FOOT.L Regulatory News (FOOT)

19 June 2018

This announcement contains inside information

Footasylum plc

Full Year Results

Strong revenue growth across all channels and product categories

Footasylum plc ("Footasylum" or the "Company"), the UK-based fashion retailer focusing on branded footwear and apparel, today announces its full year results for the 52 weeks ended 24 February 2018 ("FY18").

Financial highlights

· Strong underlying performance in FY18

· Revenue up 33% to £194.8m, (FY17: £147.0m) with strong growth across all channels and product categories

o Online sales up 41%, now accounting for 30% of total revenue (FY17: 29%)

· Adjusted EBITDA up 12% to £12.5m (FY17: £11.2m)

o Adjusted EBITDA margin of 6.4% (FY17: 7.6%), down 120bps in FY18, due to lower gross margin and planned investments in central functions

· Adjusted profit before tax up 4% to £8.4m (FY17: £8.1m)

· Profit before tax of £1.9m (FY17: £8.1m), after exceptional items of £6.0m and the share-based payment charge of £0.4m (FY17: nil)

· Cash balances increased to £11.4m at year end, reflecting IPO proceeds and growth of the Company (25 February 2017: £2.8m)

Operational highlights

· Opened 10 new stores, refitted two stores and upsized seven stores

· Continued investment in the footasylum.com website and further investment in other online platforms with the launch of an own brand website, and apps for Footasylum, Kings Will Dream and SEVEN

· New wholesale channel creating opportunities for own brands

· Distribution space doubled to 278,000 sq ft, with the opening of a second warehouse facility in Rochdale

· Investment in a new in-house studio in Manchester for design, photography and videography

· Barry Bown, former CEO of JD Sports Fashion plc, joined the Company in a consulting role on 1 March 2018 and joined the Board as Executive Chairman on 1 June 2018

· Headcount grew by 21% to 2,270 employees at the year end (25 February 2017: 1,869)

Clare Nesbitt, Chief Executive of Footasylum, commented:

"We are pleased to report a strong performance for the financial year, our first as a quoted company following our successful IPO last November. We have delivered broad-based growth across all of our channels and product categories, while also continuing to invest in our infrastructure and talent in order to support further long-term expansion.

While our core target market of the 16 to 24-year-old consumer has proved to be comparatively resilient in a downturn, our trading since the beginning of the new financial year has undoubtedly been impacted by the widely documented weak consumer sentiment on the high street.

Despite this, we are confident that continued investment in digital and in our stores will allow the Company to deliver strong revenue growth for the full year in line with market expectations. This includes increased investment in our consumer offering ahead of our usual peak trading period in the second half and delivering additional store upsizes alongside new store openings. However, this will have an associated increase in both expected capital expenditure and property costs for the current year and as a result, we now anticipate that, adjusted EBITDA for FY19 is likely to show more modest growth than in FY18.

In the longer-term, we remain confident that the Company's differentiated, product-led, multi-channel proposition, combined with strong partnerships with core suppliers, will underpin its continued progress."

Investor and analyst meeting

A meeting for analysts will be held today at the Andaz Hotel, 40 Liverpool St, London EC2M 7QN commencing at 9.00am. Please contact Powerscourt on the details below for further information or to confirm attendance. A copy of the presentation will be available on the Company's Investor website: http://investors.footasylum.com/.

Footasylum expects to announce its results for the six months ending 25 August 2018 on 16 October 2018.

Enquiries:

Footasylum plc Tel: +44 (0) 1706 714 265

Clare Nesbitt, Chief Executive Officer

Barry Bown, Executive Chairman

Danielle Davies, Chief Financial Officer

GCA Altium Limited (Financial and Nominated Advisor) Tel: + 44 (0) 20 7484 4040

Phil Adams

Sam Fuller

Liberum Capital Limited (Broker) Tel: +44 (0) 20 3100 2222

John Fishley

Jill Li

Powerscourt (Financial Public Relations) Tel: + 44 (0) 20 7250 1446

Rob Greening

Lisa Kavanagh

Isabelle Saber

Customer website: https://www.footasylum.com/  

Investor website: http://investors.footasylum.com/

Notes

1 Adjusted EBITDA is stated as earnings before interest, tax, depreciation, amortisation, exceptional items and the share-based payment charge.

