pro-rated for FY19 for the purpose of this calculation.
5 Reduction in benefits is due to a reduction in expenses claimed during the year.
CEO remuneration history*
The table below sets out the remuneration data for Directors undertaking the role of CEO during each of the past ten financial years.
Year to
31 March
2010
Year to
31 March
2011
Year to
31 March
2012
Year to
31 August
2013
Year to
31 August
2014
Year to
31 August
2015
Year to
31 August
20164
Year to
31 August
2017
Year to
31 August
2018
Year to
31 August
2019
Year to
31 August
2020
Total
remuneration (£)1
Annual bonus %2
Long-term
incentive %3
2,084,510 1,740,821 55,210,388 803,843 337,193
81,280 1,199,520 3,072,259 2,904,614 848,487 1,689,682
–
–
–
–
60%
60%
100%
–
–
–
–
–
70%
65%
–
– 140.5%
–
99.1%
100%
27.0%
31.2%
1 Gains made under the long-term incentive plans are recognised above in the financial year of the performance period to which they relate. The value for the FY17 award was
calculated using a share price of £56.84, being the actual share price at the vesting date on 31 October 2017. The value for the FY18 award was calculated using a share price of
£54.48, being the actual share price at the vesting date on 31 October 2018. The value shown for the FY19 award was calculated using a share price of £35.30, being the actual
share price on 31 October 2019. The value shown for the year to 31 August 2020 is based on the average share price for the last quarter of the financial year to 31 August 2020.
This will be adjusted to reflect the share price at the point of vesting on 31 October 2020.
2 Annual bonus percentage figure shows the percentage of the individual’s maximum bonus percentage received in that financial year.
3 Long-term incentive percentages show the percentage of the award that vested in the financial year.
4 During the year to 31 August 2016, the CEO changed from Nick Robertson to Nick Beighton. During the year to 31 August 2015, Nick Robertson opted to waive receipt of
£442,580 of his base salary, and any entitlement to bonus.
* Note that the data above is for 12-month periods only and excludes the five-month period to 31 August 2012 to give a consistent view of the CEO’s annual remuneration.
CEO pay ratio
The table below shows the ratio of the CEO’s total remuneration for 2019/20 against the upper quartile, median and lower quartile full-time
equivalent remuneration of ASOS’ UK employees. This is the first year we have provided a pay ratio and as such, no prior year comparator
data is shown.
Executive Director
2019/20
Method
Option C
P25
73:1
P50
38:1
P75
24:1
The Company has chosen Option C as it enabled the use of readily available data that was current to ASOS’ year end. The employees at
P25, P50 and P75 were identified based on salaries at 31 August 2020, and their total remuneration was calculated, including salary,
benefits, flex allowance and pension as at that date plus 2019/20 bonus outturns (all three employees are outside the ALTIS population).
No omissions, estimates or adjustments were included in the calculation.
The total remuneration of these individuals and a small number of others positioned around each quartile were compared to determine
whether the employees at P25, P50 and P75 were most representative of pay levels at these quartiles. The remuneration of the individual at
P25 was determined to be representative of that quartile; however, the individual at P50 was furloughed during the year and the individual
at P75 was not in the business for the full year, and so in both cases the employee one place away from them in the rankings was chosen as
the most representative of those quartiles.
The base salary and total remuneration for the employees used in the above calculations are as follows:
Base salary
Total remuneration
P25
£21,017
£23,320
P50
£32,360
£44,795
P75
£54,595
£70,559
The Committee is satisfied that the ratio is consistent with the Group’s wider policies on employee pay, reward and progression. Executive
Directors receive a greater proportion of their remuneration in elements tied to performance, including participation in the ALTIS which
operates at the most senior levels, and this is reflected in the ratio.
68
69
GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020
Annual Report on Remuneration continued
Relative importance of spend on pay
The following table shows ASOS’ actual spend on pay (for all employees) relative to dividends and retained profit. To date, no dividend has
been paid by ASOS Plc and there is no intention to pay a dividend at this stage as all monies are being retained in the business for future
investment.
Staff costs1
2020
PBT
2019
2020
2019
£33.1m
1 The above includes capitalised staff costs.
Remuneration governance
£214.8m -2.2%
£219.7m
£142.1m
+329%
Composition of the Remuneration Committee
The Remuneration Committee currently comprises three independent Non-executive Directors: Karen Geary (Chair), Ian Dyson and Mai
Fyfield. Appropriate members of the management team, as well as the Committee’s advisers, are invited to attend meetings as appropriate,
unless there’s a potential conflict of interest.
The remuneration of Non-executive Directors, other than the Chair, is determined by the Chair of the Board and the Executive Directors.
Committee’s responsibilities
The Committee’s principal responsibilities are to:
– Determine and recommend to the Board the Group’s overall remuneration policy, and monitor the ongoing effectiveness of that policy.
– Determine and recommend to the Board the remuneration of Executive Directors, the Chair and the other members of the Executive
Committee.
– Monitor, review and approve the levels and structure of remuneration for other senior managers and employees.
– Determine the headline targets for any performance-related bonus or pay schemes.
– Determine specific targets and objectives for any performance-related bonus or pay schemes for the Executive Directors and the other
members of the Executive Committee.
– Review and approve any material termination payment.
Advisers to the Remuneration Committee
The Committee has engaged the external advisers listed below to help it meet its responsibilities.
– During the year, Deloitte LLP provided advice on all remuneration matters considered by the Committee. For that advice, Deloitte LLP
received fees totalling £150,630 in the financial year to 31 August 2020. Deloitte LLP are signatories to the Remuneration Consultants’
Code of Conduct, and the Committee is satisfied that the advice that it receives is objective and independent. The Deloitte LLP
engagement partner and advisory team that provide remuneration advice to the Committee do not have any connections with the Group
or individual Directors that may impair their independence. Separately, other parts of Deloitte also advised the Group during the year in
relation to internal audit services and financial modelling support as part of business planning and analysis.
– When required, ASOS also receives advice relating to remuneration matters from Lewis Silkin LLP, KPMG LLP, and Slaughter and May LLP
on reward, tax and legal matters respectively.
As a matter of course, the Committee also receives advice and assistance as needed from our Chief People Officer, Reward Director, our
General Counsel & Company Secretary, our CEO and our CFO.
Key areas of focus for the year ahead
– Engaging with shareholders in relation to our approach to remuneration for 2021/22.
– Review and approve any salary increases for the Executive Committee.
– Determine 2020/21 annual bonus outcome and FY19 ALTIS awards vesting.
– Approve 2021/22 ALTIS targets and awards, and 2021/22 annual bonus.
– Continue to monitor regulatory and legislative developments.
70
Directors’ Report
Much of the information previously provided
as part of the Directors’ Report is now
required, under company law, to be presented
as part of the Strategic Report. This Directors’
Report includes the information required to be
included under the Companies Act 2006 or,
where provided elsewhere, an appropriate
cross-reference is given. The Corporate
Governance Report approved by the Board is
provided on pages 36 to 70 and incorporated
by reference into this Directors’ Report.
Subsidiaries
The Group has 21 subsidiaries; a complete
list is provided at Note 8 of the parent
company financial statements on pages 116
to 117.
Dividends
As last year, the Directors do not recommend
the payment of a dividend (2019: £nil).
Strategic Report
This is set out on the pages 2 to 35 of the
Annual Report and includes an indication
of likely future developments.
Significant events since the end
of the financial year
There have been no material events affecting
the Group since 1 September 2020.
Risk management and principal
risks
A description of the principal risks facing
the business, and the Group’s approach to
managing those risks, is on pages 30 to 35.
Directors and their interests
Details of the Directors as at the date of this
report and any changes to the Directors
during the year are set out on pages 37
to 38.
The interests of the Directors and their closely
associated persons in the share capital of
the Company as at 31 August 2020, along
with details of Directors’ share options and
awards, are contained in the Directors’
Remuneration Report on page 67. At no time
during the year did any of the Directors have
a material interest in any significant contract
with ASOS or any of its subsidiaries.
ASOS maintains Directors’ and Officers’
liability insurance which gives appropriate
cover for any legal action brought against
its Directors. The Group has also provided
an indemnity for its Directors, which is a
qualifying third-party indemnity provision,
for the purposes of section 234 of the
Companies Act 2006. This was in place
throughout the year and up to the date of
approval of the financial statements.
Articles of Association
ASOS’ Articles of Association can only be
amended by special resolution and are
available at www.asosplc.com. It is being
proposed at the 2020 AGM that the
Company adopt new Articles of Association
to reflect developments in market practice
since the Company’s Articles of Association
were last amended in September 2009. Due
to the nature of the changes, the Company is
proposing the adoption of new Articles of
Association rather than making amendments
to the current Articles of Association. The
principal changes being proposed in the new
Articles of Association can be found in the
Appendix of the Notice of Annual General
Meeting which is available at: www.asosplc.
com/investors.
Share capital
The issued share capital of the Company at
31 August 2020 was 99,764,802 ordinary
shares of 3.5p. Full details of the issued share
capital, together with the details of shares
issued during the year to 31 August 2020,
are shown in Note 18 to the financial
statements on page 98 to 99.
As far as the Company is aware, there are
no restrictions on the voting rights attaching
to the Company’s ordinary shares and the
Company is not aware of any agreements
which may result in restrictions in the transfer
of securities or voting rights. No securities
carry any special rights.
Powers for the allotment and
acquisiton of the Company’s
own shares
The Company was authorised by
shareholders at the 2019 AGM to purchase
in the market up to 4,193,613, being 5% of
the issued ordinary share capital. No shares
were bought back under this authority during
the year ended 31 August 2020. This is a
standard authority which is renewable
annually and the Directors will be seeking to
renew this authority at the 2020 AGM.
At the 2019 AGM, the Directors were also
granted authority to allot ordinary shares in
the Company up to an aggregate amount of
£564,470. This authority will expire at the
2020 AGM, at which the Directors will be
seeking to renew this authority.
For informtation, on 8 April 2020, the
Company announced the successful
completion of the non-pre-emptive placing
of a total of 15,805,943 new ordinary
shares (Placing) and the subscription by
certain Directors, members of the Executive
Committee and their close associates for
a total of 42,537 new ordinary shares
(Subscription) at a price of 1,560 pence per
ordinary share (Placing Price). The aggregate
new ordinary shares issues under the
Placing and the Subscription represented
approximately 18.8% of the Company’s
issued ordinary share capital prior to the
Placing. The Placing Price represented a
slight premium to the closing share price
of 1,559.5 pence on 7 April 2020.
The Placing and the Subscription raised net
proceeds of £239.4m which provided
sufficient liquidity and flexibility to manage
the Group through and beyond this period
of unexpected and continuing disruption
resulting from the COVID-19 pandemic, put
the Group in a stronger financial position to
continue to invest in the growth of the business
and work supportively with its long-standing
supplier base to mutual advantage, and to
preserve the Group’s flexibility to restructure
the business in the case of a prolonged
downturn. In the circumstances, and given
the need to act quickly, the Placing was
conducted on a soft pre-emptive basis,
with consultation between the Company
and its major institutional shareholders
ahead of the announcement of the Placing.
The Board concluded that the Placing was in
the best interests of shareholders and wider
stakeholders and would promote the success
of the Group, a conclusion which was
endorsed by the consultation with major
institutional shareholders. Over the three-
year period preceding the Placing, the
Company has only issued shares for the
purpose of fulfilling its obligations under
employee share schemes. Details of
shares alloted during the period are shown
in Note 18 to the financial statements on
page 98.
71
GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Directors’ Report continued
Employee Benefit Trust
Substantial shareholders
Energy and carbon emission reporting
ASOS uses an Employee Benefit Trust to
facilitate the acquisition of ordinary shares in
the Company for the purpose of satisfying
awards and options granted under ASOS
share schemes. During the financial year,
ASOS used both the Employee Benefit Trust
(EBT) and the Link Trust (LT) to satisfy awards
granted under its Save As You Earn and SIP
share schemes:
– The EBT is a discretionary trust, the sole
beneficiaries being employees (including
Executive Directors) and former employees
of the Group who have received awards
under the Save As You Earn scheme (or
their close relations in the event of their
death). The trustee of the EBT is Apex
Financial Services (Trust Company)
Limited, an independent professional
trustee company based in Jersey. Under
the terms of the Trust Deed, ASOS funds
the EBT to purchase on the EBT’s own
account ordinary shares in the Company
on the open market in return for the EBT
agreeing to use the ordinary shares in the
Company that it holds to satisfy certain
outstanding awards and options made
under the Company’s share schemes.
– The LT holds shares awarded under the
SIP solely for the benefit of current
employees (including Executive Directors)
who participate in it. The trustee of the
SIP is Link Asset Services Limited, an
independent professional trustee
company based in the United Kingdom.
Under the terms of the Trust Deed, ASOS
funds the LT to buy the shares on the open
market and retain those shares on behalf
of the underlying beneficiaries.
Viability statement
The Directors have also assessed the Group’s
prospects and viability over a three-year
period to 31 August 2023. This three-year
assessment period was selected as it
corresponds with the Board’s strategic
planning horizon as well as the time period
over which senior management are
remunerated via long-term incentive plans.
In making this assessment, the Directors
performed a number of stress tests and
scenario analysis to determine the Group’s
viability. Within the stress testing, the Directors
assessed both how long the business could
operate with a sustained reduction in demand,
in line with the worst impacts seen in the first
wave of COVID-19 and in a zero revenue
scenario. Directors also assessed a more likely
scenario of prolonged macroeconomic
72
As at 1 October 2020, the Company was aware of the following interests in 3% or more of its
ordinary share capital:
Major shareholder
Aktieselskabet af 5.5.2010
T. Rowe Price Group
The Capital Group Companies, Inc
Jupiter Fund Management
Baillie Gifford & Co
Camelot Capital Partners
Allianz Global Investors
Nick Robertson
Goldman Sachs International UK
American Century Investment Mgmt
Holding
As a % of issued shares
26,346,819
10,953,397
9,745,597
5,515,021
5,398,786
5,190,613
4,057,046
3,636,414
3,581,222
3,162,328
26.41%
10.97%
9.77%
5.53%
5.41%
5.20%
4.06%
3.64%
3.59%
3.17%
As at 31 August 2020, the EBT and LT (combined) held 245,567 shares in ASOS Plc (2019: 271,468 shares). The total
value in reserves was a credit balance of £2.0m (2019: credit balance of £1.3m). The EBT and LT are both recognised
within the EBT reserve for accounting purposes. The Group’s accounting policies are detailed within Note 24 to the
financial statements and movements are detailed in the Consolidated Statement of Changes in Equity on page 82.
impact. In all scenarios modelled and tested
the directors concluded that ASOS not only
remains a viable entity, but is well positioned to
capture growth from the channel shift to online.
On top of this, the cadence of assessment
outside of annual processes is performed
quarterly and monthly as part of central
forecasting and reporting processes.
Short- and long-term forecasts for both cash
and profitability are maintained and any
threats to future performance is mitigated,
and any opportunities assessed are
captured, at speed.
Based on this assessment, the Directors have
a reasonable expectation that the Group
will continue in operation and meet all its
liabilities as they fall due during the period
up to 31 August 2023.
