Agile Resilient Stronger
ASOS PLC Annual Report and Accounts 2020 STRATEGIC REPORT 1 2
Cash generation 2019: (£133.2m) 2018: (£117.6m) Annual Report and Accounts 2020 Annual Report
1 2018: £2,417.3m Revenue £2,733.5m 2019:
The people behind the brand Page 24 ASOS PLC PLC ASOS
Profit before tax 2019: £33.1m 2018: £102.0m £142.1m £3,263.5m £258.6m
1 1 Gross margin Gross 48.8% 2019: 2018: 51.2%
Our performance market by Page 10 A statement from from statement A our Chairman, Crozier Adam Page 4 47.4% EBITDA margin EBITDA 2019: 3.9% 8.2% 16 ‘Leases’ to IFRS transition include the figures 1 FY20 of £239.4m net equityraise proceeds the is excluding figure 2 FY20 Diluted EPS 2019: 29.4p 2018: 98.0p 125.6p 2018: 6.5% Highlights y y osition osition otal Comprehensive otal Comprehensive itors’ Report to the Members Members to the Report itors’ e Financial Statements e Company Financial Statements -Year Financial Summary (unaudited) -Year Company information Consolidated Statement of Cash Flows Notes to th Company Statement of Changes in Equit Company Statement of Financial P Company Statement of Cash Flows Notes to th Five Independent Aud Plc of ASOS Consolidated Statement of T Income Consolidated Statement of Changes in Equit Consolidated Statement of Financial P
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2 32 26 10 18 24 30 2 6 12 16 20 1 2 Contents Strategic report 4 About us About We are an onlineWe retailer for fashion-loving 20-somethings around the Our world. purpose is to our give customers the confidence to want Through they be. to be whoever our market-leading customers ASOS app and web experience, 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 DESIGN, ASOS EDITION, ASOS ASOS 4505 and Collusion. aim to deliver We a truly frictionless experience for our customers, with an ever-greater number of paymentmethods and hundreds of local delivery and returns options, dispatched from state-of- the-art fulfilment in the centres UK, and US Germany. STRATEGIC REPORT
3 million Annual Report and Accounts 2020 Annual Report third-party brands ASOS PLC PLC ASOS active customers active apacity to handle 20m units c.850 F C automated ully Berlin Euro Hub Berlin Euro – – 23 EU +22% £1,005.3m + Retail Sales +18% UK RoW products products on site +18% £587.9m £1,175.9m £1,175.9m 1 second per Retail Sales placed .5 orders Retail Sales Barnsley – F 85K R ulfilment Centres eturns Centres Map key US
+18% £401.9m £401.9m Retail Sales .5m customer .5m fulfilment capacity 1 1 m Sq Ft Atlanta – –
global brands. localised sites, in 10 languages and and languages 10 in sites, localised 19 currencies. Our global network of fulfilment and returns centres use the latest availability and improve to automation smart while carrier softwarestock efficiency, best-in-class make and propositions rapid and convenient deliveries and countries.returns possible more in 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 Defamation). Alliance Against had stellarWe results from product collaborations and style edits with carefully selected influencers throughout second Highlights a include the year. collection with Ovie Soko and edits with Delilah Bell and Emily Shak. huge garnered content Our influencer with wide-reachingengagement, organic impressions and large uplifts on the associated product. retail leader retail A truly global global truly A
Annual Report and Accounts 2020 Annual Report 85,000 products from ASOS’ own collections from other and 85,000 products From almost any country in the world, you can shop over over shop you can any country almost world, From in the ASOS PLC PLC ASOS New brands and collaborations Our brand offering is more desirable than with ever, ASOS seen as the fashion-loving for one-stop shop 20-somethings. added We over 100 offering year, the our during to brands and Topshop fashion giant including cult beauty labels Urban Decay and attention captured Charlotte We Tilbury. after including with sought collaborations POLO Ralph Lauren X ASOS, a perfect mix of classic heritage design and throwback 90s style. celebrated We 2 Our mission is to be the world’s number one fashion-loving destination for fashion 20-somethings. believe We in a world explore to freedom the have you where and express yourself without judgement, no matter who you are or from. where you’re That is why our purpose is to give fashion- be to 20-somethings confidence the loving whoever they want give to be. our We and creating by confidence customers inspire to experiences and products curating website and app market-leading Our them. personalised and localised more boast now and before, ever than features shopping fully 12 on shop now can customers STRATEGIC REPORT 5
Annual Report and Accounts 2020 Annual Report As finish we 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 and passion talent, Your together. stronger enthusiasm is what drives our success. I would also like to express regret my that we are unable to gather together for our Annual General Meeting As per (AGM). the preventing on guidance government will we be holdingspread of COVID-19, a closed meeting this Meeting year. annual face-to-face Group’s the discuss to important an performance strategy is and but process, governance part the of safety and health the everyone protecting of is paramount. look We forward to welcoming you to the in 2021. AGM Until we meet again, look after yourselves families. your and Adam Crozier Adam Chairman ASOS PLC PLC ASOS
It would also not have been possible without shown judgement and expertthe leadership ourby Executive team, who have been able to adapt at speed during this critical time. decision- commendable and quick Their making has impressed me, and I am sure having experience this from emerge they will learned many valuable lessons for the future. The past year has been one of significant challenges,but we have emerged a better capabilities internal our With it. for business aligned to our global growth ambitions, we are ready for whatever the future may hold. Looking towards a sustainable future of continued growth Across ourmarkets, ASOS continues to be an important part of consumers’ lives. Our Fashion our to commitment longstanding 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 we focus oninto operating 2021 in the right Evenway. in these difficult times, we must never lose sight of the big picture. Alongside to need we performance, fiscal improving drive a transparent, responsible and inclusive impact the transform to business to approach of fashion on people, communities, animals and our shared planet. This we have year, proven the resilience of customer our strength of the and model our priorities our to ahead Looking engagement. we will continuefor our 2021, progress online in leader global a becoming towards fashion, and we are positioned to capitalise for shift demand accelerated the in on implications full The shopping online. and demand consumer on of COVID-19 seen, be to remain economy the wider but we are in a strong position to face any challenges that come our way. The organisation organisation The has been able to adapt been able to adapt has at speed and continue to focus on delivering commitments against the we made last year To furtherTo protect ASOS, we also made support, government of use appropriate retention job and deferrals payment including programmes. we did However, so with the intention always to do the right thing and not take advantage of funding supportwhich we did not require. As a result, following our strong results in our P3 Trading Statement we announcedin July, that we would be the under received funds the returning later, and, scheme furlough government’s the Bank of England’s Covid Corporate Facility. Financing were ableWe tomake that decision because of the strong financial results achievedby the business. In spite of the initial impact on sales COVID-19, by caused demand customer and the uncertain into outlook continued the and future, the organisation has been able to adapt atspeed and continue to focus on delivering against the commitments we made These commitments, with combined year. last management, cost and business rigorous have ensured that we delivered a strong difficultperformance these most of in circumstances. This would not have been possible without the terrific response from everyone of commitment the and our partners at ASOS.
Navigating our way through an unprecedented year startedWe our financial 2020 year with performance, half before first a strong the outbreak Of course, of COVID-19. repercussions, significant had the pandemic not just for ASOS, but for the entire world, too. customers, our for and first our pandemic, global the Throughout priority was to protect the health, safety and wellbeing of our people. As we went into lockdown, we quickly redesigned how our their reducing operate, fulfilment centres them make to capacity headcount and COVID-secure with compliant social and distancing guidelines, and we moved all of officehome our working stafffrom to 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 space. studio the protect to steps significant took also We business financially. In April we announced our strengthen to financing additional long-term for us position and sheet balance growth. This included a non-pre-emptive placing of ordinary shares, which raised £246.6m (gross). With of these c.95% new shareholders, existing our to allocated shares I wish to extend heartfelt thanks to these confidence continued their for investors in the future of our business. unprecedented year. unprecedented A tough but necessary transformation journey financialUndoubtedly,year was our 2019 a challenging one for ASOS. As I wrote then, while we had made significant progress with international expanded an to transition our underestimated network, had we warehouse the complexity these of changes, highlighting and experience our in gaps where business. the within existed capabilities Coming out of that period we defined2020 as a pivotal year for entered ASOS. We 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, towardsdelivering world-class, lean frictionless internationally. and operations a taking meant momentum our Regaining and operations internal our at critical look business, the across spend of deployment our what of elements core the on refocusing and 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 our augment to continue offering. We best, the with labels own-brand leading most relevant fashion from the most desirable world, the around 20-something brands who continue to see ASOS as a strategic support products to their partner choice of marketing. and Alongside our curated product range, we with engagement constant on focused have channels, social our through customers our scale. at content compelling delivering and These strategic priorities and focus areas will help us continue to build market share as the accelerates. retail shift online to statement ASOS to successfully navigate an to ASOS
Chairman’s Chairman’s Robust and resilient operations have enabled operations have Robust and resilient Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS 4 just as it has been for the wider world. (‘COVID-19’) pandemic The Coronavirus-19 challengesunforeseen significant has posed for all businesses, including ASOS; however, changes organisational transformative the that we put into action months more than 12 ago, and the resilience that we built into the business, have enabled us to navigate the uncertainty rigour. and with confidence Executive and Boardroom Our strengthened leadership, expert demonstrated have team and for this I wish to extend gratitude. my effort the and commitment their of to Thanks the entire ASOS team to deliver the objectives we set out last we are ready year, to emerge from the current situation as a nimble, fast-growing business, with a more robust and tools with the and sheet, balance capabilities we need to achieve our global ambitions. It’s beenIt’s a year like no other for ASOS, STRATEGIC REPORT 7 Annual Report and Accounts 2020 Annual Report real-life models, without the need to shoot product in a studio. digitally By model the onto product each mapping in a realistic taking way, account of the size, cut and fit of each garment, product ensured the technology and realistic as remained presentation supporting while possible, as engaging social distancing. year end position has been enhanced by a by enhanced been has position end year later than usual stock build for peak trading which is phaseddue to COVID-19, into the firstExcluding half of thisFY21. tailwind of c.£89m, we expect to be cash generative in the year ahead. was investedCapital expenditure of £115.6m this year across our technology platforms and warehouse infrastructure. This was lower than our initial expectations as we delayed Retail Global Truly our of implementation lockdown due to programme (TGR) restrictions, which will be rephased into FY21. in capital - £180m planWe to invest £170m expenditure This includes in FY21. the conclusion of the £5m investment we made to ensure our warehouses go well beyond to with respect guidelines government secureCOVID-19 sites. will We also fourth our into investment commence from learnings Leveraging fulfilment centre. 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 ThisFY23. incremental capacity will be situated in the high support continuing will the and UK growth we have seen in our home market and also allows for maximum flexibility service to across demand and resilience our global network. have learnt We a lot programme investment recent our from implementation confident the that and are 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 project. this of implementation ASOS PLC PLC ASOS Augmented realityAugmented – collab with Zeekit This we accelerated year, our use of technology, realityaugmented (AR) using it to simulate real-life model photography as part of our response technology, The pandemic. to the powered Israeli-based by start-up Zeekit, meant we could offer our customers a simulated view of up to 500 products each week on six The incremental costs incurred we COVID-19 were primarily driven by: the increased safety measures we implemented in our warehouse support costs increased (which operations airfreighthigher efficiencies); reduced and facing customer additional and rates; out’ ‘going on demand stimulate to investment product. these However, were more than offset two by 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 categories and rate returns lower into purchasing deliberate more exhibited processing lower drove which behaviour, costs through our network. Secondly, we in significantly spend marketing our reduced P3 to avoid stimulating demand we could not capacity managed service restrictions we as social for implemented warehouses, our in purposes. distancing Beyond this, we made good progress in the across costs non-strategic removing improvements substantial saw and business transformational the in efficiency from investments we have made in automation, more detail of which can be found in corresponding our under this statement key priorities. closedWe the financialyear in a strong net cash position up from a net debt of £407.5m, position of £90.5m at the start of the year. This inflow has been drivenby a combination undertook we raise capital proactive the of in April (net cash a proceeds of £239.4m), significant increase in EBITDA and improved the addition, In discipline. capital working of change we undertook to reshape every undertook reshape to we of change unprecedented was business our of element – 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 acquisition customer for and growth as they arose. As our results demonstrate, we have emerged from this financialyear as a business, agile and resilient more stronger, having progressed with our priorities as planned, but also having taken many disruption and challenges the from learnings positions This presented. has pandemic the us well as we considerthe uncertain foresee to continue We ahead. landscape which demand, consumer to headwinds financial lifestyles and until abate will not 20-somethingstability our for normalise to disruption the expect we and customer global product supply will be felt into 2021. we haveHowever, built greater diversity into our product mix and have proven how be. can business our flexible operationally 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 fashionretail. help To 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, theASOS platform and the ASOS be will which of All experience. customer increasingly efficient, an underpinned by model. operating effective sustainable and Financial performance exceptionally an delivered has business The year performance financial strong this including record levels of profit and cash to £116.0m increased EBIT generation. and equated to a margin of 4.6%, £151.1m up 330bps year on Whilst year. this strong growth in profit was assistedby unusually through rates returns customer low grip, operational strong a lockdown, greater discipline around investment, the removalof non-strategic cost and leverage investments the transformational from we have made are driving sustainable growth. underlying profit had a substantialCOVID-19 impact on the shape of the this P&L financialyear. material incremental We experienced costs from disruption; however the mitigating combined business, the across taken action with the significant reduction in returns rates, business the for tailwind profit a generated this year of c.£45m.
-19 secure manner. The amount amount The manner. secure -19 OVID the challenge we faced shifted faced uncertain to we the challenge certain for types demand Whilst demand. particularly and occasion of product, we constrained remained formal-wear, saw strong growth in casualwear and other lockdown relevant products. this However, polarisation in demand in turn drove further the by exacerbated constraints supply reduction in product produced globally this year given the restrictions most businesses under. operating are primary our period, focus this Throughout was on continuing to do the right thing – safety and health the people ensuring of and customers our operations, our across 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 C
pursuing our global growth ambitions. global our pursuing made we Notwithstanding backdrop, the solid progress against each of the priorities of foundations strengthened the has which 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. increased with progress, combined This an rigorous more and grip operational to us performance enabled management, challenges the through business the steer business The pandemic. the by caused showed great agility, adapting to significant our across disruption change, operational shift consumer dramatic in a chain, supply changing fast uncertain and an and demand landscape. From our perspective, initiallyCOVID-19 presented itself as a suppliers as supply product to challenge freight and constraints lockdown managed was disrupted. As we moved into April, to do to continue our progress. our progress. to do to continue
Operational & & Operational made this year but there is still lots more for us is still lots year but there made this We are pleased by the improvements we have improvements the are pleased by We
e progress in addressing e progress financial review financial Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Af us mak 6 Overview performance strong a delivered ASOS across the year as we navigated the as arose that challenges unprecedented Total salesa result grew of COVID-19. to and £3,263.5m profitby 19% before an increase of tax increased to £142.1m, on the previous entered We year. £109.0m this financialyear with a clear focus on executing and momentum rebuilding consistently. Last October, we set out the key priorities to help us achieve this; restoring offer facing customer our strengthof the and ensuring we had the right internal capabilities financial strength continue and to Whilst life for our 20-something customers our for life Whilst 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.