2 Adjusted profit before tax is stated as adjusted EBITDA after interest, depreciation and amortisation.

3 Non-GAAP adjusted diluted earnings per share ("EPS") is stated as profit after tax ("PAT") before exceptional items and the share-based payment charge per the diluted issued ordinary shares as at 24 February 2018 for both FY18 and FY17.

Disclaimer

This announcement contains inside information for the purposes of article 7 of EU Regulation 596/2014. The person responsible for making this announcement on behalf of Footasylum is Nancy Kelsall, Company Secretary.

Certain statements in this financial report are forward looking. Where the financial report includes forward-looking statements, these are made by the Directors in good faith based on the information available to them at the time of their approval of this report. Such statements are based on current expectations and are subject to a number of risks and uncertainties, including both economic and business risk factors that could cause actual events or results to differ materially from any expected future events or results referred to in these forward-looking statements. Unless otherwise required by applicable law, regulation or accounting standards, the Group undertakes no obligations to update any forward-looking statements whether as a result of new information, future events or otherwise. This announcement does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any Footasylum plc shares in the UK, the US, under the US Securities Act 1933 or in any other jurisdiction.

About Footasylum

Footasylum is a UK-based fashion retailer focusing on the branded footwear and apparel markets. The Company retails "on-trend" product ranges which are predominantly aimed at 16 to 24-year-old fashion-conscious consumers and are sourced from an extensive stable of third-party and own brands. These include well-known sports and casual footwear and apparel brands, as well as up-and-coming brands and own label products.

Examples of third-party brands include: adidas; Nike; The North Face; Gym King; Converse; New Balance; EA7; Vans; Nicce London; Under Armour; Tommy Hilfiger; and Calvin Klein. Examples of Footasylum's own brands include: Kings Will Dream and Alessandro Zavetti.

The Company operates a multi-channel model which combines a 65-strong store estate - in a variety of high street, mall and retail park locations in cities and towns throughout Great Britain - with a fast-growing online platform and a recently launched wholesale arm for distributing its own brand ranges via a network of partners.

Footasylum was founded in 2005 and the Company's ordinary shares were admitted to trading on AIM in November 2017.

EXECUTIVE CHAIRMAN'S STATEMENT

This is Footasylum's first full year results as a public company following our admission to trading on AIM in November 2017 (the "IPO"). It is also my first opportunity, having taken on the role of Executive Chairman in June 2018, to welcome shareholders who have joined the Company on or following the IPO. The Board was delighted with the support we received for the IPO which, together with the refinancing of our banking facilities in July 2017, will enable us to continue to invest and capitalise on further growth opportunities in the years to come.

FY18 was another good year of disciplined growth for the Company, with revenue up 33 per cent to £194.8 million. Our adjusted EBITDA increased by 12 per cent to £12.5 million and we invested in our infrastructure and talent to support further growth.

I would like to thank John Wardle who, as our previous Executive Chairman and before that as Chief Executive Officer, played such an important leadership role in helping to build Footasylum into the retailer we are today. I bring many years of experience and contacts in the industry to Footasylum, especially when it comes to developing strong brand-retailer relationships, so I am confident that we can continue to enhance our competitive position in the market.

Exciting shopping experiences

I am enthused by Footasylum's prospects and the ability of its people to deliver value for our shareholders. This is a great time to join the business, after more than 10 years that have seen the Company create an exciting shopping experience on the high street, in retail malls and, importantly, online. We have much work ahead of us as we expand our thinking as well as our retail footprint but we stand ready as a business that is fit for a digital age. Our online sales are growing and we are investing in the technology we need to continue improving consumer engagement.

Governance and financial discipline

While Footasylum continues to be an agile and dynamic business I am pleased to report that we are fully committed to supporting high standards of corporate governance and applying strong financial discipline to our growth plans and day-to-day operations.

We operate appropriate measures to comply with the Quoted Companies Alliance Code for small and mid-sized quoted companies across the organisation. This has helped us enhance our corporate governance arrangements and we hope it will encourage positive engagement between the Company and its shareholders.

At the time of our IPO the leadership team was further strengthened with the appointment of two new Non-Executive Directors to our Board, Stephen Robertson and Brendan Hynes. We are already benefiting from their experience and knowledge and look forward to their contributions in the years to come.

Capital structure and dividend policy

The Board is satisfied that the current capital and funding structure of the Company is robust, allowing it to invest in the systems and stores that will fuel future growth. In the short-term, as disclosed at the time of the IPO, we will retain the Company's earnings for re-investment to continue funding this growth. Therefore, we are not proposing a final dividend for FY18. Ultimately, it is the Board's intention to pursue a progressive dividend policy which will be balanced against the need to retain sufficient earnings to expand and develop the Company.