Going concern
The Group’s business activities, financial
position and cash flows, together with the
factors likely to affect its future performance
and position, are set out in the Strategic
Report on pages 2 to 35. In addition, details
of the Group’s objectives and policies on
financial risk management are set out in Note
19 to the financial statements on pages 99
to 102.
The Group ended the year with net cash
position of £407.5m at 31 August 2020. The
Group has a £350m revolving credit facility
which is available until July 2023 (with a
one-year extension to July 2024 applicable
subject to the agreement of all parties).
During the year, the Group also issued
commercial paper to the value of £100.0m,
as part of the government-backed Covid
Corporate Financing Facility (CCFF). This
was fully repaid on 28 August 2020. 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
current facilities for the foreseeable future
and at a minimum for 12 months from the
date of signing the Group’s financial
statements. The Directors have therefore
continued to adopt the going concern basis
in preparing the Group’s financial statements.
Statement on disclosure of
information to auditors
The Directors confirm that, so far as each is
aware, there is no relevant audit information of
which the Group’s auditors are unaware. Each
of the Directors has taken all the steps he or
she should have taken as a Director to make
himself or herself aware of any relevant audit
information and to establish that the Group’s
auditors are aware of that information.
Employee engagement
Information relating to how the Group
engages with its workforce can be found
on pages 22 to 25.
Energy consumption used to calculate emissions – for gas, electricity and transport
emissions
kWh
24,679,429
50,451,739
Unit of measurement UK portion
Total global
Scope 1 – emissions from combustion of gas
Scope 2 – emissions from purchased electricity - location based
Scope 3 – emissions from staff vehicles used for business purposes
Total gross emissions
Intensity ratio – tCO2e/£m revenue – location based
Market based emissions
Scope 2 – emissions from purchased electricity – market based
Intensity ratio – tCO2e/£m revenue – market based
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e/£m revenue
1,359
4,026
23
5,408
2,955
11,084
23
14,062
4.31
Unit of measurement UK portion
Total global
tCO2e
tCO2e/£m revenue
1,703
5,046
2.46
Quantification and reporting methodology: We have followed the 2020 HM Government Environmental Reporting Guidelines.
We have also used the GHG Reporting Protocol – Corporate Standard (Operational Control boundary), Ofgem environmental impact
measurements for fuel sources, and have used the 2020 UK Government’s Conversion Factors for Company Reporting. Other intensity
factors acquired through EIA and EEA for US and German markets. Energy data is obtained from a hierarchy of HH data, meter readings,
invoices and finally estimates if necessary. Only 1% of total energy data presented is estimated. Data for emissions from staff vehicles used
for business purposes are accurate to the Global level but currently difficult to separate based on location; the same figure for the UK
portion has therefore been used.
Energy Management Statement: This year we have onboarded our first ever dedicated energy management and procurement partner,
Amber Energy, and have worked closely with them to improve energy data availability, energy performance analysis and renewable electricity
procurement. Together we have launched a company-wide energy data management platform, Fabriq, and have increased the level of energy
performance reporting to key stakeholders. We continue to improve the data quality on this platform and are using the analysis to identify ways
energy consumption can be reduced. We have also worked closely with Amber Energy to consolidate our energy procurement at all key assets
and during the year transitioned to 75% renewable electricity across our operations. We aim to achieve 100% renewable electricity across all
sites by 2025 and increase our own renewable energy generation capacity.
Employees with disabilities
Stakeholder engagement
ASOS gives full and fair consideration to
applicants with a disability or long-term
health condition. We work with external
partners, including charities such as Leonard
Cheshire, to promote job opportunities to
candidates with disabilities. We are
committed to providing equal opportunities
and continue to demonstrate our
commitment by interviewing candidates
who meet the minimum criteria.
To support learning for our employees with a
disability or long-term health condition, we
deliver training in accessible spaces and make
reasonable adjustments to the content and
approach. As an example, we use technology
to caption video content, work with third party
psychometric providers to make sure all
employees can complete these fairly and will
always offer 1:1 or bespoke support when a
need is identified. We are committed to giving
all employees access to the same learning and
development as one another.
Information relating to how the Group
engages with its stakeholders can be found
on pages 22 to 23.
Political donations
No political donations have been made
during this financial year (2019: £Nil).
Authority will be sought to authorise the
Company to make political donations up to the
value of £100,000 at the 2020 AGM. The
Group’s policy is that is does not, directly or
through a subsidiary, make political donations;
however, this resolution has been proposed to
ensure the Group and its subsidiaries do not,
because of the wide reaching definition in the
Companies Act 2006, unintentionally make a
breach of the Act.
Annual General Meeting
The Annual General Meeting of the Company
will be held at 12 noon on 26 November
2020. We are continuing to monitor
developments relating to the outbreak of
COVID-19, including the related public health
guidance and legislation issued by the UK
Government. In light of the continuously
changing developments with respect to the
COVID-19 pandemic and, in particular, the
UK Government’s response (including the use
of local lockdowns and guidance on working
from home and gatherings), the Board has
concluded that the interests of all our
stakeholders would be best served by running
this year’s AGM as a closed meeting.
Shareholders will therefore not be able to
attend in person. The Notice of Meeting will
be available to view on www.asosplc.com,
sufficiently in advance of that meeting.
By order of the Board
Anna Suchopar
Company Secretary
13 October 2020
73
GOVERNANCE REPORTASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Statement of Directors’
Responsibility
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
The Directors are also responsible for
safeguarding the assets of the Group and
parent Company and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Group
and parent Company’s transactions and
disclose with reasonable accuracy at any
time the financial position of the Group and
parent Company and enable them to ensure
that the financial statements comply with the
Companies Act 2006.
The Directors are responsible for the
maintenance and integrity of the parent
Company’s website. Legislation in the United
Kingdom governing the preparation and
dissemination of financial statements may
differ from legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report
and Accounts, taken as a whole, is fair,
balanced and understandable and provides
the information necessary for shareholders
to assess the Group and parent Company’s
position and performance, business model
and strategy.
In the case of each Director in office at the
date the Directors’ Report is approved:
– so far as the Director is aware, there is
no relevant audit information of which the
Group and parent Company’s auditors
are unaware; and
– they have taken all the steps that they
ought to have taken as a Director in order
to make themselves aware of any relevant
audit information and to establish that the
Group and parent Company’s auditors
are aware of that information.
Anna Suchopar
Company Secretary
13 October 2020
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law the Directors
have prepared the group financial statements
in accordance with International Financial
Reporting Standards (IFRSs) as adopted by
the European Union and parent company
financial statements in accordance with
International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Under company law the Directors must not
approve the financial statements unless they
are satisfied that they give a true and fair
view of the state of affairs of the Group and
parent Company and of the profit or loss of
the Group and parent Company for that
period. In preparing the financial statements,
the Directors are required to:
– select suitable accounting policies and
then apply them consistently;
– state whether applicable IFRSs as
adopted by the European Union have
been followed for the Group financial
statements and IFRSs as adopted by the
European Union have been followed for
the Company financial statements, subject
to any material departures disclosed and
explained in the financial statements;
– make judgements and accounting
estimates that are reasonable and
prudent; and
– prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the Group
and parent Company will continue in
business.
Financial
Statements
76
Independent Auditors’ Report to the Members of ASOS Plc
81 Consolidated Statement of Total Comprehensive Income
82 Consolidated Statement of Changes in Equity
83 Consolidated Statement of Financial Position
84 Consolidated Statement of Cash Flows
85 Notes to the Financial Statements
111 Company Statement of Changes in Equity
112 Company Statement of Financial Position
113 Company Statement of Cash Flows
114 Notes to the Company Financial Statements
118 Five-Year Financial Summary (unaudited)
120 Company Information
74
ASOS PLC Annual Report and Accounts 2020
75
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020 Independent Auditors’ Report
to the Members of ASOS Plc
Report on the Audit of the Financial Statements
Opinion
In our opinion, ASOS Plc’s group financial statements and company financial statements (the “financial statements”):
– give a true and fair view of the state of the group’s and of the company’s affairs as at 31 August 2020 and of the group’s profit and the
group’s and the company’s cash flows for the year then ended;
– have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union
and, as regards the company’s financial statements, as applied in accordance with the provisions of the Companies Act 2006; and
– have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts 2020 (the “Annual Report”), which comprise:
the Consolidated and Company Statements of Financial Position as at 31 August 2020; the Consolidated Statement of Total Comprehensive
Income, the Consolidated and Company Statements of Cash Flows, and the Consolidated and Company Statements of Changes in Equity
for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
Our audit approach
Overview
– Overall group materiality: £7,000,000 (2019: £4,500,000), based on approximately 1% of
total revenue with regard to profit before tax.
– Overall company materiality: £350,000 (2019: £250,000), based on 1% of total assets,
Materiality
capped at an allocation of group materiality.
– Full scope audit of:
– ASOS Plc – The parent entity holding investments throughout the group.
– ASOS.com Limited – The trading entity that generates 99% of group revenue.
– Capitalisation of internal staff costs (group)
– Fraud in revenue recognition (group)
– Valuation of inventory (group)
– Consideration of the impact of COVID-19 (group and company)
Audit scope
Key audit
matters
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed
the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon,
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Capitalisation of internal staff costs
Refer to pages 85 (Note 1) and 110 (Accounting Policies)
The group continued to invest in its operational infrastructure spending
£30.2m on property, plant and equipment as set out in note 12, and
£85.4m on intangible assets as set out in note 11.
We focussed on this area due to the size of the costs capitalised and
the fact that there was judgement involved in assessing whether the
criteria set out in accounting standards for the capitalisation of such
costs had been met. In particular we focussed on the capitalisation
of internal staff costs to confirm that costs capitalised were a fair
reflection of actual costs incurred and the associated time was
spent on projects which met the criteria to be capitalised. We further
assessed whether costs were appropriately moved out of assets under
construction and appropriately amortised/depreciated from the point
at which they came into operational use.
Fraud in revenue recognition
Refer to pages 88 (Note 3) and 107 (Accounting Policies)
The group has one main source of revenue which relates to sales
made through the ASOS.com entity and its website. Sales of goods
sold via the website are recognised on dispatch from the warehouse
with customers having the right to return the goods, should they so
choose. Should customers return any goods, the group will typically
refund the associated revenue relating to the returned goods.
We deem the risk of fraud in revenue to be specific to journal postings
and judgemental adjustments. Regarding adjustments, the nature of
the group’s revenue and revenue recognition policies generated
two specific heightened areas of focus for our audit:
Firstly, regarding revenue cut off, we assessed whether the policy
of recognising revenue on dispatch is appropriate and could
significantly enhance revenues and profits inappropriately.
Secondly, we focussed on the level of provision recorded for returns
and the associated reduction in revenue and profit arising as a result
of recording this provision noting the requirement in IFRS 15 that
revenue from sales with rights of return should only be recognised
if it is highly probable that it will not reverse.
We have gained an understanding through walkthroughs performed and discussion
with management of the process in place for evaluating capital approval for staff
time capitalised in relation to capital projects.
We tested management’s operational control in relation to capital funding request
forms which evidenced that the appropriate capitalisation criteria had been
considered and the funding was appropriately authorised. We were able to place
reliance on these controls for the purpose of our audit.
Our testing approach covered capitalisation of employee time for internal staff and
external contractors. We obtained an understanding of various selected capitalised
projects, tested time charged back to timesheet data and independently assessed
whether sufficient economic benefits were likely to flow from the projects to support
the values capitalised.
Our testing did not identify any material costs that had been inappropriately capitalised.
For a number of projects which became operational in the year we validated that
the costs previously capitalised relating to these projects were moved out of assets
under construction at the point that the associated assets became operational. We
further confirmed that depreciation or amortisation commenced on these projects
at rates consistent with the group’s accounting policies once the respective projects
became operational.
We performed additional procedures over furloughed staff to confirm that staff time
was not incorrectly capitalised.
Nothing was identified from any of the work performed to suggest a material error
in relation to capitalisation of internal staff costs.
We discussed the revenue recognition policy with management and performed a
walkthrough to reconfirm our understanding of the revenue recognition process.
In order to get substantive comfort over the occurrence of revenue, we have taken
the total revenue figure recognised in the trial balance at the year-end, and reconciled
this figure to the cash received: a “Sales to Cash reconciliation”, with any differences
in excess of materiality being investigated, leaving an immaterial untested balance.
We have also performed additional testing over the classification of cash receipts,
to ensure that cash receipts for non-revenue items are not erroneously attributed to
revenue transactions in the sales to cash reconciliation, and that these cash receipts
do in fact relate to real revenue transactions.
We performed testing to identify unusual journals impacting revenue which did not
follow expected business processes. We tested and gained evidence over the
commercial rationale of a targeted sample of the journals identified. Regarding cut
off, we performed testing over a number of contracts with couriers to assess the
appropriateness of the assumption that transfer of control passed on despatch.
We have also assessed the financial impact of recognising revenue on despatch
rather than on receipt by customers. We determined that there is contractual evidence
supporting the revenue recognition policy applied and in addition that the sales
and profit impact for the year of recognising revenue on dispatch as against delivery
was not material.
We understood the methodology used to calculate the returns provision and
determined the policy has not significantly changed. We tested the inputs to
the calculation through to source data and assessed the key assumptions, driving
the calculation, being the historical returns rates for appropriateness. This included
considering the impact of Covid-19 on current return rates. We also compared
the provision to actual returns of sales made pre year end, which were processed
in the period post year end. We also considered the disclosures in respect of this
given the heightened level of uncertainty and volatility in returns rates due to the
impact of the pandemic.
No evidence arose from our work that the provision for returns was materially misstated.
76
77
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Key audit matter
How our audit addressed the key audit matter
Valuation of inventory
The group held a significant amount (£532m) of inventory as at
31 August 2020. The nature of the group’s business model is to
service demand in a dynamic and fast moving fashion market which
also inherently means there is a risk of inventory falling out of fashion
and proving difficult to sell above cost. The impact of the pandemic
also provided an environment which added further complexity
and potential risk in achieving sales values for certain elements
of inventory in excess of their carrying values.
The group’s provisioning policy is primarily based on the net
realisable value of inventory lines, with provisions being recognised
against inventory that management expect to be discounted and
sold below their average weighted cost. Specific provisions for slow
moving and fragmented items of inventory are recognised where there
is a view that the net sales price achievable will be lower than cost.
The quantum of the total inventory balance, its relative increase year
on year, along with the level of judgement involved to ensure that
individual line items are stated at the lower of cost and net realisable
value made this an area of focus.
Consideration of the impact of COVID-19
As with all businesses ASOS has not been immune to the impact of the
pandemic on its business. Given the significance of the impact of the
virus on the global economy, customer behaviours and associated
cash flows we considered this an important area to consider in terms
of a wider range of judgments impacting the business, most notably
the carrying amounts of assets and projected future cash flows in the
context of going concern and impairment assessments.
Management’s assessment of the impact on the group going concern
conclusion was made by modelling severe but plausible downside
scenarios, utilising the knowledge obtained through trading since March.
Management has concluded that the group expect to trade solvently
under these scenarios for at least twelve months from the date of this
report. The directors have therefore prepared the group financial
statements on a going concern basis, with no material uncertainty.
