ASOS Regulatory News (ASC)

30 April 2013

ASOS plc

Global Online Fashion Destination

Interim Results for the six months ended 28 February 2013

Summary results table

1Includes retail sales, delivery receipts and third party revenues

2Underlying earnings per share has been calculated using profit after tax but before exceptional items

3Earnings per share has been calculated using profit after tax including exceptional items of £nil (2012: £1.5m)

4Cash and cash equivalents less bank borrowings

Highlights:

·; Retail sales up 34% (UK retail sales up 26%, International retail sales up 39%)

·; Retail gross margin down by 60bps and gross margin down by 90bps

·; International retail sales accounted for 61% of total retail sales (2012: 59%)

·; Profit before tax and exceptional items up 11% to £25.7m (2012: £23.1m)

·; Profit before tax and exceptional items up 18% to £27.2m excluding £1.5m Long Term Incentive Plan charge

·; Net funds of £45.2m (2012: £12.7m)

·; 6.0 million active customers5 at 28 February 2013 (2012: 4.3 million)

Nick Robertson, CEO, commented:

"I am pleased to report another strong performance for ASOS for the six months ended 28 February 2013, with retail sales up 34% to £352.3m (2012: £262.9m) and profit before tax and exceptional items up 11% to £25.7m (2012: £23.1m).

We have continued to invest in all aspects of the customer offer to maximisethe growth opportunity; investing in product price and quality, enhanced delivery options, a broad range of marketing initiatives, focused local teams in international territories and continual improvement to our technology platforms, most notably mobile and international sites. Progress on our dedicated sites for both Russia and China remains on track. We are already seeing the benefits of this investment across all territories with increased customer awareness, increased shopper frequency, higher conversion rates, more items per basket and strong sales growth. At the same time we have reached the milestone of six million active customers worldwide.

Momentum is strong, and we remain positive in our outlook for 2012/13 as we continue our journey to becoming the number one online fashion destination for twenty-somethings, globally. Our International roll out continues and our £1 billion sales ambition for the Group is firmly in our sights."

5Defined as having shopped in the last 12 months

Investor and Analyst Meeting

A meeting for investors and analysts will take place at 9.30am today, 30 April 2013, at Etc. Venues, 200 Aldersgate, EC1A 4HD. A webcast of the meeting will be available at www.asosplc.com/investors.

For further information:

Background note

ASOS is a global online fashion and beauty retailer selling over 60,000 branded and own-label products to fashion forward twenty-somethings through our website, asos.com. We ship, for free, to 241 countries and territories from our 1.1 million square foot global distribution centre in the UK.

We tailor the mix of own label, global and local brands sold through each of our seven local language websites: UK, USA, France, Germany, Spain, Italy and Australia.

ASOS's websites attract 19.8 million unique visitors a month (February 2012: 15.6 million), and as at 28 February 2013 had 11.1 million registered users (29 February 2012: 7.8 million) and 6.0 million active customers* (29 February 2012: 4.3 million) from 241 countries and territories.

*Defined as having shopped in the last 12 months

www.asos.com 

www.us.asos.com

www.asos.de

www.asos.fr

www.asos.com/au

www.asos.it

www.asos.es

m.asos.com

marketplace.asos.com

fashionfinder.asos.com

ASOS plc ("the Company")

Global Online Fashion Destination

Interim Results for the six months ended 28 February 2013

Business Review

The Group has performed strongly in the period, with revenues up 33% to £359.7m (2012: £269.9m) and profit before tax and exceptional items up 11% on the comparative period at £25.7m (2012: £23.1m).

Our Fashion

Our product offer remains focused on our global twenty-something customer and we have continued to invest in improving the value of our own-brand offer. This "first price right price" approach resulted in a higher mix of full price sales and a reduction in markdown spend. We continually review our branded and own-label ranges and add c2,000 new lines per week to ensure we lead fashion trends and keep product ranges relevant for our customers, and to drive engagement and frequency of traffic.

Although we have commenced rationalisation of our supplier base, we are looking to put greater emphasis on this in future through establishing a dedicated sourcing team. This will enable us to drive retail gross margin efficiency and reduce lead times, whilst not compromising on either fashionability or quality.

ASOS own-label continues to be highly sought after in both the UK and internationally and accounted for 52.4% of total sales during the period (2012: 52.5%). During the last six months we have launched several exclusive designer collaborations including Markus Lupfer for ASOS Black, Marios Schwab Lingerie, Antipodium Shoes, Elliot Atkinson Nightwear and Puma for ASOS Black Menswear. We also continued to support local communities in Kenya through our ASOS Africa range.

