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If this were to happen, then I would be happy for the money to be used to deleverage and strengthen the balance sheet, but I would also like to see a cash distribution of some sort for shareholders.

That will keep me satisfied until FY25 when we should see the full effect of the turnaround plan manifested.

Time is of the essence however. If JD gets a sense that investors are going to vote him out, I think it’s safe to say that he will try to protect himself, just as he has done with the restructuring process.

All imo.

Some of us thought to do this with CINE, but the CEO was more sly. By the time we saw that the CEO was screwing us over, it was too late.

Here there is a chance I think. I think that because it’s a major motion, it would need 75% approval, so just 25% to vote against will be sufficient if that is the case.

You need to try and find out who the big shareholders are, perhaps look at the latest annual report and check TR-1s after to see what the institutional shareholder base looks like.

If there are only a few, it may mean that there is a lot of ownership between the small fry investors, like ourselves. That is what I understand.

Even better, considering that with Option 1 we still get destroyed.

Best thing would be if we could get some huge shareholder and remove JD as CEO, hostile takeover fashion. I wish we did that with CINE before we found out that the CEO was negotiating his own exit payout to the detriment of the shareholders. Let’s see what happens.

I posted yesterday saying next RNS may be wipeout warning, and this is what it is, just with different language.

Look at the options, either get diluted or get diluted for JD’s benefit. I’m tempted to sell but at 93% loss, I feel like staying and voting to approve only option 1 of the equity raise. Option 2 will give JD 70%+ of the company, at that stage you’re at the mercy of the ocean, anything is possible anywhere and at anytime, especially with delisting.

The funny part is that a decision will be made if we approve both equity raise options. Can you imagine? The same people that gave JD the choice to propose such a stupid option that gives him 70% will really choose the best option for shareholders?

I don’t even think it’s worth keeping my shares for the duration of the indefinite delisting. I’m going to vote for Option 1, against Option 2, and against delisting if I can. Once voted, just sell and out, very simple. I’ll take my money elsewhere, I’ve never experienced such nonsense on American markets…

All imo.

MIKODX nice to see you after so long on the CINE boards. You’re spot on, this is another CINE just duplicated. This is even worse considering the so-called “options” that have been given for the equity raise, the shareholders are basically given the choice of being shafted or being shafted with reward to JD.

I learnt my lesson from CINE and only invested a small amount here, corrupt management all over the place…

Whenever you see “restructuring plan” in any RNS it often means the beginning of wipeout for shareholders.

CINE was not fully insolvent before entering restructuring, although they were pretty much at the finish line. We don’t know where exactly SDRY is, so this is where you need to proceed with caution. Next RNS could be release of the restructuring plan where they write “no expected recovery for equity holders” etc etc.

Sure they have more lending facilities to go, but if it’s unsustainable, it’s unsustainable. That is why Hilco came inside in the first place, that is their strategy.

Complete demolition of shareholder value.

I also got burned on CINE last year, thank God I learnt and only invested a small amount in SDRY before it imploded.

CINE... also similar story, complete corruption. sp collapsed like there was no tomorrow but CEO achieved 100% bonus and emerged with £35m after they wiped out the shareholders.

Better to just go with strong, stable companies and only reserve small portion of your portfolio for companies like SDRY where the chance is 50-50.

Brush off and move on. Money is money, you can make it back.

Good morning Hexam, noted. Thanks for that info.

Learning every day :)

Have a good day ahead.

Hello Hexam! A pleasure seeing you again!

For the first point, correct. I was making the comparison to the half year results. On a year-by-year basis, it is indeed still higher.

For the second point, I also concede. I had read the first half of the report this morning, and by the time I got to writing my analysis in the evening, it had likely slipped my mind that the front page does indeed list the £32.1m as “cash flow” and not “free cash flow”.

My confusion about the free cash flow statement likely came from page 14, where there is a section titled “free cash flow”, and the final line reads £32.1m. Indeed, before we remove the equity issuance and borrowings and some other adjustments, we get the £213m you refer to, and it is an improvement over £339m last year.