Management also considered the impact of COVID-19 on the group’s
financial statements and concluded that there was no material impact
on the financial statements, including in respect of the impairment of
certain assets, or on provisions or estimates made.
We have reviewed and understood management’s provisioning policy, compared
it to the prior year and assessed its appropriateness given our knowledge of the
group and the particular market dynamics in play as at the balance sheet date.
In particular we challenged management over the rationale for the year on year
increase in the provision obtaining a granular breakdown of the constituent parts
of the provision and assessing the appropriateness of all significant elements.
As part of our work around this area we tested the inventory quantity and value
inputs into various elements making up the overall inventory provision.
For a sample of inventory items we performed a recalculation of the average
weighted cost. No exceptions were noted. In an additional sample, we tested to
supporting evidence that the net realisable value of inventory items was appropriate.
We tested the appropriateness of the data used as the basis for management’s
inventory provision calculation, with no issues noted.
We have obtained and reviewed the post year-end level of stock write offs and did
not identify any significant unprovided amounts.
Regarding going concern, we evaluated management’s forecasts, which included the
consideration of the potential impact of the pandemic on the business, along with their
severe but plausible downside scenario. Based on the information available at the time
of the approval of the Annual Report and Accounts, we consider the scenarios run to
be appropriate as a means to form a view over going concern.
We challenged management on the key assumptions included within the scenarios
modelled.
We have considered the potential impact of COVID-19 on the balance sheet,
specifically around the valuation of inventory, potential impairment of tangible and
intangible assets, the provisioning for future returns and recoverability of receivables
and concluded that there were no indicators of a material error on amounts included
in the group financial statements.
We reviewed management’s disclosures in relation to the potential impact of
COVID-19 and concluded they are appropriate given our audit work and knowledge.
Our conclusions relating to going concern are set out in the ‘Conclusions related
to going concern’ section below.
We determined that there were no key audit matters applicable to the company to communicate in our report.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the group and the company, the accounting processes and controls, and the industry
in which they operate.
We determined there to be two entities in scope for our group audit. ASOS Plc being the parent entity holding investments throughout the
group, and ASOS.com Limited which generates more than 99% of the group revenue through sales via the world-wide ASOS websites.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on
the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate
on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent company financial statements
Overall materiality
£7,000,000 (2019: £4,500,000).
£350,000 (2019: £250,000).
How we determined it
1% of total revenue with regard to profit before tax.
1% of total assets, capped at an allocation of group materiality.
Rationale for benchmark
applied
Within the group there is a focus on driving sales given the
group’s focus on reinvesting profits into significant capital
expansion to underpin future growth. At the same time, the
business remains focussed on delivering an acceptable
short term return as it expands sales. Having regard to both
the size of the business and its profitability, £7m was
viewed as an appropriate level to set materiality.
78
The company does not trade. As a result we believe that total
assets is the most appropriate benchmark to use for the Company.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of
materiality allocated across components was between £350,000 and £6,650,000.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £350,000 (group audit)
(2019: £250,000) and £17,500 (Company audit) (2019: £10,000) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
Outcome
We are required to report if we have anything material to add or draw
attention to in respect of the directors’ statement in the financial statements
about whether the directors considered it appropriate to adopt the going
concern basis of accounting in preparing the financial statements and the
directors’ identification of any material uncertainties to the group’s and the
company’s ability to continue as a going concern over a period of at least
twelve months from the date of approval of the financial statements.
Reporting on other information
We have nothing material to add or to draw attention to.
However, because not all future events or conditions can be predicted, this
statement is not a guarantee as to the group’s and company’s ability to
continue as a going concern.
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The
directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly,
we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures
to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006
have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 (CA06) and ISAs (UK)
require us also to report certain opinions and matters as described below (required by ISAs (UK) unless otherwise stated).
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the year
ended 31 August 2020 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. (CA06)
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not identify
any material misstatements in the Strategic Report and Directors’ Report. (CA06)
The directors’ assessment of the prospects of the group and of the principal risks that would threaten the solvency
or liquidity of the group
As a result of the directors’ reporting on how they have applied the UK Corporate Governance Code (the “Code”), we are required to report to you
if we have anything material to add or draw attention to regarding:
– The directors’ confirmation on pages 32 to 35 of the Annual Report that they have carried out a robust assessment of the principal risks facing the
group, including those that would threaten its business model, future performance, solvency or liquidity.
– The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
– The directors’ explanation on page 72 of the Annual Report as to how they have assessed the prospects of the group, over what period they have done
so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the group will be
able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We have nothing to report in respect of this responsibility.
Other Code Provisions
As a result of the directors’ reporting on how they have applied the Code, we are required to report to you if, in our opinion:
– The statement given by the directors, on page 46, that they consider the Annual Report taken as a whole to be fair, balanced and understandable,
and provides the information necessary for the members to assess the group’s and company’s position and performance, business model and strategy
is materially inconsistent with our knowledge of the group and company obtained in the course of performing our audit.
– The section of the Annual Report on page 47 describing the work of the Audit Committee does not appropriately address matters communicated
by us to the Audit Committee.
We have nothing to report in respect of this responsibility.
79
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibility set out on page 74, the directors are responsible for the preparation of
the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors
are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors
either intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3
of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, 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.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion
– we have not received all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from
branches not visited by us; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– the company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Other voluntary reporting
Directors’ remuneration
The company voluntarily prepares a Directors’ Remuneration Report in accordance with the provisions of the Companies Act 2006.
The directors requested that we audit the part of the Directors’ Remuneration Report specified by the Companies Act 2006 to be audited
as if the company were a quoted company.
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies
Act 2006.
Andrew Latham (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Watford
13 October 2020
Consolidated Statement
of Total Comprehensive Income
For the year to 31 August 2020
Revenue
Cost of sales
Gross profit
Distribution expenses
Administrative expenses
Operating profit
Finance income
Finance expense
Profit before tax
Income tax expense
Profit for the year
Profit for the year attributable to owners of the parent company
Net translation movements offset in reserves
Net fair value loss on derivative financial instruments
Income tax relating to these items
Other comprehensive loss for the year1
Total comprehensive income for the year attributable to owners of the
parent company
Earnings per share attributable to the owners of the parent company
during the year
Basic per share
Diluted per share
1 All items of other comprehensive loss will subsequently be reclassified to profit or loss.
Year to
31 August 2020
£m
Year to
31 August 2019
£m
3,263.5
(1,716.1)
1,547.4
(444.6)
(951.7)
151.1
0.5
(9.5)
142.1
(28.8)
113.3
113.3
0.1
(13.9)
2.9
(10.9)
102.4
2,733.5
(1,399.2)
1,334.3
(415.6)
(883.6)
35.1
–
(2.0)
33.1
(8.5)
24.6
24.6
(0.8)
(14.9)
2.8
(12.9)
11.7
126.3p
125.6p
29.4p
29.4p
Note
3
4
6
7
8
19
8
9
9
80
81
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Consolidated Statement
of Changes in Equity
For the year to 31 August 2020
Consolidated Statement
of Financial Position
As at 31 August 2020
Called up
share
capital
£m
Note
Share
premium
£m
Retained
earnings1
£m
At 1 September 2019
Profit for the year
Other comprehensive (loss)/income
Total comprehensive
income/(loss) for the year
Proceeds from share issue, net of
transaction costs
Net cash received on exercise of shares
from Employee Benefit Trust
Share-based payments charge
Tax relating to share option scheme
18
18
20
8
2.9
6.9
–
–
–
–
–
–
0.6
238.8
–
–
–
–
–
–
449.5
113.3
–
113.3
–
–
12.9
1.3
Employee
Benefit
Trust
reserve2
£m
1.3
–
–
–
–
0.7
–
–
Hedging
reserve
£m
Translation
reserve
£m
Total
equity
£m
(4.8)
–
(11.0)
(2.2)
453.6
–
0.1
113.3
(10.9)
(11.0)
0.1
102.4
–
–
–
–
–
–
–
–
239.4
0.7
12.9
1.3
Balance as at 31 August 2020
3.5
245.7
577.0
2.0
(15.8)
(2.1)
810.3
At 1 September 2018
Profit for the year
Other comprehensive loss for the year
Total comprehensive income/(loss) for
the year
Net cash received on exercise of shares
from Employee Benefit Trust
Share-based payments charge
Tax relating to share option scheme
Balance as at 31 August 2019
18
20
8
1 Retained earnings includes the share-based payments reserve.
2 Employee Benefit Trust and Link Trust.
2.9
–
–
–
–
2.9
6.9
–
–
–
–
6.9
422.1
24.6
–
82.4
–
3.4
(0.6)
449.5
1.0
–
–
–
0.3
–
–
1.3
7.5
–
(12.3)
(1.6)
–
0.6
438.8
24.6
(12.9)
(12.3)
0.6
11.7
–
–
–
–
–
–
(4.8)
(2.2)
0.3
3.4
(0.6)
453.6
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Derivative financial asset
Current assets
Inventories
Trade and other receivables
Derivative financial asset
Cash and cash equivalents
Current tax asset
Current liabilities
Trade and other payables
Bank overdraft
Borrowings
Lease liabilities
Derivative financial liability
Current tax liability
Net current assets/(liabilities)
Non-current liabilities
Lease liabilities
Deferred tax liability
Derivative financial liability
Net assets
Equity attributable to owners of the parent
Called up share capital
Share premium
Employee Benefit Trust reserve
Hedging reserve
Translation reserve
Retained earnings
Total equity
At
31 August 2020
£m
At
31 August 2019
£m
Note
10
11
12
19
13
19
14
15
14
14
16
19
16
17
19
18
1.1
346.9
616.8
4.8
969.6
532.4
60.3
19.6
407.5
–
1,019.8
(806.1)
–
–
(22.3)
(25.4)
(0.3)
(854.1)
165.7
(290.8)
(11.4)
(22.8)
(325.0)
810.3
3.5
245.7
2.0
(15.8)
(2.1)
577.0
810.3
1.1
325.1
296.0
0.1
622.3
536.8
72.8
11.0
–
2.6
623.2
(669.0)
(15.5)
(75.0)
–
(12.7)
–
(772.2)
(149.0)
(12.6)
(7.1)
(19.7)
453.6
2.9
6.9
1.3
(4.8)
(2.2)
449.5
453.6
Notes 1 to 24 are an integral part of the financial statements.
The consolidated financial statements of ASOS Plc, registered number 4006623, on pages 81 to 110, were approved by the Board
of Directors and authorised for issue on 13 October 2020 and were signed on its behalf by:
Mathew Dunn
Chief Financial Officer
82
83
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020
Consolidated Statement of Cash Flows
For the year to 31 August 2020
Notes to the Financial Statements
For the year to 31 August 2020
Operating profit
Adjusted for:
Depreciation of property, plant and equipment
Amortisation of other intangible assets
Impairment of assets
Decrease/(increase) in inventories
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Share-based payments charge
Other non-cash items
Income tax paid
Net cash generated from operating activities
Investing activities
Payments to acquire intangible assets
Payments to acquire property, plant and equipment
Finance income
Net cash used in investing activities
Financing activities
Proceeds from share issue, net of transaction costs
(Repayment of)/proceeds from borrowings
Principal portion of lease liabilities
Net cash inflow relating to Employee Benefit Trust
Finance expense
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Opening cash and cash equivalents
Effect of exchange rates on cash and cash equivalents
Closing cash and cash equivalents
Year to
31 August 2020
£m
Year to
31 August 2019
£m
151.1
57.4
60.0
4.1
4.4
6.5
129.4
10.9
–
(20.5)
403.3
(88.4)
(28.2)
0.5
(116.1)
239.4
(75.0)
(21.4)
0.7
(8.0)
135.7
422.9
(15.5)
0.1
407.5
35.1
25.3
46.0
1.4
(129.2)
(30.2)
143.3
2.5
0.7
(5.2)
89.7
(124.9)
(96.7)
–
(221.6)
–
75.0
–
0.3
(1.4)
73.9
(58.0)
42.7
(0.2)
(15.5)
Note
4
4
4
20
14
16
14
1 SIGNIFICANT ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the course of preparing the financial statements, management necessarily makes estimates and judgements that affect the application
of policies and reported amounts. Estimates and judgements are continually reviewed and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the current circumstances. Actual results may differ
from the initial estimate or judgement and any subsequent changes are accounted for with an effect on the financial statements at the time
such updated information becomes available. The Audit Committee considers estimates and judgements made by management, as detailed
in the Audit Committee Report on pages 45 to 48.
The estimates and judgements which have the most significant risk of resulting in a material adjustment to the carrying amount of assets
and liabilities are:
Accounting estimates
Inventory valuation
Inventory is carried at the lower of cost and net realisable value, on a weighted average cost basis, which requires an estimation of
products’ future selling prices. A provision is also made to write down any slow-moving or obsolete inventory to net realisable value.
The provision is £36.5m at 31 August 2020 (2019: £11.3m), an overall charge to the statement of comprehensive income of £25.2m
was recognised during the year.
Refund accruals
Accruals for sales returns are estimated on the basis of historical returns and are recorded so as to allocate them to the same period in
which the original revenue is recorded. These accruals are reviewed regularly and updated to reflect management’s latest best estimates.
Despite the increased uncertainty associated with COVID-19, management do not believe that the difference between the accrual estimate
and actual returns will be material. The accrual for net refunds totalled £62.5m at 31 August 2020 (2019: £62.9m).
Depreciation of property, plant and equipment and amortisation of other intangible assets
Depreciation and amortisation are provided to write down assets to their residual values over their estimated useful lives. As Domains have
indefinite useful lives they are not amortised. The determination of these residual values and estimated lives, and any change to the residual
values or estimated lives, requires the exercise of management judgement. See Notes 11 and 12 on pages 94 and 95.
Impairment of property, plant and equipment and other intangible assets
Property, plant and equipment and other intangible assets are reviewed for impairment if events or changes in circumstances indicate
that the carrying amount may not be recoverable. Where an impairment is required, the recoverable amount is determined based on
value-in-use calculations prepared using management’s assumptions and estimates. See Notes 11 and 12 on pages 94 and 95.
Accounting judgements
Capitalisation criteria
Where assets are acquired or developed in-house, management exercises judgement in determining that the asset meets the criteria
to be capitalised as either an intangible or tangible fixed asset.
Legal contingencies
Where legal proceedings are brought against the Group and material future economic outflow is considered possible but not probable,
or cannot be reliably measured, the Group discloses the nature of the contingent liability in the notes to the financial statements but does
not recognise a liability in respect of the contingency.
A liability is recognised only when a future economic outflow is probable and the amount of that outflow can be reliably measured.
Judgement is required in the determination of probability and as to whether the Group’s exposure can be reliably estimated.
Calculation of share-based payment charges
The charge related to equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at
the date they are granted, using an appropriate valuation model selected according to the terms and conditions of the grant. Judgement
is applied in determining the most appropriate valuation model and in determining the inputs to the model. Third-party experts are engaged
to advise in this area where necessary. Judgements are also applied in relation to estimations of the number of options which are expected
to vest, by reference to historic leaver rates and expected outcomes under relevant performance conditions. See Note 20 on pages 103
to 105.