Despite a highly competitive market our womenswear offer has performed strongly during the period. Our efforts to add more diversity into the range through an enhanced offer of separates and casualwear has been well received by customers and has driven strong growth. We have also expanded our range in our specialist sizing areas; Petites, Curve and Maternity. These areas have performed exceptionally well during the period and continue to gain momentum. We will continue to review and expand the range of sizes we offer in response to customer demand.

Menswear continued to grow strongly and accounted for 26% of total sales (2012: 24%). Our own-label menswear offer is becoming more established and is growing as a proportion of menswear sales.

Third-party brands remain very important to ASOS and we have continued to refine our third-party brand offer to ensure that it remains relevant to our twenty-something customer. As we expand globally, we are also introducing more brands with particular relevance to our international territories. During the period we have added new brands including New Look, Only, Boy London, House Of Hackney, B+AB and White Chocolate to our brand portfolio.

Operations

Technology

We continue to enhance the engaging customer experience of our websites, ensuring the ASOS platform permeates our customers' fashion lives and positions ASOS as a global online community of fashion lovers. A key part of this is creating technology that can be accessed by customers across the globe 24/7 from whichever device they chose. Mobile and tablets combined now account for almost 30% of ASOS traffic and this continues to grow rapidly. To ensure we are able to take full advantage of this, our enhanced English-language mobile site was launched during April 2013 and we will shortly be refreshing our iPad and iPhone apps and introducing an Android app, whilst concurrently launching local language sites in our strategic markets.

During the period, we added new functionality to our main site including 'buy-the-look', which allows customers to easily purchase an entire outfit when viewing a particular product, 'recently-viewed' which provides for quick access to the most recently viewed products, we improved our search results capability and launched a trial of 'Live Style Advice' where our team of stylists help our customers find items, deliver a more engaging experience, and build brand engagement. In April 2013, we launched a trial of our ASOS fit prediction tool. This increases engagement and satisfaction by allowing our customers to upload the dimensions of a garment they own or simply indicate a previously purchased product and then compare it to a product onsite to ensure correct fit. We have also significantly expanded our ability to continually test small optimisations to our website that lead to incremental improvements in conversion and sales.

We also continue to work on our underlying infrastructure including enabling our platforms to handle all language character sets and making structural changes to our checkout process to allow us to add new payment methods and functionalities as we expand globally. As part of this process, we added new payment methods for our customers based in Germany and The Netherlands, and are already seeing improved sales growth in these countries as a result.

Delivery and Returns

Delivery and returns solutions continue to be a cornerstone of our engaging customer experience and profitable international growth strategy. We have delivered further improvements to our UK proposition over the last six months including extending the next day delivery cut-off from 18:00 to 20:00, introducing an improved text messaging service providing delivery information, and reducing the price of our Premier service. We also continue to make improvements to our global customer proposition.

Warehousing

The strong performance of the Barnsley warehouse continues with an improvement in average labour cost per unit over the period of 12% compared to last year, despite making no significant changes to the operating model during the past twelve months. Average labour cost per unit during February 2013 was £0.58 (2012: £0.71). During the period we obtained HMRC approval to operate a bonded (customs) warehouse and this was launched successfully within the Barnsley site at the end of January 2013. Customs warehousing will provide ASOS with a cash flow benefit in the current financial year and will also speed up receipt of our inbound stock. The programme to optimise the Barnsley hub continues and we commenced the first stage of our mechanisation plans, which will deliver an automated despatch sorting process. Following the recent reductions in average selling price per unit, approval has been gained to extend our Barnsley site by 25% by 2014 which will provide capacity to accommodate the required unit volumes to meet our £1bn sales target by 2015 and beyond.

Global expansion

In-country teams now operate in our five key 'strategic' country targets, being the UK, US, Australia, France and Germany, and we are seeing strong growth in these territories as a result. Our next focus is on 'tactical' countries, and we already have dedicated websites in Italy and Spain and are now focussing on our expansion into the People's Republic of China and the Russian Federation.