saw half which first ter arecord the performance issues of the previous the performance issues of the will second half the financial year, to by our response be defined always ASOS way of the I am proud COVID-19. on, putting head our challenge met this dutyto act as a responsible business at and working our approach heart of the to balance our performance in that staff, as protecting As well context. driven we’ve suppliers and customers, and a stronger efficiency and emerged delivering more agile business whilst and cash generation. profit strong STRATEGIC REPORT 9
2% (3%) (4%) (7%) (7%) (65%) (0bps) 40bps 40bps (0bps) Change (80bps) Change 2.8% 0.2% 4.4% 12.7% 10.0% 2.6% 4.4% 11.0% 47. 5% 15.2% 14.3% % of sales % of sales Mat Dunn Officer Financial Chief (4.0) (29.3) (92.4) Annual Report and Accounts 2020 Annual Report 115.2 (327. 6) (414.9) 144.5 127.8p 2019 (71.3) (121.8) (389.1) (415.6) (301.4) (1,299.2) ASOS PLC PLC ASOS Year to 31 AugustYear to 31 Year to 31 AugustYear to 31 2020 (excl IFRS16) 0.5 (5.0) (1.9) 14.1 13.5 13.5 (2.4) (25.0) (2.2p) 9.6% 3.6% 3.7% 13.6% 12.3% 42.8% Nick Beighton Chief Executive Officer has on our current year profit. Although it has no impact on the FY20 margin,PBT it has decreased warehousing costs (mainly warehousing leases)40bps, by other operating costs (mainly office leases)by net keeping and 80bps by depreciation increasing whilst 40bps, flat. expense finance Taxation The effective tax rate 25.7%). reduced 540bps by to (2019: 20.3% This is due to the absence of the one-off adjusting factors which Going forward,arose in FY19. ASOS expects the effective tax rate prevailing the than higher 100bps approximately be to to continue items. permanently disallowable to due tax corporation UK of rate shareEarnings per Basic and diluted earnings per share increased 330% to by 126.3p and 29.4p). 29.4p respectivelyand to 125.6p 327% by (2019: This was driven the by increase in profit before tax during theyear. flow Cash There was a £498.0m increase in net cash (cash and cash equivalents associated proceeds cash the including year, the in borrowings) less with the equity placing in This April compares of £239.4m. 2020 with increase in net debta £133.2m in the previous The year. cash inflow in the excluding year, the equity raise, was driven by EBITDA of and£268.5m an improvement in working Of capital this of £140.3m. working capital inflow we benefited related fromCOVID-19 supply chain impacts causing the peak stock build to be later than usual. expenditure capital cash in seen is £115.6m of expenditure Capital and a capital creditor decrease associatedof £116.6m of £1.0m with our FY20 investment. % of sales 9.6% 3.6% 0.2% 4.4% 12.3% 2020 (117.4) (119.4) (313.5) (401.4) (444.6) (1,396.3) (9.0) Year to 31 AugustYear to 31 (28.8) (117. 4) 113.3 (313.5) 142.1 (401.4) 125.6p Year to 31 AugustYear to 31 2020 (incl IFRS 16) % of sales IFRS impact 16
£m Distribution costs activity promotional stimulateinto to investment planned our finally were These lockdown. during product occasion for demand partially offset a significant by improvement in our underlying margin. buying operating total and £1.4bn to 7% increased expenses Operating costs decreased 470bps by as a percentage of sales. The year on year reduction in distribution costs was principally driven the by warehouse US our from market US the fulfilment for to local change and the benefit from lower returns rates driving lower return parcel volumes. The improvement in warehousing costs was driven a by reduction in returned items to be processed as well as increasing transition. 16 IFRS the and automation Hub efficiencyEuro from These were partly offset inefficiency by due to capacity restrictions also warehouse US Our period. lockdown the during implemented continues to represent a cost drag year with on year, US orders now facility our this than from rather basis manual a on processed being costs, operating other within costs, Payroll warehouse. UK automated improved materially as a percentage of sales driven ongoing by work to improve the efficiency of our operational structure. Marketing costs also decreased 70bps by as a percentage of sales as we drove performance reduced and efficiency half greater first the during marketing spend in the third quarter to ensure stimulating we weren’t demand we couldn’t effectively service whilst our warehouses worked at reduced capacity dueto social distancing. This decrease was partially offset higher by 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 in the rose to year £9.0m 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. impactIFRS 16 During the year we implemented as required IFRS 16, International by Financial Reporting Standards. As we adopted the simplified transition approach we have not restated any comparatives. enable To a year on year comparison we have demonstrated above the impact that this Profit after tax PBT IFRS impact 16 £m Warehousing expense Finance Other operating costsOther operating Operating expenses Total operating costs Total Marketing Warehousing Taxation Diluted EPS Depreciation and amortisation and Depreciation Depreciation and amortisation and Depreciation Other operating costsOther operating
1% 4% £m 6.2 (3%) (4%) (9.0) 11% 15% 19% 86.3 Total 151.1 142.1 (951.7) Change Change (444.6) -20bps 3,171.0 (1,716.1) 1,547.4 +360bps 3,263.5 – £m
16.0 RoW 587.9 -4 603.9 3.05 72.3 20.3 3.56 3.2% Year to 81.9% £71.29 £23.34 2,266.5 31 August31 2019
US 0.1 £m 13.3 13.3 401.9 415.3
-2 3.18 80.2 23.4 3.43 3.0% Year to 85.5% £71.92 £22.63 2,691.2
Year to 31 AugustYear to 31 2020 – EU 31 August31 2020 £m 24.9 the single biggest underlying driver of improved profitability on the Alongsideyear. this we have annualised efficiency benefits from Euro proportiontransition the significant of a reversing automation, Hub costs experienced in prior years, partially offset a full by year of fixed costs and manual operations in Atlanta. trulyTo understand our profit delivery, particularly H2, in two more impacts are especially relevant. Firstly, without remedial action, both a reduction in sales volume post lockdown as well as new incremental costs would have as a result significantly of COVID-19, impacted profitability in the secondWe pivotedhalf. 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 purchasing intentional saw we Where pandemic. the during saw post lockdown, the impact this had on the profile of returns and sales one-off a than one-offoffset more benefitother which provided profit cost dragsCOVID-19 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. margin Gross Gross margin reduced in 140bps the by year driven three by principal factors: duty and increased freight costs reflecting the go-live in our US warehouse impacting the first part of theyear (which is largely offset savings by in delivery costs), changes in occasion shifted from demand away customer as mix product and lockdown categories during product casual more wear into 1,005.3 1,030.2
UK 6.1 £m 32.1 1,175.9 1,214.1
2 Annual Report and Accounts 2020 Annual Report 4 (m) 1 ASOS PLC PLC ASOS aving shopped in the last 12 months as at 31 August as at 31 months last 12 in the aving shopped 3 Defined as h Retail sales Retail Delivery receipts Total revenue Total Third-party revenues Cost of sales of Cost profit Gross Distribution expenses expenses Administrative Operating profit expense Finance before tax Profit Average order frequency order Average Average units per basket per units Average VAT) (including unit per price selling Average Net Promoter Score Promoter Net Average basket value (including VAT) 8 Retail sales on the grew previous 19% year as we navigated the many impactedways COVID-19 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 well as demand, underlying in improvements saw we lockdown, as the continuation of a beneficial returns profile. This changing dynamic is perhaps best reflected in the relationship between visits and orders. Visits on the grew previous 19% year whilst orders to 80.2m, reflecting increased a shift 11% to more which lockdown, COVID-19 through purchasing deliberate impacted conversion on-site but had a lower associated returns profile. Whilst1% on improvedABV the year, ABV declined in the categories product ASP lower into mixed customers as half second such as loungewear. The reduction in ABV in the second half was partially delivery changes mitigated in by thresholds following significant airfreight increases in COVID-19. costs following customers, active 23.4m to 3.1m by grew base customer active Our from theup previous 15% saw We particularly year. strong growth in following momentum customer rebuilding on focused we as EU the disruption in the prior Equally year. as pleasing, active ROW customer onbase the underpinned year, grew 18% by strong by growth in key markets Russia and Australia, as well as strong new customer growth. A significantProfit before tax increased£142.1m. 329% to by proportion of this increase is due, as previously mentioned, to the focus on removing non-strategic costs from the business. This was 2 Calculated as last 12 months’ total orders divided by active customers divided by orders total months’ as last 12 2 Calculated total visits divided by as total orders 3 Calculated August period ended 31 12-month score in the average movement in the represents the and this Score is based on a customer pulse survey 4 Net Promoter 1 Active customers Financial overview Mobile device visits device Mobile Total visits (m) Conversion Total orders (m) STRATEGIC REPORT 11 Year to 31 AugustYear to 31 2020 AugustYear to 31 2020 +18% (18% CC) +19% +5% -20bps +12% 3.9m (+18%) +18% (16% CC) (16% +18% +19% +9% -20bps (2%) 3.2m (+14%) Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS US KPIs sales Retail Visits Orders Conversion ABV customers Active ROW KPIs sales Retail Visits Orders Conversion ABV customers Active ROW retail sales grew by 18% (18% in constant retailROW currency) sales (18% with grew 18% by particularly strong growth in Russia, Australia and the Middle East. in changes to response positive a by underpinned was Performance activity promotional targeted more calendar, trading the rhythmthe of and a quicker return towards a more normalised product mix in the Increased participationwake of COVID-19. in Black Friday year on year and a great response to Ramadan events in the Middle East particularly pleasing. were ABV increased driven mainly 12% action by taken to protect basket airfreight significant in increase a response to costs,economics in which drove a notable increase in items per basket. This also drove the considered more larger placed customers as conversion in reduction orders. Active customer growth was pleasing, of 18% driven strong by acquisition. customer new US retail sales grew by 18% (16% in constant currency).US retail made sales (16% We a grew 18% by strong start to the year in the first half, with growth 25% of supported and growth better order availability stock stronger driving by experienced we as half second the in slowed Performance conversion. significant disruption This was reflective from COVID-19. of a divergent of mix higher the and US the in restrictions lockdown to approach occasion wear ASOS has in this market. The reduction in available airfreight also disrupted stock availability in the US in the second half. customer active total US the experienced, challenges the Despite base in the grew year at to with 14% 3.2m, particularly strong new customer growth. Traffic growth19% was particularly of pleasing, with the growth rate improving into the second half driven in part by customer positive a and performance spend increased marketing including initiatives acquisition customer of launch the to response increased student activity. discount US performanceUS performance ROW
US Performance in the US started the year well and profile stock the to made we improvements reflected the in our Atlanta warehouse. added We 0.3m customers in the first half and sales growth was25% of supported growth. order strong and better conversion by region this as slowed half second the in Performance experienced the most severe disruption from COVID-19. demand, consumer in reduction significant a saw We and recovery did not come through at the same speed as we saw in other markets. This has been driven a by US specific factors. The ASOS and market of combination same benefitedthe not from has 20-something consumer securityEuropean financial for supportas measures lifestyles consumer which to degree the and consumers, addition In Europe. behind remains also normalised have to this, we have also experienced challenges with our flights commercial in reduction The US. the in pool stock inhibited our ability to airfreight product into the US at a time when this developing stock pool still requires distribution other facilities. our from product Whilst our offer is much enhanced, we still have further opportunity relationships branded offer, stock localised our out to build and in country sourcing, which will continue to be a focus in FY21. Rest of World Retail sales in our territory ROW in the year. grew 18% This region is still fulfilled from our UK Hub in Barnsley restrictions airfreight global the significant on and caused disruption to our proposition for these countries. We delivery to changes through impact the managed thresholds to ensure we balanced basket profitability made we changes The experience. customer with the 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 restrictions.airfreight to owing with fulfilment experienced The MENA region continued to perform extremely well during the with year, Saudi Arabia the standout country growing over 50%. Growth was supported a more by as well as calendar promotional relevant locally strong activity through Ramadan which resonated well. driven constrained more performance was Russia, Within However, environment. promotional a challenging by our core proposition continues to resonate and we grew our active customer base 28%, by which was ahead of our sales growth. Year to 31 AugustYear to 31 2020 +22% (22% CC) +20% +14% -20bps (1%) 9.2m (+18%) Year to 31 AugustYear to 31 2020 +18% +17% +10% -30bps Flat 7.1m (+11%) EU performanceEU Retail sales Retail Visits Orders Conversion ABV customers Active UK retail sales in the particularly year, grew 18% pleasing in light the demonstrating impact, demand COVID-19 prolonged of the resilience of our model, appeal of our proposition and ability to pivot supported performance Our demand. was changing to response in media social and presentation product, in improvements by engagement which were focus key areas have this grown We year. the on the total year. UK customer base up 11% to over 7m, ABV remained flat on theyear, with the pronounced skew towards offsetting half category second the in mix lockdown the ASP lower ABV growth achieved in the first half. EU KPIs EU retail sales in grew constant (22% 22% currency) and represented year’s last performance in following improvement consistent a warehouse disruption and stock availability issues. The improved unlocked stance trading dynamic more a and delivery proposition saw also performance. sales supported EU strong this by automation and behaviour customer on impact lockdown pronounced a less purchasing behaviour began to return to more normal levels ahead of the UK and US. to added customers with 1.4m 18%, of growth customer Active customer rebuilding in made progress the demonstrates the base, particularly in was strong acquisition customer New momentum. the second half, notably across territories with lower levels of online penetration including Italy and France, with ‘Lockdown’ product a strong was growth Traffic customers. these new particular for appeal andat +20% ahead of orders growth as conversion of 14% stepped back 20bps due to a greater mix of mobile web visitors with lower initial conversion. UK performanceUK UK KPIs sales Retail Visits Orders Conversion ABV customers Active by market by Performance Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS EU UK 10 We delivered a consistently strong performance strong consistently across a delivered We momentum customer rebuilt we as year the of course the following disruption from the go-live of our Euro Hub warehouse automation last Retail year. sales growth for the year was as 22% our active customer base grew This18%. year our EU customers saw a much improved stock pool with greater choice and availability and The stance. trading dynamic more a benefited from by unlocked delivery to proposition enhancements supported also performance this have automation in region, as we have rolled out later cut off times across standard and next day delivery in France and in now is delivery proposition our where Germany industry-leading. performed France particularly well penetration online relative with lower lockdown during furthergenerating opportunity acquisition customer for during the year. Our model is resonating well with fashion focused 20-somethings in Europe, and we have taken share further targeting improvements are We year. the through competitive enhancing our continue positioningto and localised into investment including proposition customer pricing on ASOS DESIGN. Retail sales grew by 18% to £1,175.9m during the year Retail sales to £1,175.9m grew 18% by as we continued to take share in our home market. The and product in made we improvements facing customer proven and well resonated have engagement customer the appeal of the ASOS proposition. now have We over active7m customers in the UK and saw growth of over customers UK year. this subscriptions Premier in 30% showed a pronounced shift towards more deliberate for adjusting when and lockdown, during purchasing this change in underlying returns rate, we delivered consistent sales growth across this year despite the reduction in demand for the out’ ‘going product we are bestknown for. STRATEGIC REPORT 13 3 product choice, availability, price newness and Further increasing Further Annual Report and Accounts 2020 Annual Report We startedWe the year well, backing our first half trading plan with good availability and year on yearincrease a 13% in newness. and with customers well This resonated was reflected in our strong first half sales customer performance. of shape The the as resonated what hence and demand, shifted product, dramatically relevant most from March related onwards as COVID-19 lifestyles and customers’ impacted lockdowns ‘going for designed habits. Product shopping been always have dresses, especially out’, central to our product offer and a point of differentiation. demandcustomer Whilst for ‘going out’ product has been severely strength the lifestyle restrictions, by impacted of our brand here remainsa strategic advantage for us in the medium term and we have maintained our resource levels in this area. have adapted We 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 audience 20-something fashion core our love customers product out’ ‘going and the for. ASOS This we have year, continued to build momentum with strong our family 13 of ASOS brands, a business that delivered sales in the Collusion year. of over £1bn and ASOS 4505 both delivered great growth this year, supported how by well the productresonated ASOS lockdown. through with customers 4505 grew 89%, whilst Collusion grew 44% and firmly established itself10 brandas a top site. on ASOS Luxe and Dark Future were launched as we developed further choice for our ‘glam segments. customer male’ ‘alpha and girl’ with initial success good had Both brands launch ranges, but we have taken the further to opportunity summer the over increasing engagement, customer develop brands the backing and range the in choice with influencercampaigns. led This September saw us launch our ‘ASOS trend key Must pieces Haves’, of the season ensure to points price leading market at we are competitively positioned with our collection initial The customers. younger resonated well, with a focus on logos, pastels, utility and checks, and two further months. the coming collections in launch will ASOS PLC PLC ASOS
2 Removing non-strategic cost As we set out this we had year, identified a multi-year opportunity to drive greater to us allowing business efficiencyour across 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 return the and experience customer the into our way the to marketing, from generated teams are structured and our commercial partner opportunity the Whilst agreements. 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. our However, progress in removing c.£50m of non-strategic costs has exceeded our initial expectations this year, owing to the tenacity and adaptability of our instilled rigour greater the alongside people, operational and discipline our financial in performance We processes. management opportunity the further leveraged presented change operational and disruption the by required to test COVID-19 and by further with associated return the understand spend in a number of areas and took action further is there forward, Looking accordingly. opportunity these large taken having but 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. we are However, opportunity confident this that support will as profitability, in improvements continuing well as allowing for disciplined reinvestment into the business. 1 Strengthening organisational capabilities We have madeWe good progress this year in building out the breadth and depth of experience in our Executive team. During the threeyear, new executives have joined the business, Robert Birge as Chief Growth OfficerPeople and Chief as Butler Jo Officer, Patrik Silén as Chief Strategy Officer.We will fourth our announce final appointment and to our new Executive team shortly. The Chief end-to-end Officer take Commercial will ownership of product, from design and new This presentation. to through buying Executive team will allow us to drive greater accountability of and ownership end to end ensuring as well as customers and product we have the right capabilities as ASOS continues to grow in terms of scale and complexity. have also We reshaped our organisation beyond the Executive team ways structures, and processes new building of working. This has enabled us to improve managing whilst execution, operational our and significant organisational change 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 thisyear and have set the future. the for foundations
and newnessand product choice,product availability, price Remove Further increase Further non-strategic cost 2 3
4 1 Our engagement Strengthen priorities key FY20 Continue to improve to Continue organisational capabilities next stage of growth. next stage presentation and social media social and presentation
5 6 has strengthened foundations for our foundations strengthened has
Delivery against six key priorities in FY20 priorities against six key Delivery Strengthened Strengthened Annual Report and Accounts 2020 Annual Report
acquisition investments Optimise Leverage and retention
ASOS PLC PLC ASOS approach to customer to approach
benefits transformational from foundations for growth for foundations 12 STRATEGIC REPORT 15 Annual Report and Accounts 2020 Annual Report This year will see commencement of of commencement see will year This 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 but year financial next the in operational allows for a gradual ramp up and testing peak for capacity requirement of the ahead trade in 2023. Tech Investment in our technology platforms has been central to delivery of an ever experience. customer ASOS improving Whilst we delayed implementation of our to programme ensureTGR were we to FY21, not taking undue execution risk through across continued has progress lockdown, all our platforms despite the disruption and created. uncertainty COVID-19 outlook in supported year the across releases Multiple driving efficiency enhancing in and through outboundour delivery returns and operations. of Highlights rollout include paperless online returns to the UK, US and functionality and support logic to Germany, of development and consolidation, parcel flexible fulfilment across our network of fulfilment Flexible unlocks warehouses. the and ability service with to brands customers network warehouse our across from product if not available in the regional warehouse. customer of release the saw October This product reviews on site, which should and engagement support customer in 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 acquiring, improving our payment acceptance local our and costs transaction rates. have also We delivered further SEO our enhance to consolidation domain and improved our page speed downloads help to journey customer core the across support conversion. ASOS PLC PLC ASOS 6 Leveraging benefits from transformational investments Logistics significant disruption caused COVID-19 efficiency and our across to operations processes re-engineered our network we as ensure to structural changes made and our warehouses were compliant with best requirements. distancing social practice Perspex shielding was built to separate the facilities, our across benches pack 680 created was space sheltered additional sanitation times, break facilitate to outside was checking equipment temperature and installed as well as regulating the way staff entered, exited and moved during their shift across site. This was delivered warehouses our whilst continuing keep to operational, although it did require a significant reduction in capacity as we change. of magnitude this implemented nearlyWe have concluded an incremental £5m of investment this year to ensure that with compliant best are warehouses our permanent a on distancing social practice ventilation, includes improving basis. This increasing turnstiles structural and changes place. in systems way support one to the On anunderlying basis we have driven a significant step change in warehouse efficiency, most notably through the pick following Hub Euro in KPIs pack and year. last automation of implementation Pick units per man hour improved 57% by whilst pack also improved We 14%. by 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 standard Canadian our reduced we and delivery proposition to 6 days. from 14 Evening next day delivery is available with a midnight cut off across urban Germany and we were able to support the addition delivery options customer other of many including further pick up drop off points and more specific delivery windows. adidas X IVY launch PARK In January, we dropped X long-awaited adidas Beyoncé’s IVY collaboration. PARK This collection capsule gender-neutral sporty of comprised shapes, co-ordshigh-tech cute materials, and oversized outerwear. Working closely with adidas on the launch of this collection, our efforts marketing collaborative homepage ASOS included an out-of-home advertising takeover, and York, New and London in social assets featuring Queen B range product initial The herself. sold out within a few hours, which makes us even more excited for the drops we have coming up over the next few months. 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 acquisition. customer of levels Looking forward, we will continue with further data-led a approach and experimentation to ensure we are continually optimising and building greateragility into the way we deploy spend.