84
85
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Notes to the Financial Statements continued
2 CHANGES TO ACCOUNTING POLICIES
2 CHANGES TO ACCOUNTING POLICIES continued
The effect of these changes has resulted in EBITDA increasing by £27.6m and depreciation increasing by £25.0m; therefore EBIT has
increased by £2.6m for the year ended 31 August 2020. Net finance costs have increased by £5.0m and therefore profit before tax
reduced by £2.4m.
Within the cash flow statement, while there is no additional impact on cash flows, there are changes in the classification of cash flows,
with £21.4m of lease payments classified as financing cash flows and £5.0m as interest payments.
From 1 September 2019 the Group’s lease policy is summarised as follows:
A right-of-use asset and lease liability is recognised at the lease commencement date. The right-of-use asset is initially recognised at cost,
comprising the initial amount of the lease liability plus any initial direct cost incurred. An adjustment is made for the reclassification of
prepaid lease expenses, dilapidation accruals less any lease incentives received. The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date to the earlier of the end of the useful life of the asset or the end of the lease term.
The lease liability is initially measured as the present value of the lease payments at the commencement date, discounted using the
incremental borrowing rate of 1.43%. The lease liability is measured at amortised cost using the effective interest method and a subsequent
finance charge recognised on the finance lease liability. A finance charge on the dilapidation provision is also recognised using the same
effective borrowing rate. The finance lease liability is re-measured when there is a change in future lease payments arising from a change
in an index or a rate or a change in the Group’s assessment of whether it will exercise an extension or termination option. When the lease
liability is re-measured, a corresponding adjustment is made to the right-of-use asset.
ASOS’ activities as a lessor are not currently material.
All other accounting policies applied are consistent with those adopted and disclosed in the Group financial statements for the year to
31 August 2019.
Accounting policy references are included in the relevant notes throughout the financial statements and also in Note 24.
Standards, amendments and interpretations to existing standards that are not yet effective and have not been
early adopted by the Group and/or Company
There have been no changes to standards published that are applicable to the Group or Company.
Standards, amendments and interpretations to standards that are effective and have been adopted by the Group
and/or Company
The group has adopted IFRS 16, “Leases”, effective for accounting periods commencing 1 January 2019 and applied the simplified
transition approach with the practical expedients for short term and low value asset leases. Comparatives have not been restated and
opening retained earnings have not been impacted, as a result of the transition approach.
The Group enters into leases for property, plant and equipment. The Group’s lease portfolio is principally comprised of property leases of
land and buildings in relation to ASOS fulfilment centres and office space. The leases typically run for terms between 7 and 20 years and
may include break clauses or options to renew beyond the non-cancellable periods. The majority of the Group’s lease payments are subject
to market review, usually every 5-6 years, and some lease agreements include rental payments contingent on turnover or economic indices.
These contingent lease payments are excluded from the calculation of lease liabilities under IFRS 16.
The right-of-use assets have been measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued
lease payments relating to that lease recognised in the Statement of Financial Position immediately before the date of initial application.
The value of the lease liabilities represents the total cash commitments under each of the operating leases. The present value of the lease
liabilities is discounted at ASOS’ potential borrowing cost for a long-term liability and will be reviewed periodically.
The lease liability brought onto the balance sheet at transition is £339.3m, and the right of use asset is £352.1m. A £36.2m dilapidation
provision has also been recognised separately, discounted using the same discount rate as the lease liability. There was an existing
dilapidations provision of £5.4m held on the balance sheet for the year ended 31 August 2019, hence a £30.8m movement has been
included in the table below showing the impact across the opening Statement of Financial Position:
Non-current assets
Right-of-use assets – property, plant & equipment
Current assets
Prepayments
Current liabilities
Financial liabilities – lease liabilities
Accruals
Non-current liabilities
Financial liabilities – lease liabilities
Dilapidation provision
Total movement in retained earnings at 1 September 2019
Reconciliation of the lease liabilities at 1 September 2019 to the operating lease
commitments at 31 August 2019:
Operating lease commitments disclosed at 31 August 2019 under IAS17
Adjustments as a result of changes in management assumptions on exercising an option
to terminate a lease and reflecting individual components of a contract
Discounted using the group’s incremental borrowing rate at the date of initial application
Short-term leases excluded from lease liability
Lease liability recognised as at 1 September 2019
1 September
2019
£m
352.1
(5.0)
(22.1)
23.0
(317.2)
(30.8)
–
£m
388.9
(12.7)
(36.4)
(0.5)
339.3
86
87
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020
Notes to the Financial Statements continued
3 SEGMENTAL ANALYSIS
4 OPERATING PROFIT
a) Operating profit is stated after charging
Depreciation of property, plant and equipment
Amortisation of other intangible assets
Impairment of assets
Cost of inventory recognised as an expense
Adjustment of inventories to net realisable value
Net foreign exchange losses
Operating leases
b) Auditors’ remuneration:
Audit and audit-related services:
Statutory audit of parent company and consolidated financial statements
Statutory audit of the Company’s subsidiaries pursuant to legislation
Total
Year to
31 August 2020
£m
Year to
31 August 2019
£m
57.4
60.0
4.1
25.3
46.0
1.4
1,677.8
1,378.5
23.3
5.5
2.5
0.3
0.1
0.4
5.4
4.5
24.0
0.1
0.2
0.3
Costs relating to the audit of the parent company are borne by ASOS.com Limited. The policy for the approval of non-audit fees is set out
in the Audit Committee Report on pages 45 to 48. Costs related to non-audit services provided by the Group’s auditors were less than
£0.1m (2019: less than £0.1m).
No exceptional items were identified for the year to 31 August 2020 (2019: £nil).
IFRS 8 ‘Operating Segments’ requires operating segments to be determined based on the Group’s internal reporting to the Chief Operating
Decision Maker. The Chief Operating Decision Maker has been determined to be the Executive Committee which receives information on
the basis of the Group’s operations in key geographical territories, based on the Group’s management and internal reporting structure.
The Executive Board assesses the performance of each segment based on revenue and KPIs reflecting territory and customer performance.
See Note 24 for the Group’s accounting policy on revenue recognition.
Retail sales
Delivery receipts
Third-party revenues
Total revenues
Cost of sales
Gross profit
Distribution expenses
Administrative expenses
Operating profit
Finance income
Finance expense
Profit before tax
1 Rest of World
Retail sales
Delivery receipts
Third-party revenues
Total revenues
Cost of sales
Gross profit
Distribution expenses
Administrative expenses
Operating profit
Finance income
Finance expense
Profit before tax
1 Rest of World
Year to 31 August 2020
UK
£m
EU
£m
1,175.9
1,005.3
32.1
6.1
24.9
–
1,214.1
1,030.2
US
£m
401.9
13.3
0.1
415.3
RoW1
£m
587.9
16.0
–
Total
£m
3,171.0
86.3
6.2
603.9
3,263.5
Year to 31 August 2019
UK
£m
993.4
27.4
9.0
1,029.8
EU
£m
825.7
17.5
0.3
843.5
US
£m
341.2
12.1
0.1
353.4
RoW1
£m
497.4
9.4
–
506.8
(1,716.1)
1,547.4
(444.6)
(951.7)
151.1
0.5
(9.5)
142.1
Total
£m
2,657.7
66.4
9.4
2,733.5
(1,399.2)
1,334.3
(415.6)
(883.6)
35.1
–
(2.0)
33.1
Due to the nature of its activities, the Group is not reliant on any individual major customers.
No analysis of the assets and liabilities of each operating segment is provided to the Chief Operating Decision Maker in the monthly
management accounts. No measure of segmental assets or liabilities is therefore disclosed in this note.
The total amount of non-current assets located in the UK is £679.6m (2019: £463.4m), EU: £204.0m (2019: £113.0m), US: £80.1m
(2019: £44.7m), and RoW: £nil (2019: £nil).
88
89
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020
Notes to the Financial Statements continued
5 STAFF COSTS INCLUDING DIRECTORS’ REMUNERATION
The Group’s monthly average number of employees during the year was as follows:
6 FINANCE INCOME
Finance income receivable on cash and cash equivalents is recognised in the Statement of Total Comprehensive Income as it is earned.
By activity:
Fashion
Operations
Technology
The Group’s costs for employees, including directors, during the year were as follows:
Wages and salaries
Social security costs
Other pension costs
Share-based payments charge (Note 20)
Gross total
Less: staff costs capitalised in relation to capital projects
Year to
31 August 2020
Year to
31 August 2019
1,063
1,969
792
3,824
1,070
2,900
785
4,755
Year to
31 August 2020
£m
Year to
31 August 2019
£m
189.0
18.5
7.3
12.9
227.7
(44.5)
183.2
192.4
19.9
7.4
3.4
223.1
(43.1)
180.0
The Group contributes to the personal pension plans of certain employees under a defined contribution scheme. The costs of these
contributions are charged to the Statement of Total Comprehensive Income on an accruals basis as they become payable under the
scheme rules.
The aggregate compensation to key management personnel, being the directors of ASOS Plc (executive and non-executive) plus the
members of the Executive Committee of ASOS.com Limited, was as follows:
Short-term employee benefits
Post-employment benefits
Share-based payments charge/(credit)
Year to
31 August 2020
£m
Year to
31 August 2019
£m
7.0
0.3
3.5
10.8
3.7
0.4
(0.4)
3.7
The highest-paid director exercised 5,736 share options during the year (2019: 36,194); all other components of the highest-paid director’s
remuneration are detailed in the directors’ remuneration table on page 64.
Directors’ aggregate emoluments and pension payments are detailed in the Directors’ Remuneration Report on pages 51 to 63, along with
directors’ interests in issued shares and share options on page 67.
90
Interest receivable on cash and cash equivalents
7 FINANCE EXPENSE
Year to
31 August 2020
£m
0.5
Year to
31 August 2019
£m
–
Finance expense payable on cash and cash equivalents, including short-term borrowings, is recognised in the Statement of Total
Comprehensive Income in the period to which it relates.
Interest payable on cash and cash equivalents
IFRS 16 lease interest
8 INCOME TAX EXPENSE
See Note 24 for the Group’s accounting policy on taxation.
Tax on profit
Adjustment in respect of prior year corporation tax
Total current tax charge
Deferred tax
– Origination and reversal of temporary differences
Total deferred tax charge
Tax on profit
Effective tax rate
Reconciliation of tax charge
The tax on the Group’s profit before tax differs from the income tax expense as follows:
Profit before tax
Tax on profit at standard rate of UK corporation tax of 19% (2019: 19%)
Effects of:
Expenses not deductible for taxation purposes
Rate differences: overseas tax
Rate differences: UK tax
Tax adjustments on share-based payments
Adjustment in respect of prior years
Tax on profit
Year to
31 August 2020
£m
Year to
31 August 2019
£m
4.5
5.0
9.5
2.0
–
2.0
Year to
31 August 2020
£m
Year to
31 August 2019
£m
25.5
0.2
25.7
3.1
3.1
28.8
20.3%
4.0
(0.5)
3.5
5.0
5.0
8.5
25.7%
Year to
31 August 2020
£m
Year to
31 August 2019
£m
142.1
27.0
(0.6)
0.1
1.9
0.2
0.2
28.8
33.1
6.3
2.2
0.1
(0.4)
0.8
(0.5)
8.5
91
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Notes to the Financial Statements continued
8 INCOME TAX EXPENSE continued
Tax recognised in other comprehensive income
10 GOODWILL
See Note 24 and details below for the Group’s accounting policy on goodwill.
Cost
At 1 September 2018, 31 August 2019 and 31 August 2020
Accumulated impairment losses
At 1 September 2018, 31 August 2019 and 31 August 2020
Carrying value
At 31 August 2020
At 31 August 2019
Total
£m
1.4
(0.3)
1.1
1.1
Goodwill is not amortised, but tested annually for impairment with the recoverable amount being determined from value-in-use calculations.
The goodwill balance relates to the historic acquisition of ASOS.com Limited, a 100% subsidiary of the Group.
Goodwill has been allocated for impairment testing purposes to cash-generating units (CGUs); the geographical business segments as
described in Note 3. The key assumptions for the value-in-use calculations are the long-term growth rate and the discount rates. Value-in-use
was calculated from cash flow projections for three years using data from the Group’s latest results and financial forecasts approved by the
Board. The budgeted cash flow assumes a growth rate which is higher than the long-term growth rate of the UK economy, based on the Group’s
recent performance and current performance expectations. No reasonably possible change in the assumptions used in the value-in-use
calculations could result in a material impairment of goodwill.
Deferred tax credit on net translation movements offset in reserves
Deferred tax credit on movement of derivative financial instruments
Tax recognised in the statement of changes in equity
Deferred tax credit on movement in tax base of share options
Current tax charge on exercise of share options
Year to
31 August 2020
£m
Year to
31 August 2019
£m
0.1
2.8
2.9
0.2
2.6
2.8
Year to
31 August 2020
£m
Year to
31 August 2019
£m
1.3
–
1.3
1.4
(2.0)
(0.6)
Amounts which have been recognised in equity are included in the Consolidated Statement of Changes in Equity on page 82.
9 EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit attributable to the owners of the parent company by the weighted average
number of ordinary shares in issue during the year. Own shares held by the Employee Benefit Trust and Link Trust are eliminated from the
weighted average number of ordinary shares.
Diluted earnings per share is calculated by dividing the earnings by the weighted average number of ordinary shares in issue during the
year, adjusted for the effects of potentially dilutive share options.
Weighted average share capital
Weighted average shares in issue for basic earnings per share (no. of shares)
Weighted average effect of dilutive options (no. of shares)
Weighted average shares in issue for diluted earnings per share (no. of shares)
Earnings (£m)
Earnings attributable to owners of the parent company
Basic earnings per share
Diluted earnings per share
Year to
31 August 2020
£m
Year to
31 August 2019
£m
89,697,034
443,417
90,140,451
83,565,283
159,117
83,724,400
113.3
126.3p
125.6p
24.6
29.4p
29.4p
92
93
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Notes to the Financial Statements continued
11 OTHER INTANGIBLE ASSETS
See Note 24 for the Group’s accounting policy on intangible assets.
12 PROPERTY, PLANT AND EQUIPMENT
See Note 24 for the Group’s accounting policy on property, plant and equipment.
Cost
At 1 September 2018
Additions
Transfers
Disposals
Impairments
At 31 August 2019
Additions
Transfers
Disposals
Impairments
At 31 August 2020
Accumulated amortisation
At 1 September 2018
Charge for the year
Disposals
Impairments
At 31 August 2019
Charge for the year
Disposals
Impairments
At 31 August 2020
Net book amount
At 31 August 2020
At 31 August 2019
Domain names
£m
Software
£m
Assets under
construction
£m
0.2
–
–
–
–
0.2
–
–
–
–
0.2
–
–
–
–
–
–
–
–
–
0.2
0.2
281.3
85.9
18.4
(8.7)
(1.8)
375.1
62.1
14.6
(4.1)
(4.5)
443.2
97.9
46.0
(8.7)
(0.4)
134.8
60.0
(4.1)
(0.9)
189.8
253.4
240.3
73.3
29.7
(18.4)
–
–
84.6
23.3
(14.6)
–
–
93.3
–
–
–
–
–
–
–
–
–
93.3
84.6
Total
£m
354.8
115.6
–
(8.7)
(1.8)
459.9
85.4
–
(4.1)
(4.5)
536.7
97.9
46.0
(8.7)
(0.4)
134.8
60.0
(4.1)
(0.9)
189.8
346.9
325.1
All domain names have been determined to have an indefinite useful life as they relate to ongoing use of the ASOS brand, and are assessed
for impairment annually based on their value-in-use. Domain names have been allocated for impairment testing based on the territory to
which they relate. No impairment charge in respect of domain names has been recognised during the year (2019: £nil).