The approx £500m cash outflow calculation I cited came from page 21, which shows the consolidated cash flow statement. Taking the net cash flow figure of £32.1m, I subtracted the £77.6m from the share issuance, the £200m from borrowings and the £250m RCF drawdown to get to (£495.5m). The calculation was made to present the actual cash outflow had ASOS not had these 3 options at their disposal, which was the case last year. I believe it was good to present it this way, as a situation may arise in the future where ASOS will not have such options, and will need to operate the business without such heavy reliance on equity issuance, RCFs and borrowings. Curious to hear your thoughts on this.

Apart from that, certainly quite poor forward guidance, and this market has been very unforgiving to such guidance as of recent. My hope is that they’ve set the bar quite low, so that meeting expectations (and hopefully exceeding them) shouldn’t be too much trouble - however I said a similar thing about CINE and we saw what happened after! Must be more prudent and not see anything through rose-tinted glasses this time!

Hope you’re doing ok after the entire fiasco - glad to see you around LSE still :)

Cont.

- ASOS' net interest expense has more than doubled from last year. However when we calculate their interest coverage ratio and take out the figures attributed to depreciation and amortisation, we get an ICR of about 2.34, which isn't too bad (in my opinion, I am far from a financial analyst or adviser).

- The cash flow statement is very poor. This is the second period in a row that a large loan or RCF draw-upon has massively improved the cash flow figures. ASOS reported a "free cash flow" of £32.1m, but if we remove the loan, the equity financing and the RCF drawdown (all three things were non-existent last year), we actually get a cash outflow nearly £500m - last year we had an outflow of £339m. ASOS wasted no time in plonking the "free cash flow" on the front page, but failed to tell you front and centre that this period was entirely reliant on borrowings and debt - closing cash and cash equivalents last year were £323m, without the additional debt and equity financing, ASOS would have had insufficient money to run the business. Not great, and certainly not fair to attribute the £32.1m as free cash flow in my opinion, but thought I would place this point here. If anyone disputes these figures, please do let me know - I am not immune to mistakes :)

-Cash and undrawn facilities currently at £428m, over £200m less than last year - this is likely due to the reduction in the RCF earlier this year.

- According to ASOS' accounting predictions, they can survive an additional 30% reduction in sales on top of the -5-15% they're expecting next year, or up to a 6.5% reduction in gross margin from their "base case" - before facing significant problems.

- ASOS is currently facing legal proceedings in "overseas territories" according to page 36, regarding potentially over-claimed VAT. If they are found to have done so, the expected repayment is estimated to be around £90m, and they will need to reclaim the money from suppliers or reach agreements between the tax authorities and suppliers. ASOS currently does not know or predict the final outcome of the proceedings, and say that there are "facts supporting both sides".

Thanks for reading. I may has mis-construed or misunderstood something, and as previously mentioned, I am certainly not immune to a mistake. Please feel free to correct me if you feel I have made a mistake somewhere :)

I remain invested after today's results, and I plan to watch the price action over the coming weeks with the intention of slightly increasing my position. I still feel quite confident in the CEOs ability to deliver, but it will certainly take time.

Have a great evening.

Hello all, hope everyone is well.

Interesting day. On the whole, I am rather disappointed with today's results, but I decided I would share some things I found that I have not yet seen discussed here today.

- I was initially quite concerned about all the talking of increased marketing spend, but ASC did mention that the £30m increase amounts to just a 1% increase in their operating cost ratio. If properly executed, it could prove to be a very profitable endeavour.

-ASOS mentions that they have started to implement AI into their operations on Page 7. They have started to use something called GitHub Copilot, which is essentially a tool that helps their software engineers write code much quicker. This could end up being a big cost-saving down the road, but it isn't possible to tell how tangible this benefit will be in the medium term.

-ASOS is planning to expand their discounting to other channels. In a similar way to how the sample sale has been playing out, ASOS explains on Page 8 that they "may use off-site clearance channels" and that this may "sacrifice margin" but "limit cannibalisation". This could prove to be a good move, instead of mixing the unprofitable sale stock and the profitable full price stock, ASOS could see a good improvement by splitting the two.