Our COLLEAGUES

In FY18, we have expanded and restructured several of our teams and attracted and retained top talent who remain committed to delivering on our strategic objectives. We are a business focused on delivering sustainable long-term growth and our colleagues across the business are committed to this objective.

I would like to take this opportunity to thank our senior management team and all our colleagues for their hard work, energy, innovation and seamless teamwork that has delivered an exceptional consumer experience and business performance during the year.

The future

The UK retail environment remains uncertain, not least with the ongoing negotiations of the UK's exit from the European Union and the impact of weak consumer sentiment on the high street. However, we have a differentiated, multi-channel business model that positions us well for robust long-term growth.

We see significant opportunities to deliver further growth through disciplined store upsizes and openings and the continued expansion of our digital sales channels. The Company is currently targeting a number of store upsizes in key locations and up to eight new stores per annum in the medium-term, with a view to building a total estate of around 150 stores in the UK. Footasylum is also developing a greater digital presence and is targeting 50 per cent of total revenue to come from online and wholesale channels in the medium-term.

Footasylum is well-positioned to take advantage of the opportunities that lie ahead. With our brand differentiation and deep understanding of our consumers, a growing online presence in both domestic and international markets and a dynamic diversified business model, that now includes a meaningful wholesale operation, I am excited about the Company's future.

Current trading and outlook

While our core target market of the 16 to 24-year-old consumer has proved to be comparatively resilient in a downturn, our trading since the beginning of the new financial year has undoubtedly been impacted by the widely documented weak consumer sentiment on the high street.

Despite this, the Board is confident that continued investment in digital and in our stores will allow the Company to deliver strong revenue growth for the full year in line with market expectations. This includes increased investment in our consumer offering ahead of our usual peak trading period in the second half and delivering additional store upsizes alongside new store openings. However, this will have an associated increase in both expected capital expenditure and property costs for the current year and as a result, the Board now anticipates that, adjusted EBITDA for FY19 is likely to show more modest growth than in FY18.

In the longer-term, the Board remains confident that the Company's differentiated, product-led, multi-channel proposition, combined with strong partnerships with core suppliers, will underpin its continued progress.

Barry Bown

EXECUTIVE CHAIRMAN

CHIEF EXECUTIVE OFFICER'S STATEMENT

The key pillars to our growth strategy remain the continued development of our online and digital marketing platforms, our disciplined UK store roll out and the expansion of our new wholesale operation alongside the growth of our own brand products.

Phase of growth

We have built an energetic, well-respected business since opening our first Footasylum store in March 2006. From day one our strategic objective was to collaborate and bring together global brands and smaller niche brands, including our own brands, to serve the consumer in a hyper-personal way. Our stores are all tailored towards their local market and we are building on our digital capabilities, both to boost our online sales and to launch engaging social content. We understand our target audience, and through our stores and digital content our target audience understands us - as specialists across the full spectrum of urban fashion.

We continue to specialise in identifying, developing and driving the trends that shape the markets we operate in. Footasylum is in a significant phase of investment - we are not a 'like-for-like' business. We are pushing forwards and investigating new directions based on the strong platform we have created, and the investments we have made in the last year in our people, digital capabilities, stores and infrastructure.

Our IPO in November 2017 was also a significant step for our business. It takes us to the next level, imposing controls that we have largely taken on voluntarily over the years, but also providing the funds we need for future growth and enabling us to develop relationships with shareholders who have a new interest in our business.

Strong UNDERLYING financial PERFORMANCE

The UK's retail market remains a tough trading environment. However, the overall value of the clothing and footwear market in the UK is still expected to grow over the next five years, according to data from GlobalData, and we believe that our highly differentiated offering and hyper-local approach gives us an edge.

For FY18, I am delighted to report to all our shareholders that we made strong progress on sales, both online and in our stores. Combined with careful cost control throughout the year this has helped us deliver good underlying growth in profits.

Total revenue was £194.8 million in FY18, an increase of 33 per cent compared to the prior year (FY17: £147.0 million). Digital sales played a significant role in the overall growth, contributing £59.0 million in FY18, an increase of 41 per cent.

Revenue from stores rose to £133.2 million (FY17: £105.0 million), reflecting good underlying growth as well as 10 new Footasylum store openings during the year and the successful upsizing of a number of stores in existing locations.