Software and assets under construction as at 31 August 2020 relate to internal and external costs incurred for the development of software,
mainly the Truly Global Retail (TGR) system for internal use. The majority of assets under construction are expected to go live by end of
January 2021.
Total additions arising from internal development projects were £69.0m (2019: £97.8m).
Cost
At 1 September 2018
Additions
Transfers
Disposals
At 31 August 2019
Transition on adoption of IFRS 16
(Note 2)
FX
Additions
Transfers
Disposals
Impairments
At 31 August 2020
Accumulated depreciation
At 1 September 2018
Charge for the year
Disposals
At 31 August 2019
Charge for the year
FX
Disposals
At 31 August 2020
Net book amount
At 31 August 2020
At 31 August 2019
Leasehold land &
buildings
£m
Fixtures, fittings,
plant and
machinery
£m
Computer
equipment
£m
Assets under
construction
£m
–
–
–
–
–
352.1
(4.0)
–
–
–
–
348.1
–
–
–
–
25.0
(0.4)
–
24.6
161.4
3.3
150.7
(7.1)
308.3
–
–
25.6
30.1
(2.3)
(0.5)
361.2
46.8
20.2
(7.1)
59.9
26.2
–
(2.3)
83.8
323.5
–
277.4
248.4
16.2
0.6
9.4
(0.5)
25.7
–
–
3.8
2.9
(2.0)
–
30.4
6.0
5.1
(0.5)
10.6
6.2
–
(2.0)
14.8
15.6
15.1
116.8
75.8
(160.1)
–
32.5
–
–
0.8
(33.0)
–
–
0.3
–
–
–
–
–
–
–
–
0.3
32.5
Total
£m
294.4
79.7
–
(7.6)
366.5
352.1
(4.0)
30.2
–
(4.3)
(0.5)
740.0
52.8
25.3
(7.6)
70.5
57.4
(0.4)
(4.3)
123.2
616.8
296.0
There were no significant assets under construction as at 31 August 2020 (2019: final phase of Euro Hub automation, and development
of office space at Leavesden and Greater London House.)
94
95
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Notes to the Financial Statements continued
13 TRADE AND OTHER RECEIVABLES
15 TRADE AND OTHER PAYABLES
Trade receivables are non-interest bearing and are initially recognised at fair value and subsequently measured at amortised cost less an
allowance for expected credit losses. Such allowances are based on an individual assessment of each receivable, which is informed by
past experience, and are recognised at amounts equal to the losses expected to result from all possible default events over the life of each
financial asset. The Group also performs analysis on a case by case basis for particular trade receivables with irregular payment patterns
or history.
Trade receivables
Provision for doubtful debts
Trade receivables net of provision for doubtful debts
Prepayments
Other receivables
31 August 2020
£m
31 August 2019
£m
21.2
(0.1)
21.1
10.1
29.1
60.3
19.1
(0.1)
19.0
21.6
32.2
72.8
The other receivables balance includes £13.0m of UK VAT receivables (2019: £25.7m). The fair value of trade and other receivables is not
materially different from their carrying value. Trade and other receivables fall into the ‘loans and receivables’ category of the Group’s
financial assets.
At 31 August 2020, the provision for impairment was £0.1m (2019: £0.1m).
Movements in the provision for impairment of trade receivables are as follows:
At start of year
(Provided)/released during the year
At end of year
Year to
31 August 2020
£m
Year to
31 August 2019
£m
(0.1)
–
(0.1)
–
(0.1)
(0.1)
As at 31 August 2020, trade receivables of £2.1m (2019: £0.8m) were past due but not impaired.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Group
does not hold any collateral as security.
14 CASH AND CASH EQUIVALENTS
(a) Cash and cash equivalents
Net movement in cash and cash equivalents
Opening cash and cash equivalents
Effect of exchange rates on cash and cash equivalents
Closing cash and cash equivalents
31 August 2020
£m
31 August 2019
£m
422.9
(15.5)
0.1
407.5
(58.0)
42.7
(0.2)
(15.5)
Cash and cash equivalents comprise highly liquid funds which the Group can access without restriction.
(b) Borrowings
The Group has in place a £350m Revolving Credit Facility (RCF) available until July 2023. At 31 August 2020 the Group had drawn down
£nil (2019: £75.0m) of the RCF.
During the year, the Group also issued commercial paper to the value of £100.0m, as part of the government-backed Covid Corporate
Financing Facility (CCFF). This was fully repaid on 28 August 2020.
96
Trade and other payables are non-interest bearing and are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest rate method
Trade payables and accruals
Taxation and social security
Non-trade accruals
Other payables
31 August 2020
£m
31 August 2019
£m
353.2
11.7
304.1
137.1
806.1
285.4
9.1
270.3
104.2
669.0
Trade payables and accruals includes trade payables and goods received not invoiced, freight and duty accruals. The fair value of trade,
other payables and accruals is not materially different from their carrying value.
16 LEASE LIABILITIES
See Note 24 for the Group’s accounting policy on lease liabilities. The following amounts are included in the Group’s consolidated financial
statements in respect of its leases:
31 August 2020
£m
31 August 2019
£m
Depreciation charge for right-of-use assets (excluding impairment) (see Note 12)
Interest expense on lease liabilities
Expense relating to short-term leases
Expense relating to leases of low value assets that are not shown above as short-term leases
Total cash outflow for leases comprising interest and capital payments
Lease liabilities
The minimum lease payments under finance leases fall due as follows:
Within one year
Within two to five years
Within five to ten years
In more than ten years
Future finance charge on lease liabilities
Present value of future leases
Balance sheet lease liabilities
Current
Non-current
(25.0)
(5.0)
(2.3)
(0.1)
(26.4)
(26.1)
(129.1)
(121.3)
(67.3)
(343.8)
30.7
(313.1)
(22.3)
(290.8)
(313.1)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
97
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Notes to the Financial Statements continued
16 LEASE LIABILITIES continued
18 CALLED UP SHARE CAPITAL continued
Prior to 1 September 2019, the Group recognised operating leases in line with IAS 17. Leases where the Group does not retain substantially
all the risks and rewards of ownership of the asset were classified as operating leases. Operating lease rental payments were recognised as
an expense in the Statement of Comprehensive Income on a straight-line basis over the lease term. From 1 September 2019, the Group no
longer recognises operating leases in line with IAS 17 and instead recognises right-of-use assets and lease liabilities in line with IFRS 16.
Therefore, the future aggregate minimum lease payments payable under non-cancellable operating leases as at 1 September 2019 are
deemed to be £nil.
In April 2020, ASOS announced a share placing issuing 15,805,943 new ordinary shares in ASOS plc with an offer price of £15.60 per
share. This resulted in the raising of £246.6m in gross proceeds. Directly attributable share issuance fees deducted from share premium
totalled £7.2m, resulting in net proceeds from the share issue of £239.4m.
During the year, 86,584 (2019: 242,514) ordinary shares of 3.5 pence each were issued as a result of the exercise of various employee
share options. Total consideration received in respect of the exercise of the employee share options was £nil (2019: £nil). No shares were
issued to the Chairman (2019: nil), as part of his remuneration package.
31 August 2020
£m
31 August 2019
£m
Employee Benefit Trust
Operating lease commitments
The minimum lease payments under non-cancellable operating leases fall due as follows:
Within one year
Within two to five years
In more than five years
Total
17 DEFERRED TAX ASSET/(LIABILITY)
–
–
–
–
At 1 September 2018
(Charge)/credit to the Statement of Total Comprehensive Income
Credit to equity (see Note 8)
At 31 August 2019
(Charge)/credit to the Statement of Total Comprehensive Income
Charge to equity (see Note 8)
At 31 August 2020
Accelerated
capital
allowances
£m
Share-based
payments
£m
Derivatives
£m
Other
£m
(6.7)
(1.3)
–
(8.0)
(2.3)
–
(10.3)
5.0
(2.6)
(2.0)
0.4
0.9
1.3
2.6
(1.2)
2.6
–
1.4
2.9
–
4.3
(5.3)
(1.1)
–
(6.4)
(1.6)
–
(8.0)
26.8
107.9
254.2
388.9
2.9
Total
£m
(8.2)
(2.4)
(2.0)
(12.6)
(0.1)
1.3
(11.4)
The deferred tax assets and liabilities have been offset as they are due to reverse in the same jurisdiction.
The deferred tax asset on share-based payments is created by the temporary difference between the carrying value of outstanding
share-based payment options in the Statement of Financial Position and the tax base of these options, being the estimated future tax
deduction expected to crystallise on exercise of the option. The tax base is calculated by reference to the Company’s share price at the
reporting date and the number of share options outstanding, which has increased during the year to 31 August 2020.
At 31 August 2019 it was expected that the corporation tax rate would reduce to 17% from 1 April 2020 and deferred tax in respect of
amounts which were expected to unwind after this date was recognised at 17%. Earlier this year it was announced that the corporation tax
rate would remain at 19% and this was substantively enacted on 17 March. As a result, a rate change adjustment has arisen in respect of
brought forward balances which were not recognised at 19% and all current year movements and closing balances have been recognised
at 19%.
18 CALLED UP SHARE CAPITAL
Authorised:
100,000,000 (2018: 100,000,000) ordinary shares of 3.5p each
Allotted, issued and fully paid:
83,872,275 (2018: 83,629,761) ordinary shares of 3.5p each
Ordinary Shares (Issued)
As at 1 September 2019
New ordinary shares issued for cash – share placing
Employee share scheme issues
As at 31 August 2020
98
31 August 2020
£m
31 August 2019
£m
3.5
3.5
3.5
2.9
No. of shares
83,872,275
15,805,943
86,584
99,764,802
The provision of shares to satisfy some of the Group’s share incentive plans is facilitated by purchases of own shares by the Group’s
Employee Benefit Trust and Link Trust (the Trusts). Shares held by the Trusts are valued at the weighted average historical cost of the shares
acquired and the carrying value is shown as a reduction within shareholders’ equity. The costs of operating the Trusts are borne by the
Group and are not material.
During the year to 31 August 2020, 25,901 shares (2019: 12,006 shares) were transferred from the Trusts to employees in settlement of
share options and awards in exchange for cash consideration of £0.7m (2019: £0.3m). Nil shares (2019: nil) were purchased by the Trusts
to satisfy future options and awards, at a cost of £nil (2019: £nil). The Trusts have waived the right to receive dividends on these shares.
At 31 August 2020, 245,567 shares were held by the Trusts (2019: 271,468 shares). The total value in reserves was a credit balance
of £2.0m (2019: a credit balance of £1.3m).
19 FINANCIAL INSTRUMENTS
Categories of financial instruments
Financial assets
Derivative assets used for hedging at fair value
Amortised cost
Financial liabilities
Derivative liabilities used for hedging at fair value
Lease liabilities
Amortised cost
31 August 2020
£m
31 August 2019
£m
24.4
457.7
(48.2)
(313.1)
(794.4)
11.1
51.2
(19.8)
–
(750.4)
Financial assets at amortised cost include trade and other receivables and cash, and exclude prepayments. Included in financial liabilities
at amortised cost are trade payables, overdrafts, borrowings, accruals and other payables.
Risk management
The Group’s Treasury function seeks to reduce exposures to capital risk, liquidity risk, credit risk, interest rate risk and foreign currency risk,
to ensure liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The Group does not engage in
speculative trading in financial instruments and transacts only in relation to underlying business requirements. The Group’s treasury policies
and procedures are periodically reviewed and approved by the Audit Committee.
Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders through an appropriate balance of debt and equity funding, while maintaining a
strong credit rating and sufficient headroom. The Group makes adjustments to its capital structure in light of changes to economic conditions
and the Group’s strategic objectives.
Liquidity risk
The Group manages its exposure to liquidity risk by continuously monitoring short- and long-term forecasts and actual cash flows and
ensuring it has the necessary banking and reserve borrowing facilities available to meet the requirements of the business. At 31 August
2020, the Group had a revolving credit facility of £350.0m that is available until July 2023, of which £350.0m was not drawn down at the
year end. Borrowings under the revolving credit facility bear interest at a rate linked to LIBOR. Commitment interest is payable on the daily
undrawn balance of the facility. The facility, which is unsecured, includes covenants related to the earnings before interest, tax, depreciation
and amortisation cover of net financing costs, and net balance sheet debt.
99
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Notes to the Financial Statements continued
19 FINANCIAL INSTRUMENTS continued
19 FINANCIAL INSTRUMENTS continued
Surplus cash is invested on deposit with relationship banks and money market funds to balance return on cash balances with business
liquidity requirements and counterparty risk. The Group’s financial liabilities at amortised cost as at 31 August 2020 and 31 August 2019
all mature in less than one year.
Credit risk
Credit risk is the risk that a counterparty may default on its obligation to the Group in relation to lending, hedging, settlement and other
financial activities. The Group’s principal financial assets are trade and other receivables, financial derivatives, and cash and cash
equivalents. The Group’s credit risk is primarily attributable to its trade and other receivables and financial counterparties. The amounts
included in the Statement of Financial Position are net of allowances for doubtful receivables. An allowance for impairment is made where
there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of cash flows. The
Group has a low retail credit risk due to transactions being principally of high volume, low value and short maturity. The Group’s trade
receivables are primarily with large advertising companies with which the Group has long-standing relationships, and the risk of default
and write-offs due to bad debts is considered to be low.
The Group has no significant concentration of credit risk, as exposure is spread over a large number of counterparties and customers.
The credit risk on liquid funds is considered to be low, as the Board-approved Group Treasury Policy limits the value that can be placed
with each approved counterparty to minimise the risk of loss.
Interest rate risk
The Group is exposed to cash flow interest rate risk on its revolving credit facility to the extent that this is utilised. At 31 August 2020, £nil was
drawn down from this facility (2019: £75.0m) and therefore the Group has not entered any interest rate derivatives to mitigate the interest
rate risk.
Foreign currency risk
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 Rubles. The Group’s presentational currency is pound sterling, therefore the Group
is also exposed to foreign currency translation risks due to movements in foreign exchange rates on the translation of non-sterling
assets and liabilities.
The primary use of forward exchange contracts for sales per the Group’s hedging policy is to layer hedges over a 36-month period, with
up to 100% coverage of the net unmatched exposure for the first 12 months and coverage increasing from 20% to 95% between months
13 and 36. Hedges are currently protecting foreign exchange risk on 12 currencies. These forward foreign exchange contracts are
classified as Level 2 derivative financial instruments under IFRS 13, ‘Fair Value Measurement’.