5 Optimising to customerapproach retention and acquisition We built strong customer momentum through through momentum customer strong built We customer active our increasing year the to 23.4m. This momentumbase 3.1m by improvements the supported by has been we have made in restoring our compelling product, our across proposition customer and content media social presentation, dynamic trading stance, but it has been amplifiedby progress in refining our consumer- of allocation the to approach investment. facing have deployedWe a more scientific our deepen to testing to approach and behaviour customer of understanding to ensure we are driving the right return from all investment. During the year we geo-targeting, with have experimented media social new retargeting, prospecting, understanding our deepened and channels of Pay Per Click (PPC). This drove efficiency clearer a and spend, marketing our through incrementality the of understanding different through investment by generated channels, allowing us to redirect our continue We appropriate. as investment and calendar promotional our to view activations as an effective mechanism for to and retention acquisition, customer customers with which frequency the maximise engage with adopted ASOS. We a more dynamic approach this year – with shorter,
4 presentation social and engagementmedia Continue improving This year we made consistent progress on presentation product our further improving with a engagement, media social and content video developing on particular focus thatfeels native and organic to app channels. The year had started well aheadof peak momentum this maintained we and trading successfully by half second the through pivoting our content to reflect the realities lifestyles customers. our for of lockdown This translated into engagements over 79m year, the during channels social across with over 200m video views and over 275m story views. have continuedWe to experiment with year, different this channels media social content engaging most the developing the on strong is presence our and ensuring customers. our to platforms relevant most campaign, TikTok major first Our combination a used “AySauceChallenge”, content commissioned creator and ASOS of to drive ASOS brand recognition and challenge The success. great to awareness and views, 1.6bn over generated hashtag made ASOS the only European fashion brand to break a billion views over the campaign period have We in 2020. also begun to experiment with content on Twitch, the live streaming platform for gamers, and are excited the by prospects new on customers target our reaching for different channels. and influencer collaborationsHighlights our from included Lottie have year Tomlinson this and Wes Nelson fronting the first drop of our Must Haves’ collection,‘ASOS a campaign for content engaging generated which multiple channels and saw video over 8.7m Trotman Ashcroft Sarah Luke views. and ASOS latest our for ambassadors as acted Luxe and Dark Future collections. The content with well extremely resonated here produced activity led over influencer the generating of reach social engagements with a 10m 34m.almost Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Social media Social inspirationalOur product content relatable and presentation remain at the heart of how we 20-something our to appeal levels strong ensuring customers, social all across engagement of this of highlight channels. media A year has been surpassing 10m followers on Instagram. also We ability to our demonstrated moments trading key in resonate over the Black Friday period, 1.2bn generated we when impressions, organic potential of many of ahead landing our peers. on the From 7am Thursday before Black Friday trending was #ASOSBlackFriday worldwide. Our success was driven a surprise by and delight customers activation got that bargain their about talking purchases, increasing impressions of our product. 14 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 through demand customer strong extremely lockdown and we have capitalised on the in opportunity ambitions our accelerate to these categories. have approachedWe our Face + Body a in and differentcategory lens a through 20-something with our resonates that way differentiating positioning our customer, and authority within the market. have We consistently grown our offering of the most relevant brands over the last two years, highlights from the brands added this year Charlotteinclude Tilbury Urban Decay. and Whilst Face + Body compliments our core shopping customer offeringfashion well, this from expectations and behaviour built therefore category have differ we and 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 lockdown,by up c.50%, and we believe our edit best the presenting curating and on focus of sports lifestyle and activewear product for most the from 20-something customer, our further sports will brands, relevant globally category. this in penetration support our Our key performance indicators allow us to measure both the financial value we create Key Performance Indicators for our shareholders and the strategic value STRATEGIC REPORT in growing our business and delivering our purpose.
Financial objectives Key financial measures
Our key financial measures give us a clear Revenue Retail sales, delivery receipts and third-party revenues from 2 020 £3,263.5m indication of the overall performance and continuing operations 2019 £2,733.5m 19% position of ASOS. In some cases, the figure is an alternative performance measure, Gross margin Gross profit as a percentage of revenue 2 020 47.4% i.e. not a statutory measure. In these cases, 20 140bps information is shown in the definition to cross-reference to the corresponding 1 EBITDA margin Profit before interest, tax, depreciation and amortisation 2 020 8.2%1 statutory measure. as a percentage of revenue 20 430bps Revenue has grown by 19% and profit before tax1 by 329%. Our EBITDA margin1 1 EBIT margin Operating profit as a percentage of revenue 2 020 4.6% grew by 430bps and our cash generation2 20 330bps increased by 294%. 1 Profit before tax 2 020 £142.1m 2019 £33.1m 329%
Diluted EPS Profit after tax divided by the weighted average number of shares in 2 020 125.6p issue during the period, adjusted for the effects of potentially dilutive share options 20 2 p 327%
Cash generation2 The movement between opening and closing net cash/(debt) 2 020 £258.6m2 position where net cash/(debt) is the cash and cash equivalents less borrowings 2019 (£132.2m) 294%
Strategic objectives Key strategic measures
We are really pleased with the progress Active customers Number of customers having shopped in the last 12 months 2 020 23.4m of almost all of our key strategic measures as at 31 August 20 20 15% Active customers increased 15% to 23.4m.
Orders and visits are up 11% and 19% Total orders Total orders placed 2 020 80.2m respectively, and the trend to access our site 20 2 11 % through mobile devices continues. Our Net Promoter Score stepped back by two points Total visits Number of visits to ASOS.com via any device 2 020 2,691.2m from last year. 20 2 2 19%
Average order frequency Last 12 months’ total orders divided by active 2 020 3.43 customers 20 4%
ABV Average basket value, being total order value before returns and discounts, 2 020 £71.92 including VAT, divided by total orders 2019 £71.29 1%
Mobile device visits Number of visits to ASOS.com on any mobile device 2 020 85.5% divided by total visits 20 360bps
Group conversion Percentage of visits that convert to an order 2 020 3.0% 20 2 20bps
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 2 020 57 20 2
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
16 ASOS PLC Annual Report and Accounts 2020 ASOS PLC Annual Report and Accounts 2020 17 STRATEGIC REPORT 19 Annual Report and Accounts 2020 Annual Report Nick Beighton Chief Executive Officer Mat Dunn Officer Financial Chief However, whilstHowever, are we well positioned for peak trading andthe year ahead,are we consumer for outlook the on cautious demand, and will remain so until lifestyles 20-something stability financial and our for for Timelines start normalise. customers to containment of the virus and vaccine a still major our of number a uncertain and look of prospect the into facing territories are a second wave of cases and increasing normal a that clear is It measures. lockdown 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 the of cognisant are we globally, share economic impact this crisis is having on our pressure the and 20-something customers incomes. disposable on their performance and management rigorous The last the over demonstrated grip operational months gives12 us confidence in our ability ahead. uncertain navigate the year to related COVID-19 favourable the Excluding this impacts experienced cash and cost expectyear, we to continue to grow our profitability sustainingwhilst positive cash conscious remain we However, generation. the potentialof financial consequences associatedwith Brexit, and whilst we are readinesscomfortable business with our and scale the taken, precautions and the nature of the impact remains outside of our uncertainty the Despite control. ahead, flexibility proven and rigour the operational customer strong the and model our in momentum we have built will support our progression as one of the few truly global leaders fashion retail. in ASOS PLC PLC ASOS capabilities, whilst enhancing our consumer consumer our enhancing whilst capabilities, marketing of range broader a by interaction 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 at change strategic delivering for model ASOS and we are building a newly formed co-ordinate to cross-functional change team and projects across the business. This will momentum and support alignment driving in on the many initiatives we have in-flight and to support our next stage of growth. Outlook positioned well remain we ahead, Looking opportunity global the the through to capture brands, ASOS the of development continued customer platform ASOS the and ASOS the and demonstrated have We experience. year, flexibility operational this our enhanced resilient more stronger, a emerging are and business. agile and In terms of the ASOS customer experience experience customer ASOS the of terms In we will continue to improve the range and giving offer, customer our flexibilityof them a compelling reason to shop with us more frequently making by our offer more consumer and geography differentiated by type. will We also enhance our on-site introduced recently with the experience, capability the being reviews customer continue also will We first enhancement. to develop our payment and delivery and particularly Europe propositions, in 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 build scale we and increasing receive can consumers ways of range the and return products. With the top team now in place and much processes core our develop to done work and ways of working, our focus will shift to building out the depth of our organisational further for looking whilst capabilities efficiencies across our business. This will involve a particular focus on enhancing our our out capabilities, building geographical sourcing our category improving and teams
This will take time to build out but will broaden our appeal to a wider range of portfolio our in gap a meet and consumers fashion-forward product. lower-priced for The priorities for the ASOS platform will offer further customer to the be enhance growth strategic the in appeal its broadening categories of activewear and Face + Body. madeWe much progress in FY20 but there is much more opportunity for us to build these categories. will We also start to use a more increasing fulfilment, to approach flexible giving availability and by both range the across from product to access consumers ASOS warehouse network. will We begin this, starting in the US, in the first half of the Thisyear. will start to enhance our offering and we will work with brand key partners to build the capability to deliver to our warehouses their from directly consumers in the coming years.
These pillarsand priorities will serve us well for the next stage of growth, providing the strategic framework as our initiatives evolve year. each In the current fiscal we year, will take a further leap forward in becoming a truly our of deployment with the retailer global programmeTGR – which will give us the planning merchandising, buying, enhanced need we capabilities management stock and aspirations. growth global our underpin to These capabilities will enable our retail teams to deliver a more consistent product across consumers our to experience 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 ASOS4505. 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 future the Looking to Looking Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS evelop the ASOS platform, enhancing ASOS the evelop urther develop the range of unique mprove the ASOS customer experience experience customer ASOS the mprove to make it more inspiring, exciting, friction free and personalised D I design only we offer to grow the ASOS brands which are already a £1bn business category flexibilityour to and breadth ensure we have more of the products they whenever 20-somethings want want it F
18 These will be enabled an by efficient, effective and sustainable model. – – – Strategic focus and execution and focus Strategic one number the become to is vision Our 20-somethings fashion-loving destination for worldwide and we began our journey retailer truly global a becoming towards some years ago. Initially this was through portfolio product global strong for a building markets. More recently we have deployed fulfilment centres in the US and Europe, to physical the set and proposition our enhance foundations for the next stage of the journey. have madeWe good progress and have learnt a lot. This year we needed to build on our physical infrastructure to ensure we had working of ways and processes right the scale global of business a for appropriate and complexity. The focus on our six key priorities in this financialyear has allowed us to do this and ensure we have the right to us for strength financial and capabilities begin the next phase of our growth. know thatWe to make our vision a reality we need to meet all the fashion needs of excites inspires, that way a in 20-somethings and engages. The next stage of our journey will require us to continue building towards supported retailer truly global a becoming by three strategic key pillars: STRATEGIC REPORT 21
3. Enhance our and flexible multi-brand platform by growing by high potential categories, implementing fulfilmentflexible and improving proposition Annual Report and Accounts 2020 Annual Report by transformingby ASOS PLC PLC ASOS 5. Develop our effective, efficient sustainable and model our organisation including upgrading talent and capabilities, improving cross-functionalof ways further and working driving responsibility for everything we do
2. Grow our ASOS unique brands launching by and brands new on bothimproving speed market to priceand
4. Improve our personalisedImprove experience customer the applicationthrough of data science experimentation and the engagingto deliver most experience 1. Expand our global reach scale local and acceleratingby growth in key markets strategic priorities …and are underpinned our corresponding by 4. The ASOS customer experience
The ASOS platform 3.
sustainable model sustainable
Effective, efficient and Truly global retailer for retailer global Truly fashion-loving 20-somethings
Annual Report and Accounts 2020 Annual Report
Our five strategic strategic five Our
ASOS PLC PLC ASOS 5. 1. 2. The ASOS brands
priorities for the future for the priorities 20 business model… business the framework forthe our global framework Our strategic pillars provide STRATEGIC REPORT 23 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS e have a dedicated ethical trade team who manage our Ethical Trade programme and work ur CEO, CFO and Director of Investor Relations held a roadshow after results our FY19 ur is AGM usually a key way for shareholders to meet face-to-face to discuss the our annual ur Fashion with Integrity programme underpins our business model and ensures that we are uring we committed COVID-19, to paying for all own-brand made product and ensuring we uring the year, we published our fifth in-depth Modern Slavery Statement and continue uring it was more COVID-19, important than ever for ASOS to support our local communities he Board receives regular updates on shareholder and analyst sentiment and peer analysis. peer and sentiment analyst and shareholder on updates regular receives Board he hroughout the year our Investor Relations team regularly engaged with our larger he Chair, SeniorIndependent Director and Committee Chairs are all available to meet with he Board is committed to ensuring that ASOS continues to operate responsibly in everything he ASOS Foundation partners with charities to provide infrastructure, training and support to n 2020, we became signatories of the Ellen MacArthur Foundation’s New Plastic Economy upheld our standard payment terms, in order to protect our suppliers and workers in our global supply chain. have We continued to place new orders with our suppliers, and we have worked closely with them toagree appropriate supporting measures to ensure the health and safety of workers. to add depth to our human rights due diligence processes. 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. T shareholders. announcement. results FY20 virtual our following a hold will roadshow and announcement Remuneration the of Chair Geary, Karen year, the During requested. where shareholders, Committee, engaged in consultation exercises with our largest shareholders to discuss our remuneration. to approach O performance and strategy. As per government guidance on preventing the spread of we willCOVID-19, be holding a closed meeting this year, but we look forward to welcoming shareholders at the in AGM 2021. 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 respectin of our supply particularlychain, COVID-19. during with third-party auditors in key product regions to understand country-specific issues,ethical ensuring standards are being upheld and regularly engage with local and international stakeholders. a part of finding solutions to shared global challenges and putting these into action acrossaspects all of the business. reducing and packaging our to committed approach our demonstrating Commitment, Global our contributions to global plastic pollution. are constantly We striving to decarbonise ouroperations, for example by prioritising sea, road and rail freight, and working collaboratively with our supply chain partners to advance low-carbon innovations. 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 During by COVID-19. the year, the Board approved a charitable donation of £500k to the ASOS Foundation for FY21.