Reflecting investments made to meet the demands of our growing consumer base, adjusted EBITDA grew by 12 per cent to £12.5 million (FY17: £11.2 million). Our adjusted EBITDA margin was, as expected, slightly lower than FY17, as a function of the gross margin reduction and due to the planned investments we made in the business during the year. Non-GAAP adjusted diluted earnings per share grew by 6 per cent to 6.16 pence (FY17: 5.83 pence).

Our strategic priorities

While we are pushing boundaries and embracing the future, our core target audience remains on-trend 16 to 24-year-olds. Our people sweat the small stuff, understand the details that matter to our consumers, and take a visionary approach to identifying the trends that will drive our product offering.

The key pillars of our growth strategy continue to be the development of our online and digital marketing platforms, our disciplined UK store roll out, including upsizing in a number of key locations, and the expansion of our new wholesale operation alongside the growth of our own brand products. We have also expanded our womenswear and childrenswear product offers and we will further integrate them into the Footasylum store and online estate.

Key investments

In FY18 we invested further in the technology, people and infrastructure that we need to support our growth online and through our stores. The refocusing of our marketing function, to create teams dedicated to brand, marketing and creativity, has added experience and structure that will enable us to plan and execute the creative campaigns needed to engage and entertain our consumers. Our investment in a new 10,000 sq ft studio in Manchester also strengthens our in-house design, photography and videography capabilities to support our activities, both digitally and through our stores.

During the year, we doubled our warehouse space to support sales online and in store. The opening of our second warehouse provides improvements to our logistics and operational capacity. We have invested to ensure our facilities are now open 24/7, meaning that stock sold in our stores by 9pm will be replenished as part of the store's next delivery, which is often as soon as the following morning. Online orders made by consumers before midnight can also be fulfilled the next day.

Our brands

Our ability to build relationships with the key global brands, while nurturing smaller 'bedroom' brands, has always been an important part of Footasylum's DNA. During FY18, we have further strengthened these links and Barry Bown's appointment as our Executive Chairman means we have access to his vast experience and network of contacts that will enable us to strengthen further our third-party relationships.

The development of our own brands is also a key priority, as they underline the quality and choice we offer our consumers, while ensuring that we can drive trends when we identify a gap in the ranges of third-party brands. In FY18 our own brand sales reached £22.9 million, around 11.7 per cent of our total revenue (FY17: 8.7 per cent). We also launched a new website for Kings Will Dream.

Wholesale

The success of our own brands led to the launch of our wholesale operation, partly at the request of our partners who saw the relevance of our brands for their consumers. Through the strength of our own brands we are building a diverse range of wholesale relationships from major UK and international platforms to small, independent shops.

As well as being a valuable addition to our business model, our wholesale operation cements the market positioning of our own brands and gives them a longer life cycle. Where appropriate, it means we can take advantage of a broader market rather than on-trend appeal, selling a more mature brand through a wholesale route even when it is no longer right for our stores. We see volume potential in this area and we believe wholesale presents another route to access international markets.

Clare Nesbitt

Chief Executive Officer

FINANCIAL REVIEW

1. Adjusted EBITDA is stated as earnings before interest, tax, depreciation, amortisation, exceptional items and the share-based payment charge.

2. Adjusted profit before tax is stated as adjusted EBITDA after interest, depreciation and amortisation.

3. Non-GAAP adjusted diluted EPS is stated as profit after tax before exceptional items and the share-based payment charge per the diluted issued ordinary shares as at 24 February 2018 for both FY18 and FY17.

Footasylum delivered a strong underlying performance in FY18. Revenue increased 33 per cent, reflecting growth in all product categories across the Company's multiple channels, from further store roll out, increasing volumes of online traffic and the launch of the Company's wholesale business.

Footasylum is investing in its infrastructure and talent to support further growth. While adjusted EBITDA increased 12 per cent to £12.5 million, the adjusted EBITDA margin of 6.4 per cent was lower than FY17 (7.6 per cent), predominantly as a function of the gross margin reduction and investment in central functions.

Despite a challenging consumer backdrop Footasylum's highly relevant brands continued to appeal to a growing consumer base. Following the debt refinancing carried out in the year and the IPO, Footasylum remains well positioned to capitalise on this growth in demand, both online and in-store, while delivering long-term sustainable returns to shareholders.