Expansion into the Chinese market is an integral part of our strategy to be a truly global retailer. We have completed an in-depth review of the Chinese market, including the customer base, use of internet and social media, logistics and delivery options as well as product sourcing and storage. As a result, the operating model for ASOS China will differ from our other international activities and will include a standalone technology platform, local third-party distribution centre, local delivery solutions and payment methods, and a larger multi-disciplinary in-country team. This will give us the right platform to provide a proposition tailored to our Chinese customers and to maximise the long-term potential from this exciting market. Our third-party logistics and customer care partners have now been chosen, a general manager has been appointed and we are confident of a successful launch early in the new financial year. The initial ASOS China website will contain a relevant edit of c10% of our full product range, which will expand as our Chinese business grows. We expect the net operating cost of setting up our Chinese operation to be c£4-6m during each of the years to 31 August 2014 and 31 August 2015, as we build the business to create the platform for future sales growth. This will be recognised within underlying operating profit. All capital expenditure associated with our expansion into China is included in guidance already given.

Developments to serve our Russian customers are on track and we will launch next month. This will follow the same model as our other tactical international operations, including a dedicated Cyrillic website and focused marketing team, and with all fulfilment taking place from our UK hub.

We also continue to build our market share in the strategic US market and have an established in-country team focussed on driving continued strong sales growth through targeted local marketing and social media activities. We already have a local returns solution to serve our US customers and continue to progress towards our ambition to implement fulfilment from returns in the US.

People

The Chairman of the ASOS Audit Committee and Senior Independent Director, Peter Williams, announced on 16 April 2013 that he will be stepping down from the Board of ASOS Plc with effect from the Company's Annual General Meeting on 4 December 2013. Peter has been with the Company for nearly eight years, during which time he has played an important role and we are very grateful to him for his contribution. The search for Peter's successor is currently underway.

On 24 April, ASOS's International Director, Jon Kamaluddin, announced his intention to step down from the Board of ASOS Plc in October 2013. We would like to thank Jon for his outstanding contribution to the success of ASOS during his nine years with the Company. The process of identifying a successor is currently underway and Jon will effect a smooth handover before his departure.

We have continued to strengthen our management capabilities to ensure our senior team has the diversity of skills, experience, and capabilities to deliver our growth ambitions. During the period we were joined by our new Executive Director: Product and Trading, a new Supply Chain Director, a new Chief Information Officer, and a new Director of Finance: Reporting and Control. We also appointed in-country managers in Germany and France, a new Head of Customer Relationship Management and Insight, and a new Womenswear Design Director.

To ensure we have the talent and capacity to continue to deliver enhancements to our websites and progress towards our goal of creating an online fashion community, we strengthened our technology resource by opening a new development office in Birmingham. This location provides access to a highly skilled talent pool whilst driving operating leverage.

The Group's total headcount increased by 82 employees during the last six months, principally in our Retail and Marketing departments and also in our International offices. We have secured a small team for our Russia office and have commenced recruitment of a team in the People's Republic of China.

As announced today, to incentivise the senior management team to deliver the planned growth of the Group, the Company is implementing a new Long Term Incentive Plan which will be open to Executive Directors and certain members of our senior management team. The plan has a three-year performance period beginning on 1 September 2012 and ending on 31 August 2015 and is subject to challenging earnings per share and total shareholder return performance targets. These performance targets are aligned to the business plans of the group and ensure that our growth is delivered in a profitable way. The plan includes a 'target' performance threshold which results in maximum vesting of 70% and equates to fully-diluted earnings per share for the year to 31 August 2015 of 73.7p and our current sales goal of £1 billion. There is also a 'stretch' performance threshold which would result in 100% vesting but which requires performance significantly beyond current goals, with fully-diluted earnings per share of 91.1p and sales of £1.3 billion. A non-cash charge of £1.5m has been recognised during the period in relation to this scheme. Further detail on the scheme has been disclosed in a separate announcement today.

As well as introducing the Long Term Incentive Plan, further grants were made to other members of our management team under our existing Performance Share Plan and we implemented our new Share Incentive Plan which offers every employee a number of free shares in the company to share in the continuing success of ASOS.

Trading operations

The Group has achieved another strong performance during the six months to 28 February 2013, with growth in customers, visits, orders, sales and profit across all territories. International sales growth continues to drive performance and now accounts for 61% of total retail sales compared to 59% in the comparative period.

Revenue

Total Group revenue increased 33%, with total retail sales up 34%, driven by 39% growth in our International retail sales and 26% growth in our UK retail sales.

The UK performed ahead of expectations during the period with growth of 26%. This was driven by a particularly strong performance during the peak December trading period and a positive response to our investment in the pricing architecture of our own-brand ranges. We remain at first place in the UK for unique visitors in the 15-34 age range (Comscore, February 2013).