How we engaged… How – –T –O –T – –T –D –W –D –O –I –T –D Why they are important… they Why Operating responsibly in in responsibly Operating 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. alsoWe want to go further to find solutions to the challenges that we, our industry, and our customers face. As we continue itto grow, is imperative for the long-term success of the Group that we continue to manage our impact on universal issues and change climate as such waste. plastic A key objective of the Board is shareholders for value create to and our purpose, values and strategy strive to deliver long- growth. sustainable term, working close Maintaining open and relationships and suppliers our with dialogue brands is key to ensuring that we continue to create and product relevant most the curate fashion-loving for range 20-somethings the around globe, which is key to the long-term success of the Group. Our key Our key stakeholders… Our CommunityOur Our Shareholders Suppliers Our Placing of shares unanimously Directors the April 2020, in successfully completed was that ordinary non-pre-emptive the shares of considering When placing agreed that the equity raise would be in the best interests of all stakeholders, taking into consideration, among other and things:businessthrough sufficient the manage liquidityto flexibility provide and to the action impact take not did we on if our shareholders and suppliers ASOSers, beyond the period of disruption the caused protection COVID-19; by of the long-term growth of the Company for all of our stakeholders and industry the to as continued advantage supportively mutual to with work them to how and base supplier long-standing our shareholders; our short-term for reasons made management being cash liquidity or decisions ability the avoid to pandemic; the impacts of the from recover Company the enable with Integrity to Fashion programme our of maintenance the and long-term prospects; ASOS’ detriment to cause that may to continue to operate responsibly and in the most sustainable way for the benefit of our communities. Foundation donation ASOS During the the year, Board approved a £500k donation to the ASOS Foundation The Directors for FY21. unanimously agreed that it would long-standing Foundation’s ASOS the to impact the things: other among consideration, into taking stakeholders, all of interests best the be in 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. Key BoardKey decisions during FY20 considerationA key 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 decisions key made the by Board during FY20:
e provide inspirational and engaging content to our customers, through our inclusive social ur curated selection of fashion and Face+Body products are desirable and relevant to our uring our strategy COVID-19, was to provide engagement, support, reassurance, confidence uring the Board’s COVID-19, priority was the health and wellbeing of our ASOSers. We ll ASOSers were invited to complete a wellbeing survey during the lockdown in the UK to t the beginning of the year, the Board set out the Company’s priorities for FY20, to ensure he investments we make in technology, operations and people reflect the needs of our target hroughout the year, the Board has prioritised discussions on the Company’s strategy, to ensure he Executive Committee engage with employees through ASOS Voices, a monthly, all hroughout the pandemic, COVID-19 our senior leaders dialled up their live events and drop-in he Board has appointed Karen Geary as our Designated Non-executive Director for 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 customers. our to and optimism to our customers through our social media channels. remained We relevant to our customers’ needs by pivoting our product mix during to COVID-19 respond to customers’ shifting lifestyles. we continue advancing our mission to be the number one destination for fashion-loving 20-somethings globally. 20-something customers and our distinctively designed and sustainably sourced own brandoffer gives our customers a unique reason to shop with us. media channels and our carefully presented product imagery. now We have 10.6m followers on Instagramand a recent campaign TikTok surpassed 1.6bn views. are constantly We looking for new and innovative ways to engage with our customers. A we restored the strength of our customer facing offer, rebuilding momentum and executing consistently. our strategy company town hall, which provides the Executive Committee the opportunity opportunity ASOSers an for provides and to performance, update activities and recent on employees to ask questions. engaged. and informed ASOSers keep sessions to transformed our ways of working in response to and COVID-19 created our ‘RE-Assembles’ programme to bring our employees back to our COVID-secure workplace when the time was right. 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 The to outcomes COVID-19. 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. understand concerns and overall sentiment, the results of which were fed back to the Executive Board. Committee and
–W –T –D How we engaged… – –T –O –T –T –D –A –T business for the future. the business for The following pages comprise our section our comprise pages following The Directors the how outlining statement, 172 have, in performing their duties over the course of the had year, regard to the matters to(f) of the set out in Section 172(1)(a) Companies Act 2006.
Strong engagement with our engagement Strong stakeholders helps us to build a better helps stakeholders Stakeholder Stakeholder engagement Annual Report and Accounts 2020 Annual Report Why they are important… they Why Our goal is to create and curate products and experiences to fashion-loving inspire relevant 20-somethings. stay To 20-something our to 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 customersfrequently with our to ensure we can provide them with what they want, when they want it. The rapid shift in during habits customer why demonstrates COVID-19 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. are committed We to work employees our ensuring entrepreneurial innovative, in an working enjoyable and diverse a with environment, where workforce, and inclusive throughout heard is every voice motivated Having Group. the and engaged ASOSers will drive us to achieve our strategy long-term ultimately our and success. ASOS PLC PLC ASOS Our key Our key stakeholders… Customers Our Our ASOSers Our 22 The Board understands the importance the of understands Board The ensuring and stakeholders with our engaging that they are an important part of the Board’s decision-making. and discussions STRATEGIC REPORT 25
eld a D&I focused week on anti-racism eld a Stand Me By allyship workshop reated a BAME Reverse Mentor ommitted track fast launching a to ommitted at ASOS Plc Board Level emonstrated our commitment to to commitment our emonstrated ppointed an Executive Sponsor for aunched our Anti-Racismaunched our Toolkit. ntroduced D&I indicators into our our into indicators D&I ntroduced programme for our Executive team. to us enabling systems, resourcing ethnicity report on and and capture applicants. job of indicators other D&I with interactive events. that was attended ASOSers, with 120 by a week of thought-provoking talks and influencers BAME leading from webinars Matter, Black Minds as such subjects on Black Dope and Black entrepreneurs supporting Dads, black and Moms workplace. the in parents BAME for programme leadership Talent in FY21. A Race who will chair the ‘Race atWork’ Committee, which is made up of elected Colleague BAME the from representatives Forum, and will provide visible leadership on race and ethnicity at ASOS. Our Executive Sponsor will drive actions key such as setting targets for ethnic minority supporting and mentoring representation programmes. sponsorship and C I H H L D minoritysupport ethnic career the of introduction the with progression ILM Level 5 in Coaching and Mentoring for all BAME ASOSers taking on the member a to Mentors Reverse role of of the Executive team. C C harassment on policy zero-tolerance a to statement policy new a in bullying and on anti-racism, with all instances of discrimination escalated the Board. to
Annual Report and Accounts 2020 Annual Report – – – – – – – – – Since signing the Charter, have: we ASOS PLC PLC ASOS These partnerships yielded world-class partnerships AI yielded These experimentation, as such topics in research and vision computer forecasting, demand have which processing language natural been applied to our business. Ithas also connected Tech ASOSers to the best thinking create to skills, new of development and platforms technology our on experiences customers. our that delight specific business initiatives, wider of terms In designed were programmes development and delivered. An example of this was ASOS the whereby Develops’, ‘Finance development Finance and Academy ambassadors shared knowledge, delivered learning, created digital training, technical best and development personal enabled practice ways of working in a virtual environment. forward, going us for focus significant A across all parts of our business, will be apprenticeships, in invest to continuing choice, of employer dedicated a becoming talent within, from our whilstgrowing maximising utilisation of the levy pot. diversity to commitment Our bias removing and have seenWe a 9% increase in the number of leaders. female by held roles leadership senior continueWe to close the gender pay gap which stands down at from 26.6% 29.7%. have takenWe further steps to address the friendly family generous our maintaining gap, policies, a review of our talent attraction gender emphasising by strategyand inclusivity diversity through training. The Black Lives Matter movement shone a spotlight and gave the BAME community at ASOS a much louder voice on the inequities and prejudicesthat are evident in our every day lives. A BAME Colleague Forum was set up, providing a rich source of feedback actions demonstrable some take to in order Are ‘We our from on following internally, 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 will who Engagement & Belonging of Head take the lead on this important agenda to and momentum. transparency change, create In addition, we signed the BITC Race at public our demonstrating Work Charter, anti-racist, being only not to commitment but also to bring about positive change. icrosoft – Azure and ‘Kubernauts’ Next niversity College London (UCL) – – (UCL) niversity London College da – the National College for Digital mperial College London and University and London College mperial A TottenhamSkills in U Sciences Computer in Leaders Global Artificialand Intelligence I of Oxford – Global Leaders in Modern Learning Machine Statistical and Statistics M programme Compute Gen
– – – – Attractingtalent amazing ASOS remains a destination of choice for employer with our seekers, job external external attractingbrand c.157,000 thein site careers our through applications past Our year. LinkedIn following has grown 25%,by reaching over 440,000 globally. attracting on amazing remained focus Our talent, with Diversity & Inclusion (D&I) at the heart of our resourcing initiatives, reaching barriers removing and pools talent diverse to entry. strengthenedWe our Executive team with the Officer, People Chief new a of appointment Growth OfficerChief Strategy Officer, Chief atAnd Officer. Commercial Chief and leadership level, of 47% our hires were females, in comparison in to the 32% previous increase. year also – a 15% We saw an increase in hiring women into STEM roles, with of 35% all technology hires being women, up from 5% the previous year. In addition to external hiring, we also placed mobility, internal on emphasis greater a planning, succession and talent management 8%. internalincreasing hiring by Building our foundations by talent developing Whilst dates key 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. also We contributed to a project run the by 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 Buying for Choice of Employer Graduate and Purchasing at the Times Graduate Recruitment Awards and 2020, we have for applications of number record a seen opportunities to join our buying teams. During the we continued year, to proudly support our partnerships and invest in specialist with: training
% reating the ‘RE-Assembles’ brand brand ‘RE-Assembles’ the reating aunching our first anti-racismaunchingour toolkit, programmes, increasing the number increasing programmes, of apprenticesover by 200% ASOSers educate to designed external resources, digital through articles, videos and discussion points C and transforming our ways of working in response to COVID-19 L L
apprenticeship new four aunching Our standout standout Our moments from 2019/20 – – – 157,000 157,000 applications external our managed through career site – 24% increase previous year the from 15 hired increase in women roles into leadership ur active network of employee ontinued to deliver existing resources upported those affected organisation by upported Health Mental Awareness aunched ‘Unmind’ our Mental Health Mental aunched ‘Unmind’ our C O representatives – have – ASOS InTouch year, this throughout supported ASOSers heard are voices employees’ ensuring important that decisions and business are informed employee by feedback. S L S transition with career changes, skills, CVworkshops, interview building build them to helping techniques and their LinkedIn profiles. assistance employee our such as Health Mental First (EAP), programme healthcare new programme, Aider financialbenefits, and family and hubs.wellbeing week with live 20 events designed to inspire and educate – over 1,000 ASOSers tuned in. proactively to people our enabling App, time’ the of ‘all health their manage of our– 42% workforce utilise this tool.