Hedge effectiveness is determined at inception of the hedge relationship and through periodic prospective effectiveness assessments to
ensure that an economic relationship exists between the hedged item and hedging instrument. The derivatives have been fair valued at
31 August 2020 with reference to forward exchange rates that are quoted in an active market, with the resulting value discounted back
to present value. The Group’s forward foreign exchange contracts are entered into under International Swaps and Derivatives Association
(ISDA) master netting arrangements. In certain circumstances, such as when a default occurs, all outstanding transactions under the
agreement are terminated, the termination value is assessed and in general only a single net amount is payable in settlement of all
transactions. See Note 24 for further details on foreign exchange.
100
Fair value of derivative financial instruments
Non-current assets
Fair value of derivatives
Current assets
Fair value of derivatives
Current liabilities
Fair value of derivatives
Non-current liabilities
Fair value of derivatives
Hedging risk strategy
Carrying amount
Notional amount
Maturity date
Hedge ratio
Change in fair value of outstanding hedging instruments since inception of the hedge
31 August 2020
£m
31 August 2019
£m
4.8
19.6
(25.4)
(22.8)
(23.8)
0.1
11.0
(12.7)
(7.1)
(8.7)
31 August 2020
£m
31 August 2019
£m
Cash flow hedges
Cash flow hedges
(21.2)
1,199
(7.3)
890.1
To Jul 2023
To Mar 2021
1:1
(21.2)
1:1
(7.3)
The foreign currency forwards are denominated in the same currency as the highly probable forecast cash flows, therefore the hedge ratio
is 1:1.
The Group’s forward foreign exchange contracts were assessed to be highly effective at 31 August 2020, and the net fair value of
outstanding contracts was a £21.2m liability (2019: £7.3m liability). Cash flows related to these contracts will occur in the periods set
out below, and will impact the Statement of Total Comprehensive Income over the same periods:
Cash flows relating to forward contracts:
Within six months
Between six months and one year
Between one and three years
Cash flow hedges included within Other Comprehensive Income during the year were as follows:
31 August 2020
£m
31 August 2019
£m
(3.8)
0.6
(18.0)
(21.2)
(0.9)
0.6
(7.0)
(7.3)
31 August 2020
£m
31 August 2019
£m
Gains/(losses) arising during the year on currency forward contracts:
Gains previously in OCI, reclassified to revenue
Gains previously in OCI, reclassified to property, plant and equipment
Net unrealised loss during the year
1.7
–
(15.6)
(13.9)
5.4
0.2
(20.5)
(14.9)
101
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020
Notes to the Financial Statements continued
19 FINANCIAL INSTRUMENTS continued
The hedged highly probable forecast transactions denominated in foreign currency are expected to occur at various dates during the
next 36 months. Therefore, the fair value of a hedging derivative is classified as a non-current asset or liability when the remaining
maturity of the hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item
is less than 12 months. The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets in the Statement
of Financial Position.
Maturity
The table below analyses the Group’s gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining
period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash
flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
Forward foreign currency contracts – cash flow hedges
Outflows within one year
Outflows between one and three years
Financial instrument sensitivities
Foreign currency sensitivity
31 August 2020
£m
31 August 2019
£m
(22.0)
(18.8)
(40.8)
(12.7)
(7.1)
(19.8)
The Group’s principal financial instrument foreign currency exposures are to US dollars, euros and Australian dollars. The following
table illustrates the hypothetical sensitivity of the Group’s reported profit before tax and closing equity to a 10% increase and decrease
in the value of each of these currencies relative to pounds sterling at the reporting date, assuming all other variables remain unchanged.
The sensitivity rate of 10% is deemed to represent a reasonably possible change based on historic exchange rate volatility.
The following assumptions were made in calculating the sensitivity analysis:
– All sensitivities affecting the Statement of Total Comprehensive Income also impact equity
– Exchange rate fluctuations on currency derivatives that form part of an effective cash flow hedge relationship affect the fair value reserve
in equity and the fair value of the hedging derivatives, with no impact on the Statement of Total Comprehensive Income
– All hedge relationships are fully effective
– Translation of foreign subsidiaries and operations into the Group’s presentation currency has been excluded from the sensitivity analysis.
Positive figures represent an increase in profit before tax or in equity.
Sterling strengthens by 10% against:
US dollar
Euro
Australian dollar
Sterling weakens by 10% against:
US dollar
Euro
Australian dollar
Profit before tax
Equity
2020
£m
11.7
6.6
0.3
(11.7)
(6.6)
(0.3)
2019
£m
0.2
0.6
(0.1)
(0.2)
(0.6)
0.1
2020
£m
11.1
6.2
(0.5)
(11.1)
(6.2)
0.5
2019
£m
0.8
(0.3)
(0.3)
(0.8)
0.3
0.3
The above sensitivities are calculated with reference to a single moment in time and are subject to change due to a number of factors
including fluctuating trade payable and cash balances and changes in the currency mix. As the sensitivities are limited to financial instrument
balances as at the reporting date due to ASOS’s hedging policy, they do not take account of the Group’s revenues and costs of sale, which
are sensitive to changes in exchange rates. In addition, each of the sensitivities is calculated in isolation while, in reality, foreign currencies
do not move independently.
Interest rate sensitivity
The Group has determined that at 31 August 2020 and 31 August 2019 there was no significant sensitivity to changes in market interest rates.
20 SHARE-BASED PAYMENTS
See Note 24 for the Group’s accounting policy on share-based payments.
The Group recognised a charge of £12.9m (2019: £3.4m) and capitalised £2.0m (2019: £0.9m) related to share-based payments during
the year to 31 August 2020, all of which relates to equity-settled schemes.
Summary of movements in awards
Outstanding at 1 September 2018
357,987
6,844
837,134
1,201,965
Save As You Earn
scheme
(no. of shares)
Share
Incentive
Plan
(no. of shares)
ASOS
Long-Term Incentive
Scheme
(no. of shares)
Total
(no. of shares)
Granted during the year
Lapsed during the year
Exercised during the year
Outstanding at 31 August 2019
Exercisable at 31 August 2020
Outstanding at 1 September 2019
Granted during the year
Lapsed during the year
Exercised during the year
Outstanding at 31 August 2020
Exercisable at 31 August 2020
–
(161,159)
(9,940)
186,888
60,222
186,888
195,798
(143,643)
(24,774)
214,269
28,340
–
–
(1,632)
5,212
5,212
5,212
–
–
(1,561)
3,651
3,651
429,798
429,798
(137,308)
(298,467)
2,537
(242,514)
(254,086)
887,110
1,079,210
–
65,434
887,110
1,079,210
313,773
509,571
(313,664)
(457,307)
(69,169)
(95,504)
818,050
1,035,970
130
743
2,901
743
1,105
1,215
756
712
–
31,991
4,869
Weighted
average
exercise price
(pence)
1,325
–
The weighted average share price at date of exercise of shares exercised during the year was 3,560 pence (2019: 5,472 pence). The
weighted average remaining contractual life of outstanding options at the end of the year was 1.4 years (2019: 1.3 years). The aggregate
fair value of options granted in the year was £11.4m (2019: £20.5m).
Save As You Earn (SAYE) scheme
Under the terms of the current SAYE scheme, the Board grants options to purchase ordinary shares in the Company to employees who enter
into an HMRC-approved SAYE scheme for a term of three years. Options are granted at up to a 20% discount to the market price of the
shares on the day preceding the date of offer and are normally exercisable for a period of six months after completion of the SAYE contract.
These option grants are settled on exercise through a transfer of shares from the Employee Benefit Trust.
Date of grant
1 September 2019
(no. of shares)
Granted during
the year
(no. of shares)
Lapsed during
the year
(no. of shares)
Exercised during
the year (no. of
shares)
31 August
2020
(no. of shares)
Exercise price
(pence)
Exercise period
06.06.16
08.06.17
15.12.17
08.06.18
20.11.19
60,222
58,766
184
67,716
–
186,888
–
–
–
–
195,798
195,798
(35,595)
(30,279)
(184)
(37,535)
(40,050)
(24,627)
–
2,901
01.07.19 – 31.12.19
(147)
28,340
4,869 01.08.20 – 31.01.21
–
–
–
–
4,869 01.08.20 – 31.01.21
30,181
155,748
5,028 01.08.21 – 31.01.22
2,876 01.01.23 – 30.06.23
(143,643)
(24,774)
214,269
102
103
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Notes to the Financial Statements continued
20 SHARE-BASED PAYMENTS continued
20 SHARE-BASED PAYMENTS continued
The fair value of SAYE options granted during the current year (2019: no options granted) was calculated using the Black-Scholes model,
assuming the following inputs:
The fair value of options granted during the current and prior year under the ALTIS EPS performance conditions were calculated using the
Black-Scholes model and the fair value of options granted under the ALTIS TSR performance conditions were calculated using the Monte
Carlo model. Both sets of inputs are shown below:
Share price (pence)
Exercise price (pence)
Expected volatility (%)
Expected life (years)
Risk-free rate (%)
Dividend yield
Weighted average fair value of options (pence)
Year to
30 August 2020
3,120
2,876
52.0
3.0
0.51
–
1,183
Volatility has been estimated by taking the historical volatility in the Company’s share price over a three-year period.
Share Incentive Plan (SIP)
Under the terms of the SIP, the Board granted free shares to every employee under an HMRC-approved SIP. Awards must be held in trust
for a period of at least three years after grant date and become exercisable at this date. These option grants are settled on exercise through
a transfer of shares from the Link Trust.
Date of grant
28.12.12
15.11.13
1 September 2019
(no. of shares)
Granted during
the year
(no. of shares)
Lapsed during
the year
(no. of shares)
Exercised during
the year (no. of
shares)
31 August
2020
(no. of shares)
Exercise price
(pence)
2,740
2,472
5,212
–
–
–
–
–
–
(823)
(738)
(1,561)
1,917
1,734
3,651
nil
nil
Exercise period
Post 28.12.2015
Post 15.11.2017
ASOS Long-Term Incentive Scheme (ALTIS)
Under the terms of the ALTIS, certain executive directors and members of management may be granted conditional awards, the base value
of which is calculated as a fixed multiple of salary, and will only vest to the extent the related performance targets, as detailed in the
Directors’ Remuneration Report on page 64, are met. These options grants are settled on exercise through issue of new ordinary shares
by the Company.
Options granted under the ALTIS are shown below.
Date of grant
1 September 2019
(no. of shares)
Granted during
the year
(no. of shares)
Lapsed during
the year
(no. of shares)
Exercised during
the year
(no. of shares)
31 August
2020
(no. of shares)
Exercise price
(pence)
Exercise period
224,478
29,043
6,313
1,524
239,959
19,968
9,436
306,515
14,118
35,757
–
–
–
–
–
–
–
–
–
–
–
–
297,357
16,416
(165,090)
(59,388)
(21,198)
(4,789)
(1,112)
(34,178)
(1,655)
(1,857)
(59,651)
(2,379)
(470)
(21,285)
–
(7,845)
(1,524)
(412)
–
–
–
–
–
–
–
–
–
–
–
–
205,781
18,313
7,579
246,864
11,739
35,287
276,072
16,416
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
31.10.19
31.10.19
31.10.19
31.10.19
31.10.20
31.10.20
31.10.20
31.10.21
31.10.21
31.10.21
31.10.22
31.10.22
887,111
313,773
(313,664)
(69,169)
818,051
16.12.16
01.03.17
07.06.17
14.09.17
11.10.17
01.03.18
22.05.18
24.10.18
26.02.19
28.06.19
20.11.19
27.02.20
104
Share price (pence)
Exercise price (pence)
Expected volatility (%)
Expected life (years)
Risk-free rate (%)
Dividend yield
Weighted average fair value of options for EPS
performance condition (pence)
Weighted average fair value of options for TSR
performance condition (pence)1, 2
2020
Grant 1
Grant 2
3,120
3,073
–
52.2
2.9
0.51
–
–
55.2
2.7
0.38
–
Grant 1
5,782
–
34.3
3.0
0.83
–
Grant 2
3,085
–
46.6
2.7
0.78
–
2019
Grant 3
2,550
–
49.3
2.3
0.58
–
3,120
3,073
5,782
3,085
2,550
2,368
2,332
3,510
1,873
1,548
1 Inputs to the Monte Carlo model for both grants from 2020 were as follows: share price of 3,120 pence, exercise price of nil, expected volatility of 30.0%, expected life
of 3.0 years, risk-free rate of 0.517% and dividend yield of nil.
2 Inputs to the Monte Carlo model for all three grants from 2019 were as follows: share price of 5,782 pence, exercise price of nil, expected volatility of 30.0%, expected life
of 3.0 years, risk-free rate of 0.753% and dividend yield of nil.
21 CAPITAL COMMITMENTS
Capital expenditure committed at the reporting date but not yet incurred is as follows:
Fixtures and fittings
Intangible assets
22 CONTINGENT LIABILITIES
31 August 2020
£m
31 August 2019
£m
12.1
24.7
36.8
21.4
33.9
55.3
From time to time, the Group is subject to various legal proceedings and claims that arise in the ordinary course of business which, due to
the fast-growing nature of the Group and its e-commerce base, may concern the Group’s brand and trading name or its product designs.
All such cases brought against the Group are robustly defended and a liability is recorded only when it is probable that the case will result
in a future economic outflow which can be reliably measured.
At 31 August 2020, the Group had contingent liabilities of £21.6m (2019: £21.6m) in relation to supplier standby letters of credit, rent
deposit, deeds and other bank guarantees. On 10 September 2020 the Group extended a supplier standby letter of credit by £8.9m
bringing the total to £30.5m. The likelihood of cash outflow in relation to these contingent liabilities is considered to be low.
23 RELATED PARTY TRANSACTIONS
Transactions with key management personnel
There were no material transactions or balances between the Group and its key management personnel or their close family members
during the year to 31 August 2019 and the year to 31 August 2020 other than remuneration disclosed in Note 5.
Transactions with ASOS.com Limited Employee Benefit Trust and Link Trust (the Trusts)
During the year, £0.7m (2019: £0.3m) was received by the Trusts on exercise of employee share options.
Transactions with other related parties
During the year, the Group made purchases of inventory, net of VAT, totalling £55.6m (2019: £47.7m) from Aktieselskabet af 5.5.2010,
a company which has a significant shareholding in the Group. At 31 August 2020, the amount due to Aktieselskabet af 5.5.2010
was £15.8m (2019: £8.5m).
105
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Notes to the Financial Statements continued
24 ACCOUNTING POLICIES
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, Sweden, the Netherlands, Denmark, Poland and Russia.
The Company is a public limited company which is listed on the Alternative Investment Market (AIM) and is incorporated and domiciled
in the UK. The address of its registered office is Greater London House, Hampstead Road, London NW1 7FB.
COVID-19 impact
COVID-19 has impacted all aspects of the Group’s business. The Group has considered the additional costs and revenues incurred
as a result of the pandemic and has determined that COVID-19 impacts should not be treated as an exceptional item. The Group will
continue to monitor closely the impact of the COVID-19 outbreak, and apply guidance issued by the World Health Organization
and local governments appropriately. As always, the safety of our customers and colleagues remains paramount.
Going concern and viability assessment
The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the foreseeable future. The going concern basis of accounting has therefore
been adopted in preparing the financial statements. Further details are contained in the Directors’ Report on page 72. The directors
have also assessed the prospects of the Company and the Group over a three-year period to 31 August 2023, and have a reasonable
expectation that the Company and the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year
period under review.