Within our International markets, the US was the fastest growing segment with retail sales up 54%, driven by investment in digital marketing and social media and improvements to our service proposition. Rest of World sales continue to perform strongly, up 37%, with continued strong performances from Australia (where we have maintained our first place Comscore position) and Russia. Our EU growth of 36% was driven by strong performances in the countries where we have dedicated websites, particularly in France and Germany where we introduced in-country teams during the period. In the last six months we have moved to second place for 15-34 year old unique visitors globally (Comscore February 2013), up from fourth in August 2012.

Delivery receipts decreased 9% on the comparative period. This is a planned result of our continued investment in our delivery proposition, including trials in those countries where we have dedicated websites to waive the express delivery fee above a threshold basket value. In the UK, delivery receipts were down 36% on the comparative period as we improved the speed of our standard offer from six days in the prior year to four days this year, reducing customers' need to pay for express delivery. We also lowered the cost of the annual subscription to our 'ASOS Premier' service.

Third party revenues, which mainly comprise advertising revenues from the website and the ASOS magazine, increased by 90% on the comparative period. This was due to increased integrated advertising campaigns across multiple platforms.

Trading Key Performance Indicators

During February 2013, ASOS achieved 6.0m active customers3, growth of 41% over last year and a significant milestone as we aim to be the number one fashion destination globally. 58% of these customers are located in international territories which demonstrates the success of our international expansion, although there is still significant opportunity within the global twenty-something market. The 6% decline in average basket value was mainly driven by a 9% reduction in average selling price as a direct consequence of the restructuring and investment in our pricing architecture. Pleasingly, average units per basket showed an overall increase compared to the comparative period of 3%, reflecting quality, price and range improvements as well as new functionality such as our 'buy-the-look' feature.

1Including VAT 2During February

3As at 28 February, defined as having shopped with ASOS during the last 12 months

Gross profit

The Group generated gross profit of £179.6m during the period (2012: £137.2m), up 31% on the comparative period.

During the six months, Group retail gross margin decreased by 60bps to 48.9% (2012: 49.5%). This is in line with expectations and is the net result of significant investment in our own-brand product price points offset by savings in clearance and promotional markdown. This is most marked in the US as this segment buys the highest proportion of own-brand products. In the Rest of World segment, retail margin was unchanged despite this investment due to improved markdown management as this segment has historically consumed the highest proportion of markdown stock, as well as benefits from the receipt of inward processing relief. Group gross margin (including delivery revenues) also decreased by 90bps to 49.9% (2012: 50.8%).

ASOS maintains a strong focus on areas such as sourcing and markdown management as well as continually augmenting our retail disciplines, which includes the commencement of a rationalisation of our supplier base to deliver gross margin efficiency that subsequently can be reinvested in customer proposition and/or pricing, as appropriate.

Investment in our operating resources

ASOS has maintained tight control of costs and has delivered operating leverage and benefitted from economies of scale across its fixed cost base, whilst at the same time investing in the overall customer offer to continue to drive maximum growth levels.

The Group increased its investment in its operating resources and capability by 36% to £153.9m, excluding exceptional items (2012: £113.4m), whilst benefitting from economies of scale. Total operating costs ratio improved by 50bps excluding investment in our customer delivery proposition.

*H1 2011/12 comparatives reclassified. Reclassified costs for the 12 months to 31 August 2013 are Warehousing; £33,773,000 and Other Operating Costs; £31,096,000.

Despite investing in resource to maximise sales growth in our Retail and Marketing departments and in International offices, payroll costs have improved by 100bps to 8.4% of revenue. We have recognised a non-cash charge during the period of £1.5m in relation to our new Long Term Incentive Plan.

The impressive performance of our warehouse has continued to drive operating cost leverage, with a decline in average labour cost per unit for the period of 12% on prior year, resulting in an increase of only 28% in total warehouse costs compared to a 40% increase in the number of orders.

We continually invest in our customer proposition and since last year have reduced delivery times and improved distribution service levels. Distribution costs have, as a result, increased by 45% on the comparative period due to sales growth, faster delivery times and an increased proportion of tracked parcels, all on the back of increased customer demand.