– – – – – We know a focusWe on positive wellbeing is not just important during crisis points. Our priority whole, a as support to wellbeing remains financial mental, physical, be whether it or social, and through a suite of resources we have:
The people people The positive wellbeing, resilience, building positive how we support on our people, focusing how Over the last year we’ve continued to evolve evolve continued to last year we’ve the Over community and learning. growth and inspiring
Annual Report and Accounts 2020 Annual Report behind the brand the behind ASOS PLC PLC ASOS 24 Our focus on wellbeing Wellbeing is embedded in our culture. unprecedented faced we Unexpectedly, pandemic, global COVID-19 with the times and it was even more important for us to check in regularly with our people, put minds at ease and help them feel safe, mentally. and both physically our switched we pandemic, the During sessions communication all-employee to virtual‘ASOS Voices’ sessions and our senior leaders dialled up their live events and drop-in sessions, keeping our people providing and engaged, and informed open encouraging and transparency dialogue. A bespoke edit of virtual wellbeing events and activities were delivered between March offering everyone, for something June, and from yogaclasses, DJ sets and baking, to mindfulness webinars and art classes, which to workshops targeted more complemented help our people to adapt to the new ways of and remotely teams their managing working, making the best use of technology. Sessions enabled ASOSers to dial in at a time that patterns working new with best, them suited responsibilities. caring with those assist to know thatWe high levels of employee attrition, of levels lower to lead engagement higher levels of productivity and a more people where environment, work enjoyable thrive. have worked We hard at building of 70% and engagement, employee supported felt reported they that ASOSers by leaders and connected to the business lockdown. throughout When the time was right, and with new safety measures in place, we led the way in bringing our people back secure to our COVID-19 workplace, through our ‘RE-Assembles’ programme. As part of this programme 13 interactive live eventswere organised and watched ASOSers. over by 1,500 STRATEGIC REPORT 27
In the last We published our We As part of the We continue We to work As an active participant in the closely with our NGO partners KADAV andin Turkey CCR CSR in China to labour child remediate incidences of previouslywe’ve identified in both countries. now discovered and We’ve remediated cases of child 15 labour No cases weresince identified 2016. in the last but year, we remain vigilant and worldwide. risks possible alert to engagement: Supplier modern conducted reporting we period, slavery training in collaboration with the Ethical Trading Initiative in China. Three webinar sessions were held for 62 enhancing suppliers, 29 factories and modern on knowledge suppliers’ slavery. In the UK, all suppliers and attend to a required factories are Forward face-to-face Fast online or provides session.training Training to how on employers information for for systems management good embed ethical and compliance legal and includes a session on modern slavery. been downloaded times 3,348 and we with collaboration in work to continue remediate to partners ground the our on raised. grievances any living and practices Purchasing wage: Transformation Collaboration, Action, (ACT) initiative, we assessed our ACT the within practices purchasing ACT first the became and framework brand to survey our suppliers against Practices Purchasing Supplier ACT’s Assessment. slavery: Modern fifth in-depth Modern Slavery critical our continued Statement and friend partnership with Anti-Slavery supports with our which International, us processes. rights diligence human due labour: Child Worker welfare Worker rights: Worker Global our of implementation with IndustriALL Agreement Framework Global Union in our Turkish supply we launchedchain, an app in 2018 which allows workers to instantly and report to rights violations anonymously handler complaints independent an Union. IndustriALL Global by employed the app has As ofDecember 2019, Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Circular fashionCircular continueWe to increase the recycled fibre content in our products, with an emphasis on as nylon, and polyester like synthetic fibres well as recycled cotton. have trained We of100% 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 for Centre with the Jointly generation. waste London part the of Fashion, Sustainable 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 theloop in affordable fashion. In early we also 2020, launched a YouTube that aftercare, product to series dedicated works with talent to educate our audience on ways to update existing fashion items in wardrobe. their chain supply our processes in Improving identifyTo 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 of 43% the ASOS DESIGN product on our site has been completed has that supplier a by produced the Higg Index within the last two years and we continue to work with our supplier base to increase this to 100%. Responding to COVID-19 to Responding chain supply global the in workers Garment face significant economic risk as a result of haveunpaid We wages due to COVID-19. committing by supported these workers to payfor all own-brand orders, and by – terms payment standard our ensuring which are aligned with the ACT Purchasing Practices guidelines – have not been changed or extended as a result of the continued have we Additionally, pandemic. suppliers, with our orders new place to business, do to continue can they ensuring and wages, pay and employment provide have been in constant dialogue with them to ensure that adequate health and safety workers. protect to place in are measures The pandemic has illustrated the need for order in improvements long-term sector-wide to protect workers, and to achieve this, we committed collaborateare to continuing to partners, and suppliers, NGOs with our the wider industry to achieve real and lasting change. sourcing Sustainable sustainableMore fibres 40% of all our textiles are now produced practices farming sustainable more through or using recycled materials. of 85% the cotton we use is verified sustainably sourced – keeping us on track to meet our 2025 more 100% source to commitment sustainable cotton in the next fiveyears. All of our more sustainable products come from verified supply chains, using third-party farming certificationcover that standards better and recycled, organic, practices, processes. fibre manufacturing Edit Responsible ASOS launched our In June 2019, with customers providing Edit, Responsible environmentally- of range our to access easy to customers allows It fashion. conscious filter productsby whether they are recycled (made from, or partially made from, recycled which materials, sustainable use or materials) sourced responsibly and organic includes materials.other and fabrics, fibres For our ASOS brands such as ASOS DESIGN, we require these products to contain a minimum of 50% recycled or recycled for except fibres, sustainable cotton where we require a minimum of 20%, and for suppliers to provide us with relevant certifications or confirm to validations criteria. edit withcompliance our responsible description product Each includes consumers sustainability help information to raise and credentials the understand materials. sustainable of awareness Status mapped Fully mapped Fully mapped Fully Partially mapped Partially mapped
Factory which cuts, sews, finishes ASOS Brands product and ships to ASOS e.g. processes, more or one of Provider stitching, cutting, packing, quality warehouses control, e.g. processes, more or one of Provider embroidery laundry, dyeing, printing, Fabric mills, tanneries, hardware and trims materials Example
Main productionMain sites integral Process production to Enhancements product to components materialsRaw man-madeand natural fibres, Textile Definition In 2019, ASOS joined Anti-Slavery joined and Union IndustriALL ASOS International, Global 2019, In tackle to project a in Madagascar Bangladesh and from organisations local 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 fundingby from the UK Home Office under its Modern Slavery Innovation Fund. Case study: modern ‘Preventing slavery in Mauritius’ Tier 1 Tier 2 Tier 3 Tier 4 Fabric and Tier 5 Tier Our products Our workWe hard to produce and sell great products that are also responsibly produced and sustainably sourced. focus We on three main areas: ethical trade, sustainable sourcing and with third-partyengaging brands. committedWe’re to using our growing global reach to respect people, animals and the planet, 173 factories and 896 With approximately trust. can customers our that products with great suppliers countries, in 24 tracking the journey of an ASOS garment – and reducing exposure to environmental and social risks along the way – is critical to our business. fully So we’ve far, mapped 2 and tiers 3 of oursupply 1, chain and partially mapped tiers 4 and 5. Integrity our industry face. and our customers Fashion with with Fashion Annual Report and Accounts 2020 Annual Report The turbulent events of the past year have highlighted how how highlighted year have past of the turbulent events The important it is for ASOS to continue to operate responsibly in to continue to operate responsibly important it is for ASOS everything we do, from the way we manage our supply chain to chain we manage our supply way the we do, from everything that we must go further to find solutions to the challenges that we, that challenges solutions to the to find must go further we that how we serve and speak to our customers. It has also made it clear to our customers. It has and speak we serve how ASOS PLC PLC ASOS 26 Ethical trade Our Ethical Trade programme holds us to rights human to comes it when account our producing with associated impacts factory share information garments. We stakeholders other and customers with our through Union IndustriALL Global as such factory and map chain supply an interactive list, which are updated every two months. In the months, last 12 we have conducted unannounced factory690 audits against our Supplier Ethical Code with expert third-party started has programme audit Our auditors. to expand to include tier 2 (see above) in all regions. More detail on our Ethical Trade programme is available at asosplc.com. In September 2019, millions around the around millions September 2019, In underlining action, climate for marched world the need for us to continue to strive for our way the sustainability in environmental 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, pandemic the COVID-19 has also encouraged us to work even more closely charities, and and communities local with our shown the role we can play in being there for together with our working and customers our partners, chain continued supply whose success. our criticalsupport to is Much has changed in months the past 12 solutions find together to work to need but the has never challenges global shared our to been greater. Our Fashion with Integrity programme ensures that we are a part of putting into solutions, these finding them action across all aspects of the business. Our work within Fashion with Integrity is products, our pillars: our divided key four into communities. our and customers our business, STRATEGIC REPORT 29
The Community SOKO Trust was In partnership with Udayan Care, Annual Report and Accounts 2020 Annual Report and in 2019 launched itsand in third 2019 home. The ASOS Foundation tackles barriers to Foundation ASOS The partnership our with The through employment support to young work its and Trust Prince’s has employment and training into people important. Workplace more been never programmes funded the by ASOS Foundation give young people the skills and into move them help to need confidence they Over furtherwork, training. or education 600 young people have completed an ASOS programme in Retail, Technology and Customer Care since and 44 2009, offered been permanent have graduates roles since the partnership began. This year we have developed our first ever online training course for Customer Care, delivered gain to people young enabling remotely, complying whilst experience and skills new with social distancing requirements. Kenya: established with the goal of in 2013 skills practical with the people local providing in improvements sustainable see to needed their lives and lift themselves out of poverty. Stitching Academy launched we Together deliveringKenya in a two-month 2014, expert-standard advanced, teaching course graduates 183 opening, Since skills. tailoring have passed through the Academy with two-thirds subsequently into moving now graduates 20 employment. permanent work within the main factory SOKO of (20% ASOS the produces which workforce) the Made In Kenya range. Funding also supports the Kujuwa Initiative, which works with washable, and education provide to schools reusable sanitary pads, produced the by students. local to factory, SOKO India: abandoned and orphaned enabling we’re children to grow up in a safe and stable family environment. Since we’ve 2009, sponsored family homes for children, over 70 quality education high to with access along ASOS The training. vocational and Foundation funds also the construction charity properties the for of bespoke ASOS PLC PLC ASOS We work with Centrepoint to support to with Centrepoint work We
Additionally, we created charity created we fundraising Additionally, products such as our Heroes range and our our on Refugees with Help collaboration Choose Our NHS and Carers products to raise money for important causes. have We also partnered with Oxfam to donate £1 from every pack of ASOS face coverings Relief Emergency Coronavirus their to sold Fund. In total we have donated over £500,000 to local NHS Trusts and front line charities through this activity. FoundationASOS openWe doors, we remove barriers. help We better. the for their lives people change young This is the purpose of the ASOS Foundation and our partnerships in the UK, Kenya and India are critical as young people face the by difficult and caused challenges new With supportCOVID-19. from ASOS, our customers, and colleagues suppliers, we partner with charities to provide support and to training infrastructure, people young enable disadvantaged potential. their to reach UK: young people at risk of homelessness. The funder headline the is Foundation ASOS of the Centrepoint Helpline which has now young vulnerable 15,000 than more reached information with the them providing people, the reduce help to need supportand they risk of homelessness. The Helpline has seen a 50% increase in call volume as a result and itsof COVID-19 work to help young people newly at risk of becoming homeless continues to be vital.
Supporting home at many pandemic COVID-19 the Throughout experiences through went customers our of that werecompletely new to them, required to stay home and miss loved ones. We throughout customers support to our wanted this period and we used our social media with them. engage and out reach to channels Our collaboration with charity Ditch the Label providing by customers our help to sought their manage to how for ideas and inspiration days positively and perhaps try something effort an in their support and to them new mental health. also We launched a new franchise called At Home WithASOS where we shared tips for mindfulness, yoga sessions and followers our engage to things other and time strange a through going customers lockdown. during communitiesOur investWe time and resources to make a real do We communities. local our difference to this directly as a brand but also through our Foundation. ASOS the charity, pandemic COVID-19 beenIt’s more important than ever during communities local support to our this year for there be to and pandemic, the through 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 that understood We doing. were UK the 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 to donated our charityWe £10k partner FAD to fund their Fashion 2020 Futures project. The charity aims to diversify the fashion and change for campaigning industry by people supporting young underrepresented who want to access creative industries. The upskills these programme Futures Fashion fashion-focused providing by people young with the them equip that programmes needed skills professional and technical for a career in fashion. o date we have reduced the range of We are constantlyWe striving to decarbonise our operations, for example prioritising by sea, road and rail freight, and working collaboratively with our supply chain innovations. low-carbon partners advance to These range from using electric vehicles for 100% of implementation the to delivery, office our throughout energy renewable of portfolio amount the maximising and recycled content in our packaging. With Carbon now coming 2020 to a close, in the processwe’re of setting even more reduce long-term to targets ambitious, ASOS’ carbon footprint, which we’ll be soon.announcing customers Our Our purpose is to give young people the confidence to be whoever they want to be, and this is something always striving we’re to achieve. aim to We reflect the needs and ensuring by customers our of expectations are communications and products our that responsible, inclusive and celebrate diversity. T own-brand packaging we use 40% by Our packaging is recyclable in principle, however we continue to work to improve the level of packaging successfully recycled 90% currently contain garment bags ASOS mailing outer ASOS and content, recycled bags currently contain 80% recycled recycled with post-consumer content, customers, ASOS from returned content, making up at least of this 10% figure in both have developedWe a prototype reusable mailbag and have started preliminary trials Progress e/customer e/customer 2
100% of100% plastic packaging to be reusable, 2025 by compostable or recyclable, recycled post-consumer 30% least At recycled/renewable 100% and content content used in plastic packaging 2025 by actionTake to move from single-use towards reuse models where relevant 2025 by Commitment we aim to 2025, By have removed at least 50% of the range of our own-brand 2018 a to compared when packaging baseline As we continue to grow as a company, we recognise therole that we can play in such issues global on impact mitigating our as climate change and plastic pollution. operations committed sustainable to We are and doing business the right finding by way, that challenges global the to solutions we face. 2020Carbon This year saw the end of our long-term strategy: reduction emission carbon Carbon 2020. Announced in 2015, this strategy set the goalof reducing our every year emissions carbon operational until 2020. The programme was a success: reducedwe’ve our emissions every year and cut our emissions intensity (tCO order) 30% by in this time. This is the equivalent tonnes of avoiding 110,000 emissions. of carbon Sustainable packaging packaging Sustainable In we became 2020 signatories of the Ellen MacArthur Foundation’s New Plastic Economy environmental the improving to commitment our demonstrating Commitment, Global pollution. plastic global contribution to our reducing and packaging performance our of As signatories we are committed to the following goals: Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Case study: emission Low deliveries deliveries originating from emissions operational our of share significant With a and returns, we work closely with our wide network of international carriers to alternative include These innovations. low-carbon or sustainable support foster and 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 been working we’ve on this year is a new fleet of electricvehicles from March in launched project the carrier partners, German Since our Liefery. of one Liefery2020, 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 Engaging with third-party brands with Engaging us Third-PartyOur allows Programme Brands and practices trading ethical our extend to 850+ the to principles sourcing sustainable brands on the ASOS site, with the aim of areas these in approach their influencing transform to collaboration and encouraging the industry. Self-assessments give us a clear picture of theof practices sustainable and the ethical overwhelming majority of our third-party Requirements Minimum With our brands. acting as the core of our Programme, we’ve and topics key on materials training issued have hosted ethical trade workshops to meeting in support non-compliant brands our expectations. also committed We’re to encouraging brands to move beyond events through them engaging by compliance create knowledge-sharing and promote to opportunities collaboration. for In August we took 2020, our Third-Party and further, step one Programme Brands manufacture that partner our brands asked in the UK to sign up to four commitments, Pledge the Transparency signing including – requiring them to regularlyand publicly joining and – chains supply their disclose the Fast Forward auditing programme, which we co-founded with other UK retailers in in order to tackle2014 ethical trade and modern slavery issues in the UK fashion supply chain. co-hosted We a workshop with the Fast Forward organisation in September and 2020 we will continue partners further our brand in to support over commitments new meeting these months. the coming We are alsoWe signatories to the Sustainable report 2019 our in and Plan Action Clothing we demonstrated a reduction in our water carbon footprint of our 10%, footprint of 20% and waste 4% reduction for every tonne ofclothing sold in the UK (against baseline). a 2012 STRATEGIC REPORT 31
Third Line of Defence of Line Third usiness Assurance facilitate the risk facilitate the Assurance usiness nternal and external audit provide provide audit external and nternal i our on assurance independent activities and risk management internal controls. B providing by process management challenge. and guidance oversight, The Operating Board, Executive Committee Committee Audit and also ultimately support line, second the Board. Plc ASOS reporting the to Internal and External Audit External and Internal
Annual Report and Accounts 2020 Annual Report Second Line: Management Oversight Management Line: Second – – Assurance Independent Line: Third ASOS PLC PLC ASOS
register review ASOS Plc Board Audit CommitteeAudit Operating Board Business area risk Project risk reviews Project risk Top-Down Approach Top-Down Executive Committee Executive Bottom-Up Approach ay-to-day within management risk d ASOS, engaging the breadth of ASOS defined including leadership, accountability and ownership through mitigation. and controls of application Group-wide risk business
workshops and risk reviews risk and workshops – that the approach is dynamic and engaging and dynamic is approach the that to influence our ASOSers. While continuity in our risk management approach is valuable to ensure a consistent assessment of risk year Framework Management Risk the year, on it are underpin that processes the and reviewed regularly Business by Assurance to with line in evolves appropriately it ensure change. business Assurance and oversight of our risks opportunitiesand Our assurance and oversight echoes the ‘Three Lines of Defence model’: Assurance Practical Line: First Top-Down Review Bottom-Up Review risk assessment framework. risk across the business. Risks are appropriate level of oversight. oversight. of level appropriate Plc Board to ensure there is the strategic objectives are assessed are objectives strategic Executive Committee, Operating Day-to-day operational risks that risks Day-to-day operational escalated in accordance with our accordance escalated in and opportunities associated withand strategic plans are assessed by the our operating environment and our and environment operating our Macroeconomic and business risks business and Macroeconomic Board, Audit Committee and ASOS ASOS and Committee Audit Board, influence daily decision-making and daily influence Assurance and of oversight our risks and opportunities Risk responsibility Risk The ASOS Plc Board has overall and management responsibility risk for includesapplication controls. This of reviewing the robustness of our risk framework controls internal and management 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 for responsible are leadership senior and and mitigations processes, implementing ground. the on controls The General Counsel & Company Secretary has executive responsibility for risk team Assurance Business The management. strategic day-to-day and the facilitate management risk our of application a providing by process and framework ensuring risk, assessment while of rigorous
itigation and action plans are the main isk owners and mitigation owners owners mitigation and owners isk movement and development isk he status of risk mitigations, including T R R controls to reduce material risk. M focus for us to proactively manage the risk so that we can prevent it from crystallising. R are appointed. any target dates for implementation, are developments and reviewed, regularly monitored. are risks in movements and is monitored.