Adjusted metrics reflecting underlying business performance

The table below reconciles the adjusted result to the statutory accounts. Footasylum reports adjusted EBITDA, which represents earnings before interest, tax, depreciation, amortisation, the share-based payment charge and exceptional items. This metric reflects internal reporting and provides a useful measure of the underlying profitability of the business. Share-based compensation plans were established following the IPO with awards (and associated payment charges) being made on an annual basis over the next three years, subject to performance criteria being met.

Strong revenue growth across all channels and product categories

Overall revenue increased 33 per cent in FY18 to £194.8 million (FY17: £147.0 million). Revenue is reported net of sales taxes and returns, which remained low as a proportion of revenue in the financial year reflecting Footasylum's relevant product offering.

Revenue by channel

Footasylum operates a multi-channel model across: a 65-strong store estate in the UK; online; and a recently launched wholesale business which distributes Footasylum own brand products to select partners.

In FY18 the store estate accounted for 68 per cent of total revenue (FY17: 71 per cent), online for 30 per cent of total revenue (FY17: 29 per cent) and wholesale for less than 2 per cent of total revenue (FY17: 0 per cent).

Menswear, including both apparel and footwear, remains the main focus for Footasylum representing 69 per cent of total revenue in FY18. This has decreased as a proportion of total revenue from 71 per cent in FY17, reflecting growth in women's ranges which, along with children's ranges, have launched in selected stores as well as online.

Stores

Growth in store revenue was the main driver of the overall revenue increase in the financial year. During the year Footasylum opened 10 new stores (FY17: 12), expanded the size of seven stores (FY17: nil) and refitted two stores (FY17: 2). Reflecting both this and revenue growth in existing stores, store revenue increased 27 per cent in the year to £133.2 million (FY17: £105.0 million).

Of the 65 stores open at 24 February 2018, 63 were operated under the core Footasylum fascia, while a further two stores operate under offshoot fascia, branded Drome and SEVEN. These offshoot stores accounted for only 2 per cent of total revenue in both FY18 and FY17 but play a strategic role in strengthening supplier relationships and providing access to third party products.

Footasylum's store estate is relatively immature, with 32 of the 65 stores open at the end of FY18 having been opened since February 2015. The Company is currently targeting up to eight new store openings per annum (net of any store closures), and a number of upsizes in key locations to increase selling space and drive contribution. The Company sees potential to grow the total store estate in the UK to around 150 stores.

Online

Online revenue continues to grow strongly, up 41 per cent in FY18 to £59.0 million (FY17: £42.0 million), accounting for 30 per cent of total revenue, up from 29 per cent in FY17. The Company sells across five platforms, including platforms for its three fascias, Footasylum, Drome and SEVEN, as well as its own brand website for Kings Will Dream, which launched in the financial year.

More than 80 per cent of the traffic to these websites in FY18 came from mobile and tablet devices. Outside of this, the Company continues to develop its mobile offering, with apps launched in the year for Footasylum, Kings Will Dream and SEVEN.

Wholesale

In March 2017 Footasylum launched its wholesale operation, selling its own brands - initially Kings Will Dream - through a network of partners from small stores to major European partners. Revenue from wholesale was £2.6 million in FY18 (FY17: £nil), less than 2 per cent of total revenue (FY17: 0 per cent).

As a result of its online and wholesale operations, the Company generated a proportion of its revenue internationally in FY18, although UK-generated revenue still accounted for 98 per cent of total revenue for the year (FY17: 98 per cent).

Revenue by product category

All product categories across almost 300 brands delivered strong growth in the year. Apparel experienced the largest increase, up £28.1 million, or 50 per cent, to £84.4 million. Footwear increased 21 per cent to £102.6 million, and accessories which remain a small proportion of overall revenue, were up 30 per cent to £7.8 million.

Footwear remained the largest product category, representing 53 per cent of FY18 revenue (FY17: 58 per cent). However, the apparel and accessories categories are both growing strongly as Footasylum further diversifies its product range. In FY18, Footasylum sold over 19,000 SKUs (FY17: 17,000 SKUs) across all channels, with the top 20 SKUs accounting for just 6.0 per cent of FY18 revenue (FY17: 6.4 per cent), highlighting a limited reliance on any one product.