- We have 5 months to go until the next Trading Update (unless we get a nice surprise).

-The number of Premier customers has declined by about 11% YoY (page 10). This is a slight concern, as Premier is presumably a strong retention method. ASOS cites that this is due to increasing subscription prices and the introduction of minimum order thresholds for free delivery. Quite interestingly, however, ASOS goes on to mention in page 10 that the increased price only lasted about 6 months before being reversed - I will be keeping a close eye on this metric in the future and hope to see a recovery and subsequent increase in Premier customer numbers.

-The US and RoW segments have been shattered - I simply cannot believe that a 14% sales decline in the US and 16% sales decline in RoW is solely down to their attempts to churn unprofitable customers and high inflation. Thankfully, these two segments do not compose a large proportion of our total business, but I would like to see these numbers on the rise again.

- Despite the disappointing forward guidance, the CEOs plan seems to be working, with gross margin up and net debt down. It is nice to see at least some progress on this front.

continued in this thread.......

Very excited for Black Friday based on what Jose has said, I will ensure to put some extra aside from my next payslip to take advantage of that.

I know that increased discounting isn't a good thing from a shareholder perspective, but as a customer, I've been overjoyed. I've been able to get some really good brands, sometimes -40 or -50% off.

It would be more accurate to compare apples to oranges than to compare SHEIN and ASOS, let alone any talk of SHEIN taking up any tangible or material level of market share. The demographics that each platform attracts are broadly different from one another. 20-somethings that are shopping on ASOS are not looking for cheap rubbish in the first place... surprised that this is still something that is being spoken about.

Currently reading the report cover to cover.

At the end of the CEOs letter on page 8, has anyone noticed that he says the H1 update will be delivered in March 2023, and the HY will be delivered in April 2023? It’s supposed to be 2024!

I was planning to buy back at 590 once the bed bugs started in the UK - I said the pull back was fair considering the situation!

Just waiting for the carnage to end before putting anything inside.

Do we all really think that the CMA will authorise Flixbus to take over MCG? That would put them at huge market disadvantage as they would own two of the largest coach operators in the UK - CMA may argue that it could hurt competition?

With regard to the CEO, yes he hasn’t given us the growth we all wanted, but at least this thing isn’t bankrupt. They’re doing good in terms of the deleveraging. If they attempted to sell NA last year, would we have really gotten the best price when everyone knew that trade unions were scrapping for huge pay rises? Then again, the deal we got with them after wasn’t very good either.

I think a new CEO with a straight vision could be beneficial, look at ASC, new CEO implemented and so far all is looking good. James Stamp - no idea what is happening there, it would be better to give no forecast or prediction at this point. Maybe refresh could be very good, ultimately we have no power over that, we’ll just need to see what the big players do, I can imagine Cosmen maybe kicking up a fuss to remove Garat, wasn’t Garat handpicked by them? As someone mentioned, could it be a strategic play by Cosmen to get the Spanish division? Not everyone invests in companies for the money, some do it for strategy look at Mike Ashley.

Sold off around 25% of my holding today for a reduced loss.

Fantastic news, and it is also big news relative to the debt level, but you can’t forget that this company lost £100m+ just as announced a few weeks ago. No point doing something to reduce the debt if you’ll have to increase it again later.

The company still has some time to go. I predict that once the proposal has been approved, we’ll see another spike in the sp and then I’ll sell off the bulk of my holding. I still intend to hold some as this remains a huge turn around play, but the risk level is now higher than before, particularly with hilco involved and SDRY still sustaining huge losses with no clear end to the bleeding yet.

@Forest - I haven’t read what type of debt it is, but presumably this is just a conventional loan and they pay the 11% interest regardless of whether they use the money or not?

Unless if this is an RCF or some similar facility where interest only applies when drawn upon?

Seems a bit of an extreme movement in the share price for a CMA review no? What are the CMA going to do, tell them to cap prices? That is one of the only situations I can see where a 30% drop would be justifiable.

Haven’t done much research into CVSG, but based on the past few years they seem to have a nice history of solid returns. Dividend (although very small) is also a plus. I should take a look before market close today.