isk assessments assist in identifying – – Manage and Monitor – – – We recognise that failure to quickly identify risks before they crystallise could stop us from achieving our mission, to be the world’s fashion- destination for online one number 20-somethings.loving process management risk Our Risks are owned, managed and officially reviewed across ASOS using the following process: ontrols, and the effectiveness of those controls, are regularly eeper dives take place on our key principal risks. isks are categorised by tolerance which shows us how acceptable he status of ongoing mitigations is evaluated, as well as R impact and likelihood the includes rating which methodology, materialising. risk the of C T mitigations. new for need the assessing D R the risk is, with current controls and mitigation efforts in place. reviewed. isks are assessed and monitored through our risk assessment
Assess – – – – –
Risk ontinuity our consistency in and conversations about risk help help risk about conversations promote a positive risk culture. approach our and framework risk to risk helps to create a risk aware culture within ASOS and to embed the into management risk the day-to-day of operations business. O C risk management. proactive and ngoing Embed – – Management Our approach to risk Identifying opportunities a and risks is integral an plays which process continual part in our decision-making and day-to-day no is there Sometimes risk without operations. reward, so a proactiveapproach is taken to risk with our accordance in management risk appetite. Creating a culture that is risk aware opportunitywhile to us enables driven continue to move at the pace that we do. at ASOS ASOS at can only truly be secured through effective be secured through can only truly purpose and mission – we are mission led, mission – we are mission purpose and Managing risk risk Managing purpose driven – and that purpose and mission purpose – and that purpose driven Everything we do at ASOS revolves around our around revolves we do at ASOS Everything Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS omprehensive risk review is very formal risk review facilitated by the Business Assurance he ASOS Executive Committee and leadership team are Horizon scanning’ takes place, as it provides a forward-facing A c prepared for and reported to the CommitteeAudit months, every six risks emerging and key highlighting significant changes with any along to existing risks. Executive Committee and PLC Board on how effectively the risks managed. being are R team has an exercise which seeks to trigger fresh and instinctive risk.thinking about engaged to provide their views and perceptions of risk within risk of perceptions and views their provide to engaged their business area and collectively across ASOS as a whole. ‘ areas. focus and risks emerging identification the of enabling view E our business objectives and strategic plans. T R
with dialogue our egular
isks areidentified across all business areas and in relation to
Report Identify – – – – – – 30 Our Risk Management Framework applies Framework Management Risk Our 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 risks key and opportunities appropriately. them manage to how and are This in turn enables us to meet our day-to-day objectives and our strategic objectives which and growth sustainable the underpin long-term viability of our business. STRATEGIC REPORT
33
Annual Report and Accounts 2020 Annual Report e have continued to enhance ASOS’ Business Continuity e have evolved our current Business Continuity e have carried out a thorough lessons learned process e have conducted third-party a review of our response e continue to closely monitor the situation for risks, e continue to perform horizon scanning and monitor the e have increased the level of rigour in our financial profitability drive to continue hedgingnatural e through ll new suppliers go through a rigorous selection and he use of a diverse, multifaceted sourcing and supply chain ASOS PLC PLC ASOS focus has increasingly shifted towards assurance on our key third-party and tactical with service and providers, suppliers remediation or mitigation necessary, if and, audits strategic 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). operations care office, customer head ASOS’ in capabilities fulfilment our including centres. chain, This supply and notification, incident on assurance greater includes management. crisis and incident escalation, and monitor team Procurement our and process on-boarding basis. ongoing an performance on supplier A T different multiple many across jurisdictions suppliers involving helps spread the risk and make us less dependent on on over-reliance exporting specific from countries and/or continuously monitored. is This suppliers/brands. key W A O situation. changing rapidly the to W W June, and between March peak pandemic first the following and captured key lessons learnt and areas for improvement from our three response teams – Strategic, Tactical and Operational. W ensure to plans emergency and BCPs pandemic processes, that we are aligned with best practice and prepared to manage a second wave in the best way possible. W W as well as potential opportunities. W business operating our increase to continue we while robust customers. international of share complexity and model W help to risks macroeconomic emerging of implications prepare for any volatility in foreign exchange movements. W strengthening indicators, including lead planning, our which helps build contingency and sensitivity against W to closely monitor the situation and respond dynamically respond situation and the monitor closely to Plans (BCPs) and developed specific COVID-19 new, plans. response and brands to ensure that we are aware of their specific circumstances and can react quickly should we need alternatives. to pivot support or them to any adverse movements in foreign exchange rates. currencies. fulfilment local in
continue cross-functional teams ur response business relationships with working close maintain suppliers e e have evolved our hedging policy to ensure it remains s our internal tech and cyber resiliency continues to mature, How do manage we the risk? How do manage we the risk? How do manage we the risk? How do manage we the risk? – – – – – – – – – – – – – –
What’s the risk? multiple third-party on reliant are service and suppliers We to website from journey, customer the throughout providers fulfilment, to the product itself. This means that if there is a failure on their part, we may suffer from a disruption to our business. overall and operations Any failure in day-to-day operations risks negatively impacting our ability to process or fulfil customer orders, opportunity lost proposition, customer reduced in resulting confidence. customer of loss a and What’sthe risk? The risk of a second and deeper wave COVID-19 causing a Particularly lockdown. sustained more stricter and/or longer, in the UK, USA and Germany (where we have our Fulfilment Centres), our other key trading territories, but also at a scale. global are seeingWe signs of potential local lockdowns which could impact ASOS, butin a worst-case scenario, a second wave meaning one, first the than longer and deeper be could a stricter and longer lockdown in the other UK and/or key territories. continueWe to closely monitor and respond to the situation as the health, safety and welfare of our ASOSers, colleagues priority. one number our remains customers and What’s the risk? cause could uncertainties current The COVID-19 around suppliers’ our and chain supply operational our disruptions in 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 in-house either of stock enough having not business the of What’s the risk? are a UK-basedWe global retailer and sell products to different currencies, many in world the across customers or third-party brands. in Accounts Financial our in revenues recognising whilst 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 profitability. our on Key Technical Third-Party Supplier or Service Provider Disruptions Service Third-Party Provider or Supplier Technical Key movement Risk riskDecreased owner Risk Officer Information Chief (CIO) Operational risks Wave Second Pandemic movement Risk New risk owners Risk Counsel General CEO, Stock Shortage movement Risk risk Increased owners Risk Directors Retail Foreign Exchange Rate Exposure movement Risk Stable owner Risk CFO
e have a knowledgeable and Tax Customs team who e have a diverse, multifaceted sourcing and supply chain e continue to drive the uniqueness of our product offering product our uniqueness the of drive to continue e e continue to develop our marketing and studio e invest significantly in logistics, fulfilment, delivery, e are using technology and data to optimise and be more e continue to work with brands in promoting products that W engage with authorities and regulators in key markets to globally developments or changes local of abreast keep and recommend changes or adaptations to our business operations to mitigate the impact. W multiple locations. helps multiple in suppliers This involving individual country an on and/ over-reliance an minimise to or supplier or brand, and allows us to utilise our extensive network in the event of capacity or capability changes. W W via unique ranges only available on ASOS.com such as DESIGN, EDITION,ASOS ASOS 4505,Collusion ASOS and style edits and exclusive products from brands on site. This is alongside our expanding diverse and inclusive ranges. modest offering and sustainable product with W production strategies to make sure that our product amazing. look communications customer and W our ensure to experience customer and brand marketing, loyal, customers existing our keep to – compelling offer is most customers attract to new and re-activateto customers effectively. W targeted and strategic in how we drive acquisition of new customers and maximise the loyalty and lifetime value customers. existing of 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.
– – – – – – –
macroeconomic environment. macroeconomic
can be dynamic and influenced by the by the and influenced can be dynamic risks, many of which will equally unlock many of which risks, he Executive Committee, Operating Board and cross- Like all businesses ASOS faces a variety faces a of ASOS all businesses Like opportunities. As we operate globally, we opportunities.operate globally, As we functional Brexit and Steering COVID-19 Committees assess potential the and model monitor, to continue of implications demand and supply and outcomes andCOVID-19 Brexit, enabling changes or adaptations to be made to our business operations to address and mitigate risks. perceived T E yearour vision 10 and Plan, 3 Year and to maintaining our growth trajectory. need We to strengthen our core and areas, growth adjacent into offering, expand improve profitability to unlock a greater catalogue of mission our delivering are we ensure to and customers to be the number one destination for fashion-loving worldwide. 20-somethings fundamental achieving to business is model our volving
Principal risks risks Principal How do manage we the risk? What’s the risk? Customers for whom ASOS was always front of mind are now competitive e-commerce and global increasingly an to exposed enhance business model, our evolve to Failure environment. 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. What’s the risk? changesand factors geopolitical and Specific macroeconomic geopolitical uncertainty to business,due our influence can behaviours customer and borders across trade ability to customer diminished disruptions, operational to and lead performance. financial overall our impact and proposition How do manage we the risk? continueWe to monitor the shift in macroeconomic risks and geopolitical to uncertainties COVID-19 linked around Brexit to put in place mitigating measures to help prepare – our proposition, and be top of mind for our audience in an ASOS in result could increasingly competitive environment, losing opportunity and market share. need We to stay ahead for any further including: any for volatility, – recognise that our principal and emerging risks risks our principal and emerging recognise that Stable New risk
Annual Report and Accounts 2020 Annual Report and opportunitiesand ASOS PLC PLC ASOS Increased risk Increased risk Reduced Risk owner Risk Chief Strategy Officer(CSO) Risk movement Risk Stable Shift In E-commerce Market Dynamics Risk owner Risk CFO Risk movement Risk risk Increased Macroeconomic Trends Strategic risks 32 Risk movement key movement Risk STRATEGIC REPORT
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Annual Report and Accounts 2020 Annual Report e continue to deliver an audit programme in line with implemented in-country have e testing compliance ome of our sourcing regions, and our dependence dependence our and regions, sourcing our of ome he Brexit Steering Committee continues to monitor and ASOS PLC PLC ASOS mproved technicalcapacity in our Garment Technology a proactive approach to building resilience, for example for resilience, building to approach proactive a we When management. energy and waste addressing in look at new sourcing regions, environmental risk is a key consideration. By building greater transparency and securing supply routes resilience. our increase sustainable materials we more for encourages base engagement supply Continuous with our of a Hard Brexit. S 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. consider We the entire lifecycle of our products, our use of plastic and packaging, energy usage footprint. carbon wider our and logistics procurement, and S on natural commodities to produce our products, are change. climate of impacts the particularly to vulnerable W 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 T assess the outcome of the ongoing negotiations, whilst simultaneously preparing for a Hard Brexit and other being are plans contingency Mitigation and outcomes. put in place to address the key risks in preparation for 31 December31 2020, regardless of the outcome. W ethical trade and sourcing risks by developing our expertise led standards, quality trading ethical product and around with ultimate Director and Sourcing responsibility our by Directors. Retail withresting our W 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. I teams, overseen by our product Technical Director, to provide increased surety that the products that we receive quality product our meet suppliers standards our from and expectations before they go on our website. W and quality control facilities, with enhanced testing and identify source. to at issues reporting and capabilities ustainability at ASOS focuses on both our products – hile we are aUK based business, we have aglobal substantial mitigating progress our make to continue e How do manage we the risk? How do manage we the risk? – – How do manage we the risk? – – – – – –
itizenship implications on workforce, particularly workforce, itizenship implications on within otential disruption caused by congestion at European ncrease of duty levels exposure with our own I by delivered product and products manufactured third-party brands; C our UK fulfilment and returns centres, and within our carrier network. It is worth noting that this will be an and industry-wide challenge; P carrierports inbound network. impact our could which
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 However, now. 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 long-term viability the ASOS. of ensure to order What’sthe risk? Ultimately ASOS’ success is defined by the products it sells. and experience customer exciting engaging, an Having first-class proposition can only get us so far if the products we sell fall short of our customers’ expectations. know We that our customers care about integrity and want to be the and from come clothes their where about confident 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 chain. supply our monitoring in risks Steering cross-functional Brexit and Board Operating The 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. identified: been have risks key following The – – – What’s the risk?
Sustainability and Climate Change Climate and Sustainability movement Risk Stable owner Risk CFO, CSO, COO, Retail Directors Emerging risks Operational risks – continued Issues Ethical Trade movement Risk Stable owner Risk Directors Sourcing & Retail Brexit movement Risk risk Increased owner Risk Committee, Steering Brexit Board Operating
ulti factor authentication across (MFA) ASOS increases ur CISO and DPO work collaboratively to ensure ontinue to seek out and work with independent third-party ata and security requirements are embedded within our our within embedded are security requirements and ata ecurity controls and processes are assessed and updated updated and assessed are processes and ecurity controls egular updates on progress and key issues and risks for ach programme is supported by a cross-functional he Data Protection team actively engage across ASOS he delayed implementation of our Retail transformation transformation Retail our of implementation delayed he nternal and/or external assurance review exercises are are exercises review assurance external and/or nternal nvested in new security tooling that has improved the I C M O T teams to ensure we have visibility of the collection, use and reuse of data and any new projects that require training right the ensuring while data, employee or customer and awareness is in place. A data breach response plan is in place for use in a major incident. O S D processes. Legal and Procurement G E I T project, Truly Global Retail, which is being rephased into has providedFY21, additional time to prepare and parallel run systems in advance of cut-over to test and provide of capable and stable is system new the that confidence expected. as running R W attacks, malware and protection phishing while against our engage positively to continue campaigns cyber awareness ASOSers on thetopic of cyber security. information store used by ASOS or its contracted third parties. share to and issues key cross-functional on alignment opportunities. and areas risk intelligence on Security Cyber The continuously monitor team continuously. for any internal or external signs of confidential data loss. Transformation & Investment Board, and Design Authority Officesupport to Transformation ASOS’ alongside work including transformation monitor programmes, and transformationmanaging risks. Steering Committee, including at least one Executive Sponsor, that meets regularly to review the status of dependencies risks, progress, including the project, and impacts. readiness. project and progress validate to used the major programmes are provided to the ASOS Plc Board Committee. Audit and team, led by our CISO, and enhanced our monitoring cyber threats. external and internal both of effectiveness and efficiency of our security and fraud operations. security specialists that we rely on for periodic penetration and red team tests.
Board, Change the as such boards overnance e have increased the size of our internal Cyber Security ur DPO is an independent role and can audit any How do manage we the risk? How do manage we the risk? How do manage we the risk? – – – – – – – – – – – – – –
year, our Cyber Security team have continued to enhance securityour security and policies, procedures capabilities to reduce the risks associated with confidential data loss, service ransomware. our and to disruption prolonged What’s the risk? As a pure play online retailer, ASOS uses data for a diverse receive orders, process to including reasons, of number payment and effectively engage with our customers on a regular basis. With more than active 23m 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 threats. cyber Deliberate or accidental loss of data – either from external attack or an internal control weakness – could lead to issues, regulatory compliance damage, reputational and confidence. customer or employee of loss a and What’s the risk? evolving, cyber continuously securityThe is landscape and aggressive sophisticated, more becoming with threats financial During this frequency. in increase to continuing What’sthe risk? infrastructure, our Continuously evolving adapting and capacity and capabilityis critical if ASOS is to achieve its mission of being the world’s number one fashion destination processes and systems technology, 20-somethings. New for enable ASOS to keep evolving at pace with the growth of the business. However, transformation is complex and creates cause can that issues execution and dependencies 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. Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS
Risk owners Risk CIO, CISO and Data Protection Officer (DPO) Risk movement Risk Stable Data Protection Requirements Data Protection Risk owners Risk Information Chief CIO, Security Officer(CISO) Risk movement Risk Stable Cyber SecurityCyber Threat CIO, CSO, Chief Operating Officer(COO) Stable owner Risk Risk movement Risk Operational risks – continued Transformation Project Delays or Failure to Deliver 34 Key Board of Directors Audit Committee Nomination Committee Remuneration Committee
Before ASOS, Nick was head of finance plc in 2010. Before that, Ian was group 01 Adam Crozier 01 02 03 at Matalan in 1999, later moving into the finance director of Rank Group Plc and was Chairman role of business change and IT director. formerly a non-executive director and chair He joined the Matalan retail board in 2003. of the audit committee of Misys Plc. Appointed November 2018 In 2005, Nick joined the board of Luminar External Appointments Chair of Kantar Entertainment Group as finance director, 05 Mai Fyfield and Whitbread plc, non-executive director and became a member of the EU Independent Non-executive Director of Sony Corporation eCommerce Task Force and the Future Fifty Programme Advisory Panel. Nick is also GOVERNANCE REPORT Experience Adam was previously a member of the Retail Sector Council Appointed November 2019 chairman of Vue International and previous and is a trustee of the ASOS Foundation. non-executive directorships include Stage External Appointments Entertainment BV, G4S plc, Debenhams plc Non-executive director of Roku, a US listed and Camelot Group plc. 03 Mat Dunn entity, Nationwide Building Society and Chief Financial Officer BBC Commercial Holdings 04 05 06 Adam has had over 20 years’ experience as a chief executive officer across four different Experience Mai was chief strategy and industries, most recently as the chief Appointed April 2019 commercial officer at Sky plc until October 2018, responsible for leading strategy and executive officer of ITV plc from April 2010 External Appointments None to June 2017. Over that time he has built Sky’s commercial partnerships across the a strong track record in turning around Experience Mat is a chartered Sky Group. During her time at Sky, she was a troubled organisations and for his ability management accountant with over 15 years key player in the growth and diversification of to build and lead successful management of post-qualification experience. He has the business and has extensive international teams. Under Adam’s leadership, ITV was significant international experience in both and digital experience. Prior to joining Sky transformed into one of the most successful developed and developing markets, as well in 1999, Mai spent eight years working as and dynamic media and content companies as experience leading major commercial an economic advisor to blue-chip companies in the world and its financial performance and functional improvement and in a number of different industries, both in the improved dramatically. transformation programmes. UK and the US. 07 08 09 Before joining ITV, Adam was chief Before ASOS, Mat held various financial executive of Royal Mail, where over planning, management and leadership 06 Karen Geary seven years he led its modernisation and positions at SABMiller plc from 2002, Independent Non-executive Director and transformed it from a heavily loss-making before joining EMI Music Limited as chief Chair of the Remuneration Committee position to profitability. Prior to Royal Mail financial officer of their Global Catalogue division in 2009. He returned to SABMiller he was chief executive officer of The Appointed October 2019 Football Association between 2000 and plc in 2010, where he held the role of chief 2002 and joint chief executive officer of financial officer of Asia until 2014 before External Appointments Saatchi & Saatchi from 1995 to 2000. becoming chief financial officer of South Non-executive director of National Express African Breweries Limited from 2014 until Group plc 2015. In 2015, Mat joined the board of Experience Karen is a former FTSE 100 02 Nick Beighton Britvic plc as chief financial officer. HR director with an extensive track record in Chief Executive Officer the technology industry. Between 1998 and 04 Ian Dyson 2013, Karen was with The Sage Group plc, Chief Financial Officer in Appointed Senior Independent Director and Chair where she built the HR function and was a April 2009 and Chief Executive Officer of the Audit Committee member of the executive committee from in September 2015 2004. Between 2014 and 2016, Karen was chief people officer at Wandisco, Inc., External Appointments None Appointed October 2013 based in the US. She was most recently with Experience Nick is a chartered External Appointments Non-executive Micro Focus International, the FTSE 100 accountant, who qualified at KPMG and director of Flutter Entertainment plc (formerly software company, as chief human has been Chief Executive Officer of ASOS Paddy Power Betfair plc) and chair of the resources officer, having initially joined since 2015. He joined the Company as audit committees of Intercontinental Hotels the business as a non-executive director Chief Financial Officer in 2009 and took Group plc and SSP Group plc and chair of the remuneration committee the expanded role of Chief Operating in 2016. Officer in 2014. During his tenure, ASOS Experience He has more than 20 years of has grown both in the UK and around the experience in the public market arena and Karen brings over 20 years of executive world. Today, ASOS is one of the leading has held both executive and non-executive leadership experience across start-up and fashion destinations for 20-somethings directorships at FTSE 100 and FTSE 250 listed blue-chip organisations, as well as globally, trading in almost every country companies. He was group finance and international HR and business in the world. operations director of Marks & Spencer transformation experience across a variety Group plc from 2005 to 2010 before of industries, particularly in Europe and becoming chief executive of Punch Taverns the US.