Investing for the future

Summary income statement

Footasylum's routes to market have differing margin profiles, reflecting the underlying product mix across footwear, apparel and accessories. The overall gross margin will vary due to the impact of this mix, as well as the proportion of revenue coming from the Company's own brand labels in any given period. The FY18 gross margin was 45.0 per cent, down 90 basis points from 45.9 per cent in FY17. This was due to a number of reasons including: channel mix; a reduction in the footwear margin; and an increase in central provisions. These points were partially offset by the benefit from increased own brand participation. A combination of these factors could continue to impact gross margin in FY19.

Excluding exceptional items, depreciation, amortisation and the share-based payment charge, admin expenses were broadly similar at 38.6 per cent of revenue (FY17: 38.2 per cent of revenue). Admin expenses include rent and rates on the Company's store portfolio, distribution costs, marketing costs as well as head office costs.

Footasylum is investing ahead of the curve in its infrastructure to support future business expansion. During the year the Company opened a second distribution facility in Rochdale (known as Point 62) in addition to its existing distribution centre (known as M3), it upgraded its technology systems to support its growing digital presence and grew its Head Office team and central functions. As at the end of FY18 Footasylum had 2,270 employees across the Company (FY17: 1,869). These investments are intended to support Footasylum's growing consumer base and to meet peak trading period demand. Any short-term margin impact is expected to be offset by the benefits of the investment over time.

Adjusted EBITDA increased 12 per cent to £12.5 million (FY17: £11.2 million). The adjusted EBITDA margin, at 6.4 per cent, was 120 basis points lower (FY17: 7.6 per cent), reflecting the 90 basis point reduction in overall gross margin and the investments referred to above.

Depreciation and amortisation was £3.9 million for the year (FY17: £2.7 million), reflecting the increased capital expenditure in new stores, investments in IT and in the new distribution facility.

Exceptional items

Exceptional items in the year totalled £6.0 million (FY17: £nil). £4.1 million related to the costs of the IPO and £1.9 million related to an HMRC VAT provision.

Tax

The effective rate of tax for the year was 23.0 per cent of pre-exceptional profit before tax (FY17: 23.0 per cent). This is higher than the blended UK statutory rate of tax for the year of 19.1 per cent (FY17: 20.0 per cent), due to costs which are disallowable for tax.

Earnings per share

After exceptional items, profit after tax was £0.2 million (FY17: £6.2 million). Following a capital reorganisation and an issue of new ordinary shares at the time of the IPO in November 2017, the Company had 104,474,390 ordinary shares of £0.001 each in issue (pre-IPO: 6,000 ordinary shares of £1 each). The non-GAAP adjusted diluted EPS of 6.16p is stated as profit after tax before exceptional items and the share-based payment charge per the diluted issued ordinary shares as at 24 February 2018 for both FY18 and FY17 (FY17: 5.83p).

Consolidated statement of financial position

Net assets increased significantly during the year, largely due to the net proceeds from the IPO of £41.1 million. £18.7 million of these proceeds were used to redeem outstanding preference shares (which were classified as debt) and £3.9 million was used to repay a Director's loan. As anticipated at the time of the IPO Footasylum subsequently completed a capital reduction in February 2018, cancelling the Company's share premium account to create distributable reserves of £37.7 million.

Investments in Footasylum's stores, IT and warehousing accounted for the increased property, plant and equipment position, while working capital increased as a function of the Company's growth during the year.

During FY18 capital expenditure was £10.0 million (FY17: £5.9 million). Of this amount, £6.9 million (FY17: £4.8 million) was spent on enhancing the store estate, including opening 10 new stores, refitting two stores to enhance the consumer experience and upsizing seven stores to maximise their contribution.

Other investments in the year included rolling out a new in-store EPOS system across the store estate to speed up the buying process, and further investment in the Company's digital platforms to enhance the user experience. There was modest spend on the new warehousing facility, Point 62, which became fully operational in FY19.

Consolidated cash flow statement

Footasylum had £11.4 million net cash at 24 February 2018 (25 February 2017: £2.8 million). A reduction in operating cash flow to £(0.7) million (FY17: £12.8 million) and free cash outflow of £9.2 million (FY17: free cash inflow of £7.2 million) was funded by the net proceeds from the IPO.

The change in operating cash flow was largely due to working capital movements. Working capital fluctuates throughout the year around trading activity, and was highest in November 2017 around peak trading. Inventory at 24 February 2018 was higher than at 25 February 2017 due to growth in the store estate, the new distribution facility, and an earlier Easter. This was partly offset by payables due in relation to an exceptional HMRC VAT provision.