The Group has conducted extensive stress-testing given the impacts of COVID-19 on customer demand and behaviours, none of which have
resulted in a change to the assessment of the Group as a going concern. The Directors have therefore continued to adopt the going concern
basis in preparing the Group’s financial statements.
Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS
Interpretations Committee (IFRS IC) interpretations, as adopted by the European Union (EU), and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS. As at the reporting date, these are the standards, subsequent amendments and related
interpretations issued and adopted by the International Accounting Standards Board (IASB) that have been endorsed by the EU.
a) Accounting convention
The financial statements are drawn up on the historical cost basis of accounting, excluding derivative financial instruments held at fair value.
The financial statements are presented in sterling and all values are rounded to the nearest hundred thousand pounds except where
otherwise indicated.
b) Basis of consolidation
The consolidated Group financial statements include the financial statements of ASOS Plc, all its subsidiaries, and the Employee Benefit Trust
and Link Trust up to the reporting date. All intercompany transactions and balances between Group companies are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
(i) Subsidiaries
Subsidiary undertakings are all entities over which the Group has control. The Group controls an entity where the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are deconsolidated
from the date on which control ceases. Subsidiary undertakings acquired during the period are recorded under the acquisition method
of accounting. A list of all the subsidiaries of the Group is included in Note 8 of the parent company financial statements on page 117.
All apply accounting policies which are consistent with those of the rest of the Group.
Any non-controlling interest acquired on acquisition of a subsidiary is recognised at the proportionate share of the acquired net assets.
Subsequent to acquisition, the carrying amount of non-controlling interest equals the amount of those interests at initial recognition plus
the non-controlling share of changes in equity since acquisition. Transactions with non-controlling interests that do not result in loss of
control are accounted for as equity transactions. Total comprehensive income is attributed to a non-controlling interest even if this results
in the non-controlling interest having a deficit balance.
24 ACCOUNTING POLICIES continued
(ii) Employee Benefit Trust and Link Trust
The Employee Benefit Trust and Link Trust (the Trusts) are considered to be controlled by the Group. The activities of the Trusts are conducted
on behalf of the Group according to its specific business needs in order to obtain benefits from its operation and, on this basis, the assets
held by the Trusts are consolidated into the Group’s financial statements.
Additional accounting policy information
a) Revenue recognition
Revenue consists primarily of internet and advertising sales as well as postage and packaging receipts (delivery receipts).
Retail sales and delivery receipts are recorded net of an appropriate deduction for actual and expected returns, relevant vouchers and sales
taxes. Retail sales and delivery receipts are recognised on despatch from the warehouse, at which point title and risk passes to third parties
and revenue can be reliably measured.
Third-party revenue relates to advertising income earned from the website and is measured at the fair value of the consideration received
or receivable, net of value added tax, and is recognised at which date the service is completed.
The amount of revenue arising from the sale of goods and provision of services has been disclosed in Note 3 to the financial statements.
b) Foreign currency translation
The trading results and cash flows of overseas subsidiaries are translated at the average monthly exchange rates during the year.
The Statement of Financial Position of each overseas subsidiary is translated at year-end exchange rates. The resulting exchange differences
are recognised in the Translation Reserve within equity and are reported in Other Comprehensive Income.
Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at year-end exchange rates.
Exchange differences on monetary items are recognised in the Statement of Total Comprehensive Income.
c) Derivative financial instruments and hedging activities
The Group operates internationally and is therefore exposed to foreign currency transaction risk, primarily on sales denominated in Euros,
US dollars, Australian Dollars and Russian Roubles. To manage this exposure the Group hedge a proportion of sales based on the assessed
net currency exposure. The Group’s presentational currency is pound sterling, therefore the Group is also exposed to foreign currency
translation risks due to movements in foreign exchange rates on the translation of non-sterling assets and liabilities.
The Group’s policy is to match up to 100% of foreign currency transactions in the same currency, taking into account a proportion of sales
approach. For capital expenditure, the Group’s policy is to hedge pre-approved foreign currency expenditure. Where appropriate, the
Group uses financial instruments in the form of forward foreign exchange contracts to hedge future highly probable forecast foreign
currency cash flows. Derivatives are initially recognised at fair value at the trade date and subsequently remeasured at fair value. The Group
designates certain derivatives as hedges of highly probable forecast transactions (cash flow hedges). At inception of the designated
hedging relationships, the risk management objective and strategy for undertaking the hedge is documented alongside the economic
relationship between the item being hedged and the hedging instrument.
For hedges of sales, the effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in the hedging reserve within equity. The gain or loss relating to the ineffective portion is recognised immediately in Statement
of Comprehensive Income, within other gains/(losses). Amounts accumulated in equity are reclassified in the periods when the hedged
item affects the Statement of Comprehensive Income. The foreign currency forwards are denominated in the same currency as the highly
probable forecast foreign cash flows, therefore the hedge ratio is assumed to be 1:1 based on the risk management strategy. The primary
use of forward exchange contracts for sales per the Group’s policy is to layer hedges over a 36-month period, with up to 100% coverage
of the net unmatched exposure for the first 12 months and coverage increasing from 20% to 95% between month 13 and 36, with hedges
currently in 12 currencies.
These forward foreign exchange contracts are classified as Level 2 derivative financial instruments under IFRS 13, ‘Fair Value Measurement’.
Hedge effectiveness is determined at inception of the hedge relationship and through periodic prospective effectiveness assessments to
ensure that an economic relationship exists between the hedged item and hedging instrument. In these hedge relationships ineffectiveness
may arise if the timing of the forecast transaction changes from what was originally estimated, change in quantity or if there are changes
in the credit risk of the Group or the derivative counterparty. There was no ineffectiveness in the year ending 31 August 2020 (2019:
no ineffectiveness). The derivatives have been fair valued at 31 August 2020 with reference to forward exchange rates that are quoted
in an active market, with the resulting value discounted back to present value.
106
107
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Notes to the Financial Statements continued
24 ACCOUNTING POLICIES continued
Derivatives are initially recognised at fair value on the date a derivative contract is entered and subsequent changes in the fair value
of foreign currency derivatives, which are designated and effective as hedges of future cash flows, are recognised in equity in the
Hedging Reserve and in Other Comprehensive Income, and are recycled when cash flows from the hedged items impact the accounts.
Changes in the fair value of foreign currency derivatives which are ineffective or do not meet the criteria for hedge accounting
in accordance with IFRS 9 are recognised immediately in the Statement of Total Comprehensive Income.
The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk
management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge
inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes
in fair values or cash flows of hedged items.
d) Inventories
Inventories are valued at the lower of cost and net realisable value, on a weighted average cost basis. Net realisable value is the estimated
selling price in the ordinary course of business less applicable variable selling expenses. Cost of purchase comprises the purchase price
including import duties and other taxes, transport and handling costs and any other directly attributable costs, less trade discounts.
A provision is made to write down any slow-moving or obsolete inventory to net realisable value.
e) Exceptional items
Items of income and expenditure which are material and non-recurring are presented separately in the Consolidated Statement of
Total Comprehensive Income. The separate reporting of exceptional items helps to provide an indication of the underlying performance
of the Group.
f) Taxation
The tax expense included in the Statement of Total Comprehensive Income and Statement of Changes in Equity comprises current and
deferred tax.
Current tax is the expected tax payable based on the taxable profit for the period, and the tax laws that have been enacted or substantively
enacted by the reporting date. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Current and deferred tax is charged or credited in the Statement of Total Comprehensive Income, except when it relates to items charged
or credited directly to equity, in which case the current or deferred tax is also recognised directly in equity.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are
not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates and
in accordance with laws that are expected to apply in the period/jurisdiction when/where the liability is settled or the asset is realised.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets against current tax liabilities
and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority, on either the taxable entity
or different taxable entities, and where there is an intention to settle the balances on a net basis.
24 ACCOUNTING POLICIES continued
g) Share-based payments
The Group issues equity-settled share-based payments to certain employees, whereby employees render services in exchange for shares
or rights over shares of the parent company.
Equity-settled awards are measured at fair value at the date of grant. The fair value is calculated using an appropriate option pricing model
and is expensed to the Statement of Total Comprehensive Income on a straight-line basis over the vesting period after allowing for an
estimate of shares that will eventually vest. The level of vesting is reviewed annually and the charge adjusted to reflect actual and estimated
levels of vesting.
Where an equity-settled share-based payment scheme is modified during the vesting period, an additional charge is recognised over the
remainder of that vesting period to the extent that the fair value of the revised scheme at the modification date exceeds the fair value of the
original scheme at the modification date. Where the fair value of the revised scheme does not exceed the fair value of the original scheme,
the Group continues to recognise the charge required under the conditions of the original scheme.
In accordance with IFRS 2, ASOS.com Limited is required to recognise share-based payment arrangements involving equity instruments
where ASOS.com Limited has remunerated those providing services to the entity in this way. ASOS Plc makes contributions to ASOS.com
Limited equal to the charge for the share-based payment arrangement which is reflected as an increase in ASOS Plc’s investment in
ASOS.com Limited.
h) Leases
The Group currently hold leases for their fulfilment centres and office space. ASOS adopted IFRS 16 “Leases” from 1 September 2019.
The Group recognises a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is initially recognised
at cost, comprising the initial amount of the lease liability plus any initial direct cost incurred. An adjustment is made for the reclassification of
prepaid lease expenses, dilapidation accruals less any lease incentives received. The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date to the earlier of the end of the useful life of the asset or the end of the lease term.
Lease liabilities are initially measured as the present value of the lease payments at the commencement date, discounted using the
incremental borrowing rate. The lease liability is measured at amortised cost using the effective interest method and a subsequent finance
charge recognised on the finance lease liability. A finance charge on the dilapidation provision is also recognised using the same effective
borrowing rate. The finance lease liability is re-measured when there is a change in future lease payments arising from a change in an index
or a rate or a change in the Group’s assessment of whether it will exercise an extension or termination option. When the lease liability
is re-measured, a corresponding adjustment is made to the right-of-use asset.
i) Business combinations and goodwill arising thereon
The Group applies the acquisition method of accounting to account for business combinations in accordance with IFRS 3, ‘Business
Combinations’.
The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of assets given, equity instruments issued
and liabilities incurred or assumed in exchange for control of the acquiree. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of
any non-controlling interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets
acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference
is recognised directly in the Statement of Total Comprehensive Income. Acquisition expenses are recognised in the Statement of Total
Comprehensive Income as incurred.
Goodwill represents the excess of the cost of acquisitions over the Group’s interest in the fair value of the identifiable assets and liabilities
(including intangible assets) of the acquired entity at the date of acquisition. Goodwill is recognised as an asset and assessed for impairment
at least annually. Any impairment is recognised immediately in the Statement of Total Comprehensive Income. For the purposes of
impairment testing, goodwill is allocated to those CGUs that have benefited from the acquisition. If the recoverable amount of the CGU is
less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of the goodwill allocated to the unit and
then to the other assets of the unit on a pro rata basis. On disposal of a subsidiary, the attributable amount of goodwill is included in the
determination of the profit and loss on disposal.
108
109
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020
Company Statement of
Changes in Equity
For the year to 31 August 2020
At 1 September 2019
Shares allotted
Loss for the year and total comprehensive loss
Share-based payments contribution
At 31 August 2020
At 1 September 2018
Loss for the year and total comprehensive loss
Share-based payments contribution
At 31 August 2019
1 Retained earnings includes the share-based payments reserve.
Called up share
capital
£m
2.9
0.6
–
–
3.5
2.9
–
–
2.9
Share
premium
£m
6.9
238.8
–
–
245.7
6.9
–
–
6.9
Retained
earnings1
£m
25.8
–
(1.5)
12.9
37.2
23.3
(0.9)
3.4
25.8
Total
equity
£m
35.6
239.4
(1.5)
12.9
286.4
33.1
(0.9)
3.4
35.6
Notes to the Financial Statements continued
24 ACCOUNTING POLICIES continued
j) Other intangible assets
The cost of acquiring and developing software that is not integral to the related hardware is capitalised separately as an intangible
asset. This does not include internal website development and maintenance costs, which are expensed as incurred unless representing
a technological advance leading to future economic benefit. Capitalised software costs include external direct costs of material and
services and the payroll and payroll-related costs for employees who are directly associated with the project.
Capitalised software development costs are stated at historic cost less accumulated amortisation. Amortisation is calculated on a straight-
line basis over the assets’ expected economic lives, normally between three and seven years, except for major technical infrastructure
projects which have an expected economic life of ten years. Amortisation is included within administrative expenses in the Statement
of Total Comprehensive Income. Software under development is held at cost less any recognised impairment loss.
Acquired domain names are recognised initially at cost. Those deemed to have a definite useful life are amortised on a straight-line basis
according to the estimated life of the asset. Those deemed to have an indefinite useful life are tested for impairment annually or as triggering
events occur. Any impairment in value is charged to the Statement of Total Comprehensive Income in the period in which it occurs.
k) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any provision for impairment in value. Cost includes
the original purchase price of the asset and the costs attributable in bringing the asset to its working condition for its intended use. Residual
values and useful lives are assessed at each reporting date.
Right-of-use assets are initially measured at cost, which is an amount equal to the corresponding lease liabilities (present value of future
lease payments) adjusted for any lease payment made at or before the commencement date, less any lease incentives received. See section
(h) for the lease liabilities accounting policy.
Depreciation is recognised to write-off the cost of items of property, plant and equipment to their estimated residual values, on a straight-line
basis as follows:
– Leasehold land and buildings: depreciated over seven to twenty years depending on lease term
– Fixtures, fittings, plant and machinery: depreciated over five 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
Depreciation is included in administrative expenses in the Statement of Total Comprehensive Income. Assets under construction are not
depreciated.
At each reporting date, property, plant and equipment is reviewed for impairment if events or changes in circumstances indicate that the
carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount is assessed by reference
to the net present value of expected future pre-tax cash flows of the relevant CGU or fair value less costs to sell if higher. Any impairment
in value is charged to the Statement of Total Comprehensive Income in the period in which it occurs.
110
111
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Company Statement of
Financial Position
As at 31 August 2020
Non-current assets
Investments
Current assets
Other receivables
Current liabilities
Other payables
Net current assets/(liabilities)
Net assets
Equity
Called up share capital
Share premium
Retained earnings
Total equity
Note
31 August 2020
£m
31 August 2019
£m
8
3
4
6
49.3
237.1
–
237.1
286.5
3.5
245.7
37.2
286.4
36.4
0.9
(1.7)
(0.8)
35.6
2.9
6.9
25.8
35.6
Notes 1 to 8 are an integral part of the financial statements.
As shown in Note 2, the Company incurred a loss for the year of £1.5m (2019: loss of £0.9m).