We have invested in increased marketing activities during the period, both in digital marketing and country-specific campaigns, particularly in our strategic markets of the UK, France, Germany, Australia and the US. This included targeted Christmas campaigns in the UK and US, a multi-channel awareness campaign in Australia and local magazine partnerships in France and Germany. The results of these activities are already visible in the strong growth seen during the period, and we expect continued returns on this investment in each of our strategic markets over a twelve-month period.

Depreciation has increased to 1.8% of revenue as a result of increased investment in IT infrastructure during the last year.

Group Profit

The Group generated profit before tax and exceptional items up 11% on the comparative period at £25.7m (2012: £23.1m). Excluding the non-cash Long Term Incentive Plan charge, profit before tax and exceptional items increased by 18%.

Exceptional items

The transition to our new warehousing facilities was completed by 31 March 2012 and all related property provisions were utilised by 31 August 2012. There is therefore no exceptional cost or cash outflow during the six month period to 28 February 2013.

Taxation

The effective tax rate before exceptional items for the Group was 24.6%, 180bps lower than the prior year (2012: 26.4%). Including exceptional items the effective tax rate was 24.6% (2012: 26.6%). Going forward, we would expect the effective rate of tax pre-exceptional items to be around 1% higher than the prevailing UK corporation tax rate due to permanent disallowable items.

Earnings per share

Basic underlying earnings per share1 increased by 6% to 23.7p per share (2012: 22.3p), and diluted underlying earnings per share1 increased by 14% to 23.3p per share (2012: 20.5p). Excluding the Long Term Incentive Plan charge, diluted underlying earnings per share1 increased by 20% to 24.7p per share.

Basic earnings per share2 increased by 14% to 23.7p per share (2012: 20.8p), and diluted earnings per share2 increased by 22% to 23.3p per share (2012: 19.1p).

Dividend

The Board is of the opinion that shareholder's interests are best served by continuing to reinvest the cash generated by the business to drive further growth and to exploit opportunities both in the UK and Internationally. Accordingly, it has decided not to pay a dividend for the six months ended 28 February 2013. This policy remains under regular review.

1 Underlying earnings per share has been calculated using profit after tax but before exceptional items.

2 Earnings per share has been calculated using profit after tax and exceptional items.

Statement of Financial Position

The Group enjoys a robust financial position including a strong cash balance and a clean stock position as we exit the winter season. During the six month period, net assets increased by £23.0m to £129.0m (31 August 2012: £106.0m), driven by profit after tax for the period. The summary Statement of Financial Position is shown below.

* Cash and cash equivalents less bank borrowings

Statement of Cash Flows

The Group generated cash of £17.3m during the period (2012: £3.5m) and the closing cash balance was £45.2m at 28 February 2013, up from £27.9m at 31 August 2012. Net funds were £45.2m (31 August 2012: £27.9m). The summary Statement of Cash Flows is shown below.

Cash generated from operating profit before exceptional items increased by £4.3m, largely due to EBITDA improvements of £3.9m. The cash outflow from working capital improved by £0.7m due to improved stock management and a £2.0m duty and VAT benefit as a result of gaining bonded warehouse status, partially offset by timing of creditor payments. Capital expenditure was lower than in the prior year due to the phasing of expenditure in the current year, with capital expenditure weighted towards the second half of the year, as well as timing of payments.

Our investments are funded by operating cash flows, with additional short-term and medium-term facilities to support working capital movements and planned capital expenditure. At 28 February 2013, the Group had in place an undrawn £20.0m revolving loan credit facility which includes an ancillary £10.0m guaranteed overdraft facility and which is available until July 2015.

Fixed asset additions

The majority of fixed asset additions were related to improvements in our underlying IT infrastructure to support future growth and ensure we provide a truly global offering to all our customers. We have also commenced investment in mechanisation of our warehouse despatch sorting process to drive future operating cost efficiencies.

Outlook

We remain confident in our outlook for the remainder of the financial year with our International operations continuing to drive growth, and encouraging performance in our UK business. Momentum is strong, our plans for expansion into Russia and China are on track, and our £1 billion sales ambition for the Group is firmly in sight. 