In July 2017 Footasylum negotiated a new multi-currency revolving credit facility with HSBC of £30 million. The facility was made available to fund capital expenditure and future working capital requirements. The interest payable on the loan is LIBOR plus 1.9 per cent. At 24 February 2018 the facility was undrawn.

Dividend policy

As disclosed at the time of the IPO the Directors intend, in the short-term, to retain the Company's earnings for re-investment to fund growth. It is the Directors' ultimate intention to pursue a progressive dividend policy subject to the need to retain earnings to expand the growth and development of the Group.

FINANCIAL STATEMENTSCONSOLIDATED INCOME STATEMENT

for the year ended 24 February 2018

* Underlying EBITDA is stated as earnings before interest, tax, depreciation, amortisation, exceptional items and share-based payments charge

All activities relate to continuing operations.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

for the year ended 24 February 2018

FINANCIAL STATEMENTSCONSOLIDATED CASH FLOW STATEMENT

for the year ended 24 February 2018

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Reconciliation of 52 week period to 25 February 2017

Reconciliation of 52 week period to 24 February 2018

i On the 2 of November 2017, the Company issued bonus shares of 12 to 1 for existing shareholders

ii On the 2 of November 2017, the Company sub divided existing Ordinary shares by 1000

iii On the 2 of November 2017, the Company issued 26,474,390 ordinary shares

iv On the 13 February 2018, the Company reduced share premium account by £37,740,525

1 BASIS OF PREPARATION

Footasylum plc (the "Company") is a company limited by shares and incorporated and domiciled in the UK. Footasylum plc is incorporated in the United Kingdom. The registered office is Sandbrook House, Sandbrook Park, Rochdale, Lancashire, OL11 1RY. The principal activity of the Company is the retail of sports and fashion footwear and clothing.

The Consolidated and Company Financial Statements have been prepared in accordance with IFRS and the International Financial Reporting Interpretation Committee ("IFRIC") interpretations endorsed by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The functional currency of the Company and its subsidiary undertakings (the "Group") is pounds sterling and the financial statements are presented in pounds sterling, rounded to the nearest thousand.

These financial statements are prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the EU. The accounting policies applied are consistent with those disclosed in the Historical Financial Information included in the Admission Document.

The financial statements have been prepared under the historical cost convention, as modified for financial assets and liabilities at fair value through the Consolidated Income Statement.

The preparation of financial statements in conformity with adopted IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The judgements, estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

The financial information included in this preliminary statement of results does not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006 (the "Act"). The financial information for the 52 week period ended 24 February 2018 has been extracted from the statutory accounts on which an unqualified audit opinion has been issued. The auditors have consented to the publication of the Announcement.

2 SEGMENTAL REPORTING

The Directors consider there to be one operating and reportable segment, being that of the sale of products through retail outlets, the Group's website and wholesale.

Whilst the business and Chief Operating Decision Maker ('CODM') does review analysis of revenues at a disaggregated level, as disclosed below, information in relation to assess business performance and make resource allocation decisions at a level below the whole business is not made available. In particular, operating profit is not calculated at a level below the whole business. As such, the Directors consider there to be one operating and reportable segment.

Geographic Information

The following table provides analysis of the Group's revenue by geographical market:

3 PROFIT BEFORE TAX

This is stated after charging:

Exceptional costs in the period ending 24 February 2018 relate to preparations for admission (£4,145,000) and HMRC VAT provisions (£1,878,000).

Total costs incurred in relation to the admission to trading on AIM were £6,462,000 with £2,317,000 charged to the share premium as being directly related to newly issued shares.

HMRC VAT provisions are made for known issues based on management's interpretation of legislation and the likely outcome of negotiations or litigation. Each provision is considered separately and the amount provided reflects the best estimate of the most likely outcome, being the single most likely in a range of possible outcomes.

Underlying EBITDA is calculated as Group underlying operating profit under IFRS plus depreciation and amortisation. It excludes exceptional items and IFRS2 related share-based payments charge.

4 STAFF NUMBERS AND COSTS

Staff costs (including directors) consist of:

The average number of employees (including directors) during the period was as follows:

5 EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share is calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential ordinary shares into ordinary shares.

*Restated in accordance with IAS 33 to reflect the impact of the sub-division and bonus issue of shares on 2 November 2017.

**Non-GAAP measure is based on shareholdings as at 24 February 2018 for both FY18 and FY17.