The financial statements of ASOS Plc, registered number 4006623, on pages 111 to 119, were approved by the Board of Directors and
authorised for issue on 13 October 2020 and were signed on its behalf by:
Mathew Dunn
Chief Financial Officer
Company Statement
of Cash Flows
For the year to 31 August 2020
Operating loss
Adjusted for:
Increase in other receivables
(Decrease)/increase in payables
Proceeds from issue of ordinary shares
Interest paid
Net movement in cash and cash equivalents
Opening cash and cash equivalents
Closing cash and cash equivalents
Year to
31 August 2020
£m
Year to
31 August 2019
£m
(1.2)
(236.2)
(1.7)
239.4
(0.3)
–
–
–
(0.9)
(0.1)
1.0
–
–
–
–
–
112
113
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020
Notes to the Company Financial Statements
For the year to 31 August 2020
Notes to the Company Financial Statements continued
1 ACCOUNTING POLICIES
Basis of preparation
The separate financial statements of the Company are drawn up in accordance with International Financial Reporting Standards (IFRS),
as adopted by the European Union and with the Companies Act 2006.
The Company’s principal accounting policies are the same as those set out in Note 24 of the Group financial statements, with the addition
of those included within the relevant notes below. Unless otherwise stated, these policies have been consistently applied to all the periods
presented.
5 FINANCIAL INSTRUMENTS
Financial assets
Amortised cost
Financial liabilities
Amortised accruals
2 LOSS FOR THE YEAR
The Company has not presented its own Statement of Total Comprehensive Income as permitted by section 408 of the Companies Act 2006.
6 CALLED UP SHARE CAPITAL
The loss for the year and total comprehensive loss attributable to shareholders was £1.5m (2019: loss of £0.9m).
3 OTHER RECEIVABLES
Other receivables are non-interest bearing and are initially recognised at fair value. Subsequently, they are measured at amortised cost
using the effective interest rate method less provision for impairment. A provision for impairment of receivables due from subsidiary
undertakings is established when there is objective evidence that amounts will not be recovered.
Amounts due from subsidiary undertakings
31 August 2020
£m
237.1
31 August 2019
£m
0.9
The fair value of other receivables is not materially different to their carrying value.
As at 31 August 2020, receivables from subsidiary undertakings of £237.2m (2019: £0.9m) were unimpaired and considered by
management to be fully recoverable. Receivables from subsidiary undertakings that are less than three months past due are not considered
impaired. As at 31 August 2020, receivables of £237.2m (2019: £0.9m) were more than three months past due but not impaired. These
relate to subsidiary undertakings for which there is no history of default. The ageing analysis of these receivables is as follows:
More than six months
31 August 2020
£m
0.9
31 August 2019
£m
0.98
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above.
31 August 2020
£m
31 August 2019
£m
237.2
–
0.9
(1.7)
31 August 2020
£m
31 August 2019
£m
3.5
3.5
3.5
2.9
No. of shares
83,872,275
15,805,943
86,584
99,764,802
Authorised:
100,000,000 (2019: 100,000,000) ordinary shares of 3.5p each
Allotted, issued and fully paid:
99,764,802 (2019: 83,872,275) ordinary shares of 3.5p each
Ordinary Shares (Issued)
As at 1 September 2019
New ordinary shares issued for cash – share placing
Employee share scheme issues
As at 31 August 2020
In April 2020, ASOS announced a share placing issuing 15,805,943 new ordinary shares in ASOS plc with an offer price of £15.60 per
share. This resulted in the raising of £246.6m in gross proceeds. Directly attributable share issuance fees deducted from share premium
totalled £7.2m, resulting in net proceeds from share issue of £239.4m.
During the year, 86,584 (2019: 242,514) ordinary shares of 3.5 pence each were issued as a result of the exercise of various employee
share options. Total consideration received in respect of the exercise of the employee share options was £nil (2019: £nil). No shares were
issued to the chairman (2019: nil), as part of his remuneration package.
7 RELATED PARTY TRANSACTIONS
During the year, the Company entered into transactions in the ordinary course of business with related parties as follows:
4 OTHER PAYABLES
Amounts due to subsidiary undertakings
31 August 2020
£m
–
31 August 2019
£m
1.7
Costs recharged by subsidiary undertakings
Year to
31 August 2020
£m
1.2
Year to
31 August 2019
£m
1.0
All accruals are due within one year. The fair value of accruals is not materially different from their carrying value
For transactions with directors and key management of ASOS Plc, see Note 23 to the consolidated financial statements on page 105.
114
115
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Notes to the Company Financial Statements continued
8 INVESTMENTS
8 INVESTMENTS continued
Investments in subsidiary companies are stated at cost and are subject to review for impairment if an impairment indicator is identified.
At 31 August 2020, the Company’s subsidiaries were as follows:
In accordance with IFRS 2, ASOS.com Limited is required to recognise share-based payment arrangements involving equity instruments
where ASOS.com Limited has remunerated those providing services to the entity in this way. ASOS Plc makes contributions to ASOS.com
Limited equal to the charge for the share-based payment arrangement which is reflected as an increase in ASOS Plc’s capital contribution
to ASOS.com Limited. For the year to 31 August 2020, ASOS.com Limited recognised a charge of £12.9m (2019: £3.4m) in respect of
share-based payment arrangements. Accordingly, this is shown as an increase (2019: increase) in the capital contribution balance in the
table below.
Cost and net book amount
At 1 September 2018
Additions
At 31 August 2019
Additions
At 31 August 2020
Investment
£m
Capital
contribution
£m
1.7
–
1.7
–
1.7
31.3
3.4
34.7
12.9
47.6
Total
£m
33.0
3.4
36.4
12.9
49.3
The directors believe the carrying value of investments is supported by their underlying net assets.
Name of company
ASOS Intermediate Holdings Limited
Mornington & Co (No. 1) Limited
Mornington & Co (No. 2) Limited
ASOS.com Limited1
Crooked Tongues Limited
Covetique Limited
ASOS Marketplace Limited
ASOS Global Limited
Eight Paw Projects Limited
ASOS US, Inc
ASOS Germany GmbH
ASOS France SAS
ASOS Transaction Services France SAS
ASOS Australia Pty Limited
ASOS Canada Services Limited
ASOS Transaction Services Limited
ASOS Transaction Services Australia Pty Limited
ASOS US Sales, LLC
ASOS Projects Limited2
ASOS Ventures Limited3
ASOS (Shanghai) Commerce Co. Limited
Country of
incorporation
Proportion of
ordinary
shares held
UK
UK
UK
UK
UK
UK
UK
UK
UK
US
Germany
France
France
Australia
Canada
UK
Australia
US
UK
UK
China
100%
100%
100%
100%
95%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Nature of business
Holding company
Vehicle for implementation of ALTIP
Vehicle for implementation of ALTIP
Internet retailer
Internet retailer
Discontinued internet marketplace
Internet marketplace
Holding company
Brand management company
Employer of marketing staff based in the US
Employer of marketing staff based in Germany
Holding company
Payment processing company
Holding company
Non-trading company
Holding company
Payment processing company
Payment processing company
Holding company
Holding company
Discontinued internet retailer
1 ASOS.com Limited has a 7.2% interest in Needle and Thread Design Holdings Limited.
2 ASOS Projects Limited has a 3.4% interest in Action Artificial Intelligence Limited.
3 ASOS Ventures Limited has a 9.5% interest in Trackonomics Limited.
ASOS Intermediate Holdings Limited, Mornington & Co (No. 1) Limited and Mornington & Co (No. 2) Limited are direct subsidiaries
of the Company. All others are indirect subsidiaries of ASOS Plc.
All operating subsidiaries’ results are included in the consolidated financial statements, based on percentage of voting rights held.
No subsidiaries have non-controlling interests that are material to the consolidated financial statements of ASOS Plc.
The accounting reference date of all subsidiaries of ASOS Plc is 31 August, except for ASOS (Shanghai) Commerce Co. Limited
which has an accounting reference date of 31 December due to Chinese statutory requirements.
All UK incorporated entities share the same registered office as ASOS Plc and non-UK entities’ registered offices are detailed below:
ASOS US Inc: 12 Timber Creek Lane, Newark, DE 19711, US
ASOS Germany GmbH: An der Anhalter Bahn 6, 14979 Grossbeeren, Germany
ASOS France SAS: TMF France SAS, 3-5 Rue Saint Georges, 75009 Paris, France
ASOS Transaction Services France SAS: TMF France SAS, 3-5 Rue Saint Georges, 75009 Paris, France
ASOS Australia Pty Limited: Company Matters Pty Limited, Level 12, 680 George Street, Sydney NSW 2000, Australia
ASOS Canada Services Limited: 777 Dunsmuir Street, Suite 1700, Vancouver, BC V7Y 1K4, Canada
ASOS Transaction Service Australia Pty Limited: c/o Company Matters Pty Limited, Tower 4, 727 Collins Street, Docklands, VIC 3008, Australia
ASOS US Sales LLC: 12 Timber Creek Lane, Newark, DE 19711, US
ASOS (Shanghai) Commerce Co. Limited: 587 Langao Road, Putuo District, 200333 Shanghai, China
116
117
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Five-Year Financial
Summary (unaudited)
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Non-current assets
Current assets
Total assets
Equity attributable to owners of the parent company
Current liabilities
Non-current liabilities
Total liabilities, capital and reserves
Consolidated Statement of Cash Flows
Net cash generated from operating activities after exceptional items
Net cash used in investing activities
Net cash generated from financing activities
Net movement in cash and cash equivalents
Opening cash and cash equivalents
Effect of exchange rates on cash and cash equivalents
Closing cash and cash equivalents
As at
31 August
2016
£m
As at
31 August
2017
£m
204.0
446.0
650.0
200.4
428.6
21.0
650.0
325.9
514.5
840.4
287.1
544.2
9.1
840.4
Year to
31 August
2016
£m
Year to
31 August
2017
£m
130.7
(78.4)
0.6
52.9
119.2
1.2
173.3
145.9
(161.0)
1.8
(13.3)
173.3
0.3
160.3
As at
31 August
2018
£m
503.4
503.6
As at
31 August
2019
£m
622.3
623.2
1,007.0
1,245.5
438.8
558.0
10.2
453.6
772.2
19.7
As at
31 August
2020
£m
969.6
1,019.8
1,989.4
810.3
854.1
325.0
1,007.0
1,245.5
1,989.4
Year to
31 August
2018
£m
93.9
(212.7)
1.5
(117.3)
160.3
(0.3)
42.7
Year to
31 August
2019
£m
Year to
31 August
2020
£m
89.7
(221.6)
73.9
(58.0)
42.7
(0.2)
(15.5)
403.3
(116.1)
135.7
422.9
(15.5)
0.1
407.5
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Operating profit before exceptional items
Exceptional items
Operating profit after exceptional items
Finance income
Finance expense
Profit before tax
Income tax expense
Profit from continuing operations
Discontinued operations
Loss from discontinued operations before tax
Tax from discontinued operations
Loss from discontinued operations after tax
Profit for the year attributable to owners of the parent company
Net translation movements offset in reserves
Net fair value (losses)/gains on derivative financial instruments
Income tax relating to these items
Other comprehensive income/(loss) for the year
Profit attributable to:
Owners of the parent company
Non-controlling interest
Total comprehensive income/(loss) attributable to:
Owners of the parent company
Non-controlling interest
Underlying earnings per share1
Basic
Diluted
Earnings per share
Basic
Diluted
Year to
31 August
2016
£m
1,444.9
(722.7)
722.2
(216.0)
(443.2)
63.0
(20.9)
42.1
0.7
–
42.8
(8.1)
34.7
(10.1)
(0.2)
(10.3)
24.4
(1.4)
(82.3)
16.2
(67.5)
24.4
–
24.4
(43.1)
–
(43.1)
61.9p
61.8p
29.4p
29.3p
Year to
31 August
2017
£m
1,923.6
(965.3)
958.3
(299.2)
(579.5)
79.6
Year to
31 August
2018
£m
2,417.3
(1,180.2)
1,237.1
(380.8)
(754.4)
101.9
–
79.6
0.4
–
80.0
(15.9)
64.1
–
–
–
64.1
(0.3)
15.8
(3.3)
12.2
64.1
–
64.1
76.3
–
76.3
77.2p
76.6p
77.2p
76.6p
–
101.9
0.3
(0.2)
102.0
(19.6)
82.4
–
–
–
82.4
0.3
67.7
(12.8)
55.2
82.4
–
82.4
137.6
–
137.6
98.9p
98.0p
98.9p
98.0p
Year to
31 August
2019
£m
2,733.5
(1,399.2)
1,334.3
(415.6)
(883.6)
35.1
–
35.1
–
(2.0)
33.1
(8.5)
24.6
–
–
–
24.6
(0.8)
(14.9)
2.8
(12.9)
24.6
–
24.6
11.7
–
11.7
29.4p
29.4p
29.4p
29.4p
Year to
31 August
2020
£m
3,263.5
(1,716.1)
1,547.4
(444.6)
(951.7)
151.1
–
151.1
0.5
(9.5)
142.1
(28.8)
113.3
–
–
–
113.3
0.1
(13.9)
2.9
(10.9)
113.3
–
113.3
102.4
–
102.4
126.3p
125.6p
126.3p
125.6p
1 Underlying EPS is calculated using profit after tax before exceptional items and discontinued operations.
118
119
FINANCIAL STATEMENTSASOS PLC Annual Report and Accounts 2020ASOS PLC Annual Report and Accounts 2020 Company Information
Annual General Meeting
The AGM will be held at 12.00 noon on Thursday 26 November
2020 at Greater London House, Hampstead Road, London NW1
7FB. We are continuing to monitor developments relating to the
outbreak of COVID-19, including the related public health guidance
and legislation issued by the UK Government. In light of the
continuously changing developments with respect to the COVID-19
pandemic and, in particular, the UK Government’s response
(including the use of local lockdowns and guidance on working from
home and gatherings), the Board has concluded that the interests of
all our stakeholders would be best served by running this year’s
AGM as a closed meeting. Shareholders will therefore not be able
to attend in person. The Notice of Meeting is available on our
website setting out the business to be transacted.
Directors
Adam Crozier (Chair)
Nick Beighton
Mat Dunn
Ian Dyson
Mai Fyfield
Karen Geary
Luke Jensen
Nick Robertson
Eugenia Ulasewicz
Company Secretary
Anna Suchopar
Registered office
Greater London House
Hampstead Road
London NW1 7FB
Registered in England
Company Number 4006623
Designed, edited and produced by Salterbaxter
An MSL Company
Shareholder helpline
0871 664 0300
Independent auditors
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
1 Embankment Place
Charing Cross
London WC2N 6RH
Lawyers
Slaughter and May
1 Bunhill Row
London EC1Y 8YY
Financial adviser, nominated adviser
and joint broker
J.P. Morgan Cazenove
25 Bank Street
London E14 5JP
Joint broker
Numis Securities Limited
5th Floor 10 Paternoster Square
London EC4M 7LT
Financial PR
Headland Consultancy
Cannon Green
1 Suffolk Lane
London EC4R 0AX
Registrars
Link Asset Services
34 Beckenham Road
Beckenham
Kent BR3 4TU
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100% of the inks used are vegetable oil based, 95% of press
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.
120
STRATEGIC REPORTASOS PLC Annual Report and Accounts 2020 ASOS plc
Greater London House
Hampstead Road
London
NW1 7FB, UK
Tel: +44 (0)20 7756 1000
Company information
Registered in England 4006623
VAT number – 788 6225 77