36 ASOS PLC Annual Report and Accounts 2020 ASOS PLC Annual Report and Accounts 2020 37 GOVERNANCE REPORT 39 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS
In addition to our Board changes, we also significantly with year the during team management senior strengthened our Officer, People Chief Growth Officer, Chief a of appointment the Officerour to StrategyCommercial OfficerChief Chief and further has appointment strengthened Committee. Each Executive support to our capabilities internal and team leadership our global ambitions and set us up for ournext stage of growth. engagement Stakeholder with our importance engaging the of understands Board The stakeholderskey and we have continued to keep their interests year. the decision-making throughout our of forefront the at As part of this effort, Karen Geary replaced Rita Clifton as our engagement. employee for Director Non-executive Designated During the year Karen met with the Chairs of our employee employee on Board the feedback to providing InTouch, forum, with engages Board the how information on More sentiment. 22. page on found be can stakeholders Governance governance corporate of standards appropriate Maintaining is essential for good management of the business. As a Board, we recognise the need for ensuring an effective corporate stakeholders our give to place in is framework governance the confidence that the business is being run effectively. UK CorporateThe Governance 2018 Code (the Code) became applicable During to ASOS from the 1 September year, 2019. we have applied the principles and of, complied with the provisions the of, Code, with the exception of Provisions and 36 aligning and requirements shareholding post-employment 38, After workforce. with the contributions pension director executive a review of post cessation shareholdings for Executive Directors, that concluded Board Committee the and Remuneration the plan current the under exist measures retention sufficiently robust rules to ensure a significant number of shares are held post a to introduce recommended not was it therefore cessation and formal policy (this is discussed in more detail in the Remuneration Report on page An explanation 63). of how we will comply with Provision in 38 the future is set out on page in the 53 Directors’ Remuneration Report. A full version of the Code is available from the Financial Reporting Council website at www.frc.org.uk. Crozier Adam Chair 2020 October 13 Chairman’s Governance Governance Chairman’s Statement Shareholder, Dear Governance Corporate year’s this present to pleased I’m every underpins Thing’ Right the ‘Doing Plc ASOS For Report. part of our business model, and the Board is committed to to governance corporate of levels highest the maintaining our for value long-termsupport sustainable of creation the stakeholders. key other and suppliers employees, shareholders, the that ensuring on focused started Board year The the year, prior challenging a track, following on back got business and continued to deliver against the commitments we made last year. ASOS had a solid start to the financial butyear, in the second half of the the year, impact pandemic ofthe COVID-19 health, the shifted ensuring focus to Board’s the that meant safety and wellbeing of our people, while also taking steps to protect the business financially and adapt at speed to the uncertain, these is outlook Although the landscape. changing and management cost rigorous with the combined steps, 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 helpTo 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. brought have and Board, strengthened the have additions These a wealth of knowledge from across retail, technology, logistics, Board. the to management people and international markets Full biographies can be found on pages to 38. 37 Hilary Riva and Rita Clifton stepped down from the Board in March Both 2020. 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. Corporate Governance Report Governance Corporate Non-executive After holding a number of April 2020 2019 June External Appointments Changes during the year Hilary Riva Non-executive Director on Board the from down (Stepped March31 2020) Rita Clifton Non-executive Director on Board the from down (Stepped March31 2020) 09 Eugenia Ulasewicz 09 Eugenia Ulasewicz Director Independent Non-executive Appointed Limited, Vince Signet Jewelers director of Holding Group and Hudson Limited Experience with Bloomingdale’s, positions retail senior Galeries Lafayette and Saks Fifth Avenue, Eugenia joined Burberry Group plc and was of one Americas, Burberry, of President three global regions of Burberry Group plc which includes North and Latin Americas, After leaving to 2013. from Burberry 1998 Eugenia took on a numberin 2013, of serves a engagements and as board non-executive director for Signet Jewelers, HoldingHudson Limited Vince Group. and She was a non-executive director on Bunzl outsourcing distribution and global a plc, group based in the UK with substantial continental and US the in operations Europe, until April Eugenia 2020. has management, brand in experience extensive social media digital and technology, management, general and marketing particularly in the US and the broader Americas. Anna Suchopar Counsel & Company Secretary General Appointed None Annual Report and Accounts 2020 Annual Report Luke is currently chief chief currently is Luke Nick’s career began in 1987 Co-founded ASOS.com Ltd November 2019 November 2019 ASOS PLC PLC ASOS 38 in 2000, and served as its Chief Executive he when Officer2015, until September Director Non-executive a became External Appointments: Appointed 08 Nick Robertson Director and Non-executive Founder Experience Appointed officerSolutions, Ocado of executive a position and he has held since 2017 joined the Board of Ocado Group plc, the FTSE listed 100 online grocer and technology Prior to company, in 2018. this, Luke was senior a advisor at Boston Consulting Group and between 2015 and between 2008 and 2014, 2017, Luke held various roles at J Sainsbury plc, director, development group including and online for responsible was he where activities. digital customer-facing all Luke has extensive experience in logistics, strategy and technology in the retail international scale. an on sector, at the advertising agency & Rubicam. Young he moved to Carat, the UK’s In 1991, largest media planning and buying agency. co-founded Entertainment he 1995, In services marketing a business. Ltd, Marketing He is Chairman of the ASOS Foundation, a registered charity funded ASOS by which works to improve the lives of young people in the UK and overseas through long-term charities.partnerships local with established for hisNick was awarded an OBE in 2011 retailing. fashion of world the in achievements 07 Luke Jensen 07 Luke Director Independent Non-executive ExecutiveExternal Appointments plc, Group Ocado of director chief executive officer of Ocado Solutions Limited and non-executive director of Hana Group Experience GOVERNANCE REPORT 41 Attended 2 2 2 2 11 1 1 1 11 1 1 1 –– –– –– –– Nomination Eligible Eligible to attendto Attended 5 5 34 3 4 44 4 4 –– –– –– –– –––– Annual Report and Accounts 2020 Annual Report also attended Forum an InTouch during the year, giving members InTouch the opportunity questions. him ask to meetings Board meetings scheduled eight held Board The Senior the and Chairman The year. the during additional an held Director Independent meeting with the CEO and CFO to discuss the cash on conducted been had that tests stress flowas well in responseas a to COVID-19, wider updateon the business and business expected are Directors continuity proposals. to attend all scheduled Board and relevant Committee meetings. The table above sets out attendance at all Board and year the during Committee held meetings August 2020. to 31 The Board and its Committees receive information timely and appropriate is agenda formal a meeting, before each Board and meeting, each for produced distributed are and Committee papers place take meetings before days several contribute, to members Board all allowing even if they cannot attend. In response to pandemic,the COVID-19 the Board were Group’s the with information on provided response in terms of business continuity, fulfilment logistics, chain, supply our trading, centres and delivery solutions, as well as how we ensured the health, safety and wellbeing of our employes during Eligible Eligible Remuneration to attendto Committee meetings ASOS PLC PLC ASOS Attended 4 4 343 3 4 1 3 22 1 2 2 –– –– –– –– Audit Eligible Eligible to attendto Attended 9 9 9 9 9 9 8 8 9 9 676 6 6 2 6 55 2 5 5 and complexity, as continue we to grow. removing on been has Another focus non-strategic cost from the business, in order to drive greater efficiencies across the business. Our progress on this priority by leveraged expectations, our exceeded the greater rigour instilled in our financial Our governance. and operational discipline next stage of our growth will seek to build our global scale, particularly in the US and Europe, driven five by key strategic pillars (see page Over 20). the next the year, Board will be focused on ensuring we deliver on the strategic priorities that underpin our five strategic pillars. The Board acknowledges that it is ensuring for stakeholders to accountable managed appropriately is Group the that and achieves its objectives in a way that is supported the by right culture and behaviours. The Board is responsible for activities its that culture ensuring reflect the and top the from tone the set Group, the of drive the right behaviours with our ASOSers. Our ASOS behaviours are recognised all by and culture support and our ASOSers ensure that every ASOSer lives our purpose. Geary the on took Karen year, the During role of Designated Non-executive Director with the met and engagement employee for forum, InTouch. employee our Chairs of on found be can this information on More page Our 22. Chairman, Adam Crozier, ector on 16 April 2020. ector on 16 Eligible Eligible to attendto ector on 1 November 2019. Plc Board meetings Board Plc 4 2 3 1 5 5 ton and Hilary Riva stepped down as Non-executive Directors on 31 March 2020. March on 31 ton and Hilary Riva stepped down as Non-executive Directors e Jensen was appointed as Non-executive Director on 1 November 2019. on 1 November 2019. e Jensen was appointed as Non-executive Director aren 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 2020 February Meeting on 25 was unable to attend Board the Karen Geary 2019. on 1 October aren was appointed as Non-executive Director Mai Fyfield was appointed as Non-executive Dir K Board. joining the before commitment agreed Luk Eugenia Ulasewicz was appointed as Non-executive Dir Rita Clif
Mai FyfieldMai Ian Dyson Mat Dunn Mat Eugenia Ulasewicz Eugenia Nick BeightonNick Karen GearyKaren Jensen Luke Nick Robertson CliftonRita Hilary Riva Adam Crozier Adam 1 2 3 4 5 Our purpose, culture and strategy The Board has overall responsibility for establishing purpose, the Group’s culture long-term the growth deliver strategy to and of the Group and generate value for shareholders. The Board is committed to the delivery of our clear strategy and mission to be the for destination globally online one number 20-somethings. ASOS At fashion-loving we recognise the importance of effective supporting in the governance corporate Group. the of growth long-term and success facilitates governance corporate Good clear delegation of authority from the Board through to our Executive Committee and promote to beyond, and Board, Operating and decision-making disciplined clear ensure the effectiveexecution of our strategic priorities. During the the year, Board was focused on the delivery of six key priorities to reset the business and prime us for our next stage of global growth The Board(see page has overseen 12). organisational our of the strengthening governance enhanced and capabilities of development with the framework our Executive Committee through the Growth Officer, Chief a of appointments Strategy OfficerChief Officer, People Chief These Officer. Commercial Chief and Group the that ensured have appointments has the right capabilities in terms of scale
rutinise and constructively constructively and rutinise ovide sound independent independent sound ovide challenge the performance the of challenge execution the in management of our strategy Board to judgement discussions Pr Protect long-term value shareholder Sc — — Non-executive Directors — Remuneration CommitteeRemuneration and responsibilities composition, The Committee Remuneration the activities of are set out in the Directors’ Remuneration Report on pages along to 70, 51 with our that how of details and Policy Remuneration policy was implemented during the year to August31 2020. ppraises the Chair’s vailable to shareholders to vailable upports the Chair rusted intermediary for other A A T Directors Non-executive performance arise where concerns S Senior Independent Director, the Executive Directors and the and Directors Executive the Director, Independent Senior Non-executive Directors, and our Committees. is appropriately managed and achieves its objectives in a way that is supported by the right culture and behaviours. The Board sets the riskGroup’s appetite, and reviews the controls applied to operate the business in line with that appetite. It determines, monitors and audit and controls processes, management financial risk oversees effectively sustainably operates and ASOS ensure to processes term. long the n 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. — Senior Independent DirectorSenior — — — The Board
Executive Committee of day-to-day management the for responsibility delegates Board The the Group to the Executive Committee. Led by the CEO, the Executive Committee is collectively budgets; and plans operational strategy, the implementing and developing for responsible and risks; key overseeing performance; financial and operational overall monitoring basis. monthly a on formally Committee meets Executive The development. management The Board Operating Executive Committee delegates authority to the Operating Board to and acquisition performance, customer retail short-termmanage trading, activities to related operational execution, to drive profitability and the ASOS vision. The Operating Board meets on a weekly basis. Nomination Committee composition, the on information More the of activities and responsibilities Nomination Committee are set out in the Committee Report Nomination separate on pages to 49 50. esponsible for proposing the the proposing for esponsible eading the engagement engagement the eading mplementation and execution execution and mplementation R strategic focus to the Board I strategy of L of ASOS through the Executive Committee — — Chief Executive — Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS esponsible the running for ncourages open debate debate open ncourages nsures the effectiveness the of nsures romotes high standards of of standards high romotes E and between Executive the Directors Non-executive R business of the Board E the Board and appropriate strategic focus and direction P governance corporate Disclosure Committee verifyTo the accuracy and oversee the and disclosures timeliness Group of regulatory the per as information material framework. Audit CommitteeAudit composition, the on information More Audit the of activities and responsibilities Committee are set out in the separate Audit Committee Report on pages 45 to 48. The Board has delegated specific responsibilities to the Board Board the to responsibilities specific delegated has Board The 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 The 70. minutes of Committee meetings are — — — Chair — The Board is responsible for the long-term sustainable success of of success long-term sustainable the for responsible is Board The the Company, by ensuring that ASOS, its subsidiaries and all its long-term benefit the of for managed are Group) (the businesses customers, employees, for regard having while all shareholders, community operational the impact on our and suppliers, and environment. It sets the purpose, Group’s strategy and values and is accountable to shareholders for ensuring that the Group Group the that ensuring for shareholders to accountable is and 40 Board structure Board The table below sets out our governance framework and outlines the division of responsibilities between the Chair and the CEO, as agreed the by Board, along with a summary of the roles of the Corporate governance framework governance Corporate Corporate Governance Report continued Report Corporate Governance GOVERNANCE REPORT 43 Annual Report and Accounts 2020 Annual Report were available to answer questions raised each on vote Shareholders shareholders. by resolution way by of a poll, and the results of voting were published on our website www.asosplc.com. This will AGM year’s noon be held at 12 on Thursday November 26 at 2020 our continuing are We office London. head in theto relating developments to monitor includingoutbreak the of related COVID-19, issued legislation and guidance health public theby UK Government. In light of the with developments changing continuously respect pandemic to the COVID-19 and, in response Government’s UK the particular, and lockdowns local of use the (including and home from working on guidance that concluded has Board the gatherings), the interests of all our stakeholders would be best served running by this as a AGM year’s therefore will Shareholders meeting. closed not be able to attend in person. Full details are included in the Notice of Meeting, which is sent to shareholders days at least before 21 meeting.the shareholder and Website communications Our website www.asosplc.com provides a our information on corporate of range performance, financial and results business, Report Annual our and of copies including presentations. and announcements Accounts, London, Boston, New York New Boston, London, London California Barcelona Amsterdam, Rotterdam, Brussels London Global Frankfurt New York Where ASOS PLC PLC ASOS planning, diversity and inclusion. The recently The diversity inclusion. and planning, appointed Chief People Officer will play an integral role in facilitating the latter twoareas focus. of shareholders with Relations committed is communicating to ASOS that ensure to shareholders with its openly its strategy and performance are clearly numerous year, the During understood. with engage to undertaken activities were information about More shareholders. our be can with shareholders engagement our 22. page on found announcements routine and Results through with shareholders communicate We our full-year and half-year announcements institutional invite We updates. trading and attend to analysts and shareholders virtually, or person in either presentations following our full-year and half-year and slides presentation The announcements. made are presentations the of webcasts www.asosplc.com. at available Shareholder meetings The is the AGM principal forum for dialogue with private shareholders. The was AGM held on Wednesday November 27 2019 at our head office in London. The Chair and the Chair of each Committee, as well as all and attended Directors, other AGM the