Unaudited Consolidated Statement of Comprehensive Income

For the six months ended 28 February 2013

1 Earnings per share is calculated in accordance with IAS 33 'Earnings per share' and includes exceptional items

2 Underlying earnings per share excludes exceptional items

Unaudited Consolidated Statement of Changes in Equity

For the six months ended 28 February 2013

1Retained earnings includes the share-based payments reserve

Unaudited Consolidated Statement of Financial Position

As at 28 February 2013

Unaudited Consolidated Statement of Cash Flows

For the six months ended 28 February 2013

Reconciliation of net cash flow to movement in net funds

Notes to the Unaudited Interim Financial Information

For the six months ended 28 February 2013

1. Basis of preparation, accounting policies and approval of Interim Statement

a) Basis of preparation

The Interim Financial Statements for the six months ended 28 February 2013 have been prepared in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the Group's Annual Report and Accounts for the five months ended 31 August 2012, which have been prepared in accordance with IFRSs as adopted by the European Union.

The Group's business activities together with the factors that are likely to affect its future developments, performance and position are set out in the Business Review. The Business Review describes the Group's financial position, cash flows and borrowing facilities. The principal risks and uncertainties facing the Group for the six months ended 28 February 2013 remain unchanged from those set out in the Annual Report and Accounts for the five months ended 31 August 2012 and are applicable to the remainder of the financial year to 31 August 2013. The Annual Report and Accounts for the five months ended 31 August 2012 includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk.

The directors have reviewed current performance and forecasts, combined with expenditure commitments, including capital expenditure. After making enquiries, the directors have a reasonable expectation that the Group has adequate financial resources to continue its current operations, including contractual and commercial commitments for the foreseeable future despite the current uncertain economic outlook. For this reason, they have continued to adopt the going concern basis in preparing the financial statements.

b) Financial information

The financial information set out in this report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The Annual Report and Accounts for the five months ended 31 August 2012 has been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under s498(2) or s498(3) of the Companies Act 2006.

The Interim Financial Statements are unaudited and were approved by the Board of Directors on 29 April 2013.

c) Accounting policies

The Financial Statements have been prepared in accordance with the accounting policies set out in the Annual Report and Accounts for the five months to 31 August 2012.

d) Exceptional items

The Group separately identifies and discloses significant one-off or unusual items which can have a material impact on absolute profits. These are termed 'exceptional items' and are disclosed separately in the statement of comprehensive income in order to provide an understanding of the Group's underlying financial performance. Exceptional items are judgemental in their nature and may not be comparable to similarly titled measures used by other companies. Further details of exceptional items are included in Note 3 to this release.

2. Segmental analysis

IFRS 8 'Operating Segments' requires operating segments to be determined based on the Group's internal reporting to the Chief Operating Decision Maker ("CODM"). The CODM has been determined to be the Executive Board. The Executive Board has determined that the primary segmental reporting format is geographical by customer location, based on the Group's management and internal reporting structure. The Executive Board assesses the performance of each segment based on revenue and gross profit after distribution expenses, which excludes administrative expenses and exceptional items.

2. Segmental analysis (continued)

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 CODM in the monthly management accounts therefore no measure of segments assets or liabilities is disclosed in this note.

There are no material non-current assets located outside the UK.

3. Exceptional items

During the six months to 28 February 2013, exceptional costs of £nil were charged to operating expenses. In the prior period exceptional costs of £1,508,000 were charged to operating expenses to reflect the direct costs of the completion of the reorganisation of distribution following the leasing of a new distribution centre to meet the increasing capacity needs of the business. The reorganisation was completed by 31 March 2012.

The main components of the exceptional charge are as follows:

4. Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of the Parent Company by the weighted average number of ordinary shares in issue during the period. Own shares held by the ASOS.com Limited Employee Benefit Trust are eliminated from the weighted average number of ordinary shares.

Diluted earnings per share amounts are calculated by dividing the profit attributable to the owners of the Parent Company by the weighted average number of ordinary shares in issue during the period, adjusted for the effects of potentially dilutive share options.

4,000,822 shares issued on 31 May 2012 under the Management Incentive Plan are included within weighted average shares in issue for basic earnings per share. These shares were included within weighted average shares in issue for diluted earnings per share at 29 February 2012. At 31 August 2012, 2,405,723 of these shares were included in weighted average shares in issue for basic earnings per share and the remainder were included in weighted average shares in issue for diluted earnings per share.

1Underlying earnings per share has been calculated using profit after tax but before exceptional items.

2Earnings per share has been calculated using profit after tax and exceptional items.

5. Reconciliation of net funds

The Group has a £20.0m revolving loan credit facility which includes an ancillary £10.0m guaranteed overdraft facility and which is available until July 2015.

6. Related parties

The Group's related parties are its joint venture, Employee Benefit Trust and key management personnel. There have been no material changes to the related party transactions during the interim period under review.