Full Results Year Roadshow JP Morgan Best of British Conference Conference Consumer Coast West Berenberg Conference TMT Global Stanley Morgan Roadshow Benelux Berenberg Exane Retail Store Tour Virtual Half Results Year & Placement Roadshow Exane Frankfurt IR Virtual Roadshow Virtual Clicks Bricks to Conference Fargo Wells Conference name Conference October 2019 November 2019 January 2020 April 2020 May 2020 June 2020 The table below sets out the key institutional shareholder engagement activities carried out during the year. the activities during engagement carried out institutional shareholder key the sets out below table The Month 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 the year, decision was made to conduct this Board year’s effectiveness review internally, way by of the and Chair The questionnaire. an online Secretary Company & Counsel General specific the topics and approach the agreed that would be covered, and the Directors were invited to comment anonymously on Board performance succession, and composition Director Independent Senior Chair, of the Committees, management risk and the the as well as engagement, and stakeholder culture of the Board. The results of the questionnaire were collated, to were presented actions recommended and the Board for discussion. The Board agreed that it was satisfied with theoverall performance of the Board during the year, together well worked had Directors the that and that the Board and its Committees had discharged their duties effectively. The review opportunitiesidentified some Board the for and some of the areas of focus for the year the enhance to continuing include ahead and between members engagement Board senior leadership, increase the Board’s evaluates business the with how engagement to continue and culture, its monitors and Nomination the of operation the develop succession on focus Committee its and Board, with a broad range of skills, experience, and knowledge backgrounds, Board maintain essential to element is an advantage. competitive effectiveness and knowledge background, skills, of Diversity consideration into taken all are gender and the to appointments new making when merit, on made are appointments All Board. taking into account suitability for the role, composition and balance of the Board, to ensure that the Group has the right mix of and independence experience, skills, 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 background ethnic or religion gender, age, and the Group will only engage with executive search firms who have signed up gender on Conduct of voluntary Code to the the that ensure to practice diversity best and pool of candidates is as wide and diverse as possible. endeavour We to maintain a level of at least 30% female Directors on the ASOS Plc Board over the short to medium are procedures that ensures Board The term. in place to underpin this policy on diversity, its succession senior in for including planning management. Board appointments the of recommendation the on Board, The decisions Committee, makes Nomination of removal appointment and the regarding and rigorous formal, a is there and Directors appointments. To for procedure transparent and ASOS of understanding facilitate their provide an insight into the experience of an ASOS employee, all new Directors receive tailored induction formal a comprehensive, to their needs, including site visits, briefings from senior managers on areas key of the advisers. with external meetings and business Corporate UK with the accordance In Governance Code, all of our Directors stand for re-election annually at every AGM. The Board unanimously believes that standing Director each of contributions the for re-election continue to be effective. to shareholders encourage We therefore case the re-electionsupport their in and, 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 conducts Board the role, committed their to regular evaluations of its performance, as 33%
Women Men 67% Board composition composition Board The Board is currently composed of the Chair, two Executive Directors (the CEO & CFO) and six Non-executive Directors, five independent. be to considered are whom of compositionthe to changes some were There of the Board of Directors during the year with the appointment of four Non-executive Directors, who joined us throughout FY20. are that Directors the for Biographies appointed as at the date of this report are set out on pages to The 38. 37 Board is satisfied that all Non-executive Directors role their to sufficientcommit to have time on the Board. The Board is satisfied that its Directors have and skills of appropriate balance an balance suitable a is there and experience, and character between of independence judgement, and knowledge of the Group, to enable it to discharge its duties and responsibilities effectively. All Directors are independent their use to encouraged constructively challenge to and judgement operational. or whether strategic all matters, have effectiveWe procedures in place to interest. of conflicts with deal and monitor and commitments time the to changes Any interests of its Directors are reported to and, where appropriate, agreed with the rest of Board. the ASOS recognises the importance recognises ASOS of diversity across the organisation and see it as driver a key of business success. are We 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 employee every ASOS where environment opportunity the given is contribute and to to experiences and skills talents, their use participate in making ASOS the number one fashion-loving destination for online 20-somethings. believe We that a diverse Board diversity Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS onitored progress with TGR progress onitored roup’s response roup’s to COVID-19 -Suite recruitment recruitment -Suite pproved Three-Year Strategy & Plan funding Foundation ASOS pproved epayment of funds received from UK from received funds of epayment he placing of non-pre-emptive of shares placing he R A A Government’s furlough scheme and the and scheme furlough Government’s Corporate Covid England’s of Bank FacilityFinancing C M G T in April 2020
42 – – – – – – – Key BoardKey actions during the year lockdown, and continued to provide provide to continued and lockdown, relevant and engaging content with our challenge can Director Any customers. taken are decisions and proposals, after Any democratically discussion. remains concern any that feels who Director unresolved after discussion may ask for that concern to be noted in the minutes of the meeting, which are then circulated to all from arising Specific Directors. actions such meetings are agreed the by Board or relevant Committee and then followed up by management. and advice the to access have Directors The services Secretarial team, Company the of Company & Counsel the General including Secretary, who is responsible for ensuring that all Board procedures have been with.complied appointment The and removal of the Company Secretary is a matter reserved for the Board as a whole. take to able also are Directors Individual at advice financial and legal independent necessary when expense to Group’s the support as performance duties the their of met Chair the year, the During directors. with the Non-executive Directors without present. being Directors the Executive Throughout their period in office, the Directors are also updated on the Group’s regulatory the and and areas business industry-specific environments in which they operate way by of written briefings and where and, executives with senior meetings parties. external appropriate, Appropriate training is also available to all Directors to they ensure and knowledge their develop stay up to date on matters for which they have responsibility as a Board member. Officers’ and Directors’ a addition, In Liability maintained policy is insurance for all Directors. Corporate Governance Report continued Report Corporate Governance GOVERNANCE REPORT 45 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Audit Committee statement Chair’s Committee the year, has continuedDuring the in fulfilling its oversight Board to assist the the by monitoring and reviewing responsibilities reporting and financial integrity Group’s of the effectiveness Externalthe Internal and of the functions, risk management framework Audit ‘business as As well as the and cyber security. Committeeusual’ items, the was particularly COVID-19 impact of the focused on the business, in terms of financial pandemic on the risks, and crisisperformance, new and emerging management, business continuity and resilience. next financial priorities for the Committee’s The ongoing impact year will be to consider the in terms of future Group on the of COVID-19 evolution of Group-wide planning and the business continuity monitor the arrangements, and its business strategy implementation of the and risk internal control Group’s impact on the and continue to ensure management processes, critical topics focus is given to the appropriate programme of cyber security controls and the supply chain. sourcing for ASOS’ 1/1 4/4 4/4 3/3 3/3 2/2 2/2
Attendance record
ector and joined Luke Jensen Luke
Non-executive Director Non-executive Role Committee Chair Non-executive Director Non-executive Director Non-executive Director Non-executive Director Non-executive Director Non-executive Karen Geary e Jensen were appointed as Non-executive Directors appointed as Non-executive Directors e Jensen were 2
1 1 3 3
ton and Hilary Riva stepped down from the Audit Committee Audit ton and Hilary and the down from Riva stepped onitor the integrity of ASOS’ financial statements financial integrity the onitor ASOS’ of eview the effectiveness of the internal and external effectiveness the and internal the of eview eview the effectiveness of financial the Group’s and internal Ian Dyson Mai Fyfield Ulasewicz Eugenia Mai Fyfield and Luk Committee Audit on 1 November 2019. and joined the Eugenia Ulasewicz was appointed as Non-executive Dir April 2020. Committee on 16 the Audit Rita Clif 2020. March on 31 as Non-executive Directors M performance. financial Group’s the to relation in R audit processes. R assessment evaluation, the for process the including controls, risk. of management and
Karen GearyKaren Ulasewicz Eugenia Rita CliftonRita member Committee Ian Dyson 1 2 3 Committee Chair Committee Members Responsibilities principal to: responsibilities are Committee’s The – – – reference of Terms 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 Mai FyfieldMai Jensen Luke Hilary Riva Audit CommitteeAudit Report with each year, year, each Appropriate assistance: Deloitte, our internal auditors, carry out reviews of our internal processes in a number of different areas to assist with provide processes, management our risk an objective independent view of the and procedures effectiveness various of identify and improvements policies, where could be made. Deloitte report to the Audit day-to-day the and relationship Committee; is managed our by General Counsel & SecretaryCompany the into with links Business Assurance function, with and input from the CFO. The internal audit plan for after compiled consultation is year each with the Executive Committee members, approved the by Audit Committee and the each from reports recommendations and audit are reviewed the by relevant business department, the Executive Committee, Audit Committee Business and Assurance. Appropriate disclosure: internal a business as large as ASOS, we know we rely on our people to be our eyes and ears organisation. the across happening what’s on 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 third-partyour independent, whistleblowing to connected anyone service, which Spot, ASOS can contact through a website portal The business. the about concerns share to significant Committee any advisedAudit of is service this and through raised concerns subsequent investigations, while the Board has oversight of investigations of serious reviewing for responsible is and wrongdoing Policy Whistleblowing our approving and all that ensure to seek We processes. and long-serving, of and know new ASOSers, encourage and these feedback channels their use across ASOS.
all material all as businesses as the Board is committed is the Board maintaining to business our all for standards appropriate these that standards activities ensuring and are set out in written policies. examples Key of such standards and policies include Do The Right Thing, our Code of Integrity; our Fashion with Integrity programme; and the Standards. Supplier ASOS Appropriate approvals: Procurement the by reviewed are contracts and Legal departments, and signed a by senior executive of ASOS. Appropriate oversight: risks. and challenges their do so change, Given ASOS’ continued growth, the Board policies and standards all regularly reviews ASOS to appropriate remain they ensure to as its size and shape evolves. The most management risk our is these of significant Riskprocess, our based which around is function Assurance Business The Register. primaryhas Risk responsibility the for Register. It has deep links with the Executive Directors and Executive team in its oversight management. its and risk of implementation the and review, its Through of business continuity plans to address key risks immediate with risks impact, facing an re-assessed are business the potential and to implemented and considered are actions mitigatethose risks and prepare the business to handle them should they arise. The Risk Register is reviewed on a regular basis and Committee twice Audit the to presented a year. Non-financial controls ASOS has a number of non-financial controls covering areas such as legal and regulatory health business integrity, andcompliance, continuity business management, risk safety, corporateand responsibility (including standards, supplier trading, ethical employment and concerns environmental diversity). The elements key of those non-financial controls are set out below and financial previous with the consistent remain year in order to provide important continuity across our fast-moving business. policies: Appropriate and standards Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS he Board has established an he Audit Committee assists the Board he Board is responsible for reviewing here are comprehensive procedures for for procedures comprehensive are here T T with structure, authority organisational responsibility of lines defined clearly and approval thresholds, to specify the approval. its requiring transactions in discharging its duties regarding the accounting statementsand financial policies, as well as with the maintenance and business internal proper of controls, financial and operational performed work by of results the including the internal function. audit Committee The provides a direct link between the Board auditors internal and external the and meetings. regular through T T and approving overall Group strategy, budgets capital and revenue approving the determining for and plans, and including financial structureASOS of policy. dividend and tax treasury, Monthly results and variances from plans Board. reported the to are forecasts and budgeting and planning, for monitoring for planning, and budgeting business Board reporting the and to budgets those performance against and plans, and for forecasting expected the of remainder the performance over financial period.
44 – – – – Financial controls ASOS has an established framework of effectiveness the controls, financial internal of which is regularly reviewed the by Executive Committee, the Audit Committee assessment ongoing an as Board the and of significant risks facing the Group. Meetings, roadshows and Meetings, roadshows conferences The Directors actively seek to build a mutual with institutional objectives of understanding are relations Shareholder shareholders. managed primarily the by CEO, CFO and supported Relations, Investor of Director calendar A appropriate. as Chair by our of events is set out above. In addition, we briefings brokers’ and notes analysts’ review to achieve a wide understanding of investors’ views. The Board is kept informed of the shareholders major of concerns and views of Director the briefings from through Investor Relations, and investment reports from analysts. The Non-executive Independent Senior the Directors, including Director, are available to meet with major discuss to required whenever shareholders issues as they arise. Corporate Governance Report continued Report Corporate Governance GOVERNANCE REPORT 47 Annual Report and Accounts 2020 Annual Report Our Business Risk Register isformally reviewed every six months using a consistent business and identify to process likelihood the risk, as emerging material or any of impact well as any mitigating factors or controls, and a robust assessment of the principal and been has Group the facing risks emerging carriedout during the Progress year. and key Risk ongoing the of out coming themes Register review are reported to the Executive Committee and the Audit Committee. More processes management risk our on details and Risk Register can be found in the Risk Report on pages 30 to 35. causedCOVID-19 us to re-evaluate systems control. internal and management risk of The business quickly had to adapt to new pandemic, the during working of ways to workforce majority the switching our of Customer our including working, remote Care centre. This brought new risks with it and, at the same time, mitigated others, and whilst we have a number of systems unaffected location are which by controls of work, we performed a full review of what additional risks might exist. This risk review cross-functional information involved gathering, with input from specialists across the business, which was discussed and refinedby our Operating Board. In addition to the bi-annual business risk review, specifica COVID-19 risk register was established to capture these risks but also changes or movement in existing risks due to the pandemic. risk The register COVID-19 is reviewed the by Executive Committee on a quarterly basis and reported to the Audit Committee as part of the bi-annual risk review. teams response continuity business Our development the monitoring been have of the pandemic since the onset in January to allow for a swift response to any changes Business Our Continuity guidance. new or Plans (‘BCP’) were updated to include the specific scenario of a forced office, for closure fulfilment centre or website an extended period. Whilst has COVID-19 been a serious test of resilience the Group’s maintained has limits, theand Group been has much and throughout operations 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 Internal Group’s the to tested pursuant and ASOS PLC PLC ASOS The Board is satisfied that the Group has adequate place safeguards in policies and PwC objectivity their ensure maintain to and report auditors external The independence. Committee the Audit to their on annually rotation Periodic ASOS. from independence of audit key partners is also required. Current PwC audit partner Andrew Latham first startedoverseeing ASOS’external audit with effect fromthe financialyear ended A new audit partner will 2017. 31 August need to be appointed for financialyear Augustended 2022. 31 The Board has a formal policy on the relationshipGroup’s with PwC in respect of non-audit non-audit all for work. Proposals services above £50,000 must be approved being Committee before Audit the by carried out, and PwC may only provide conflict services doesn’t such advice their if statutorywith their and responsibilities ethical guidance. Audit the review, recent most the Following reappointment the Committee recommended of PwC as auditors of ASOS, and PwC continue. to willingness their expressed A resolution to reappoint PwC and a resolution their determine to Directors the enable to the at proposed be will remuneration 2020 AGM. internal and management Risk controls for responsibility delegated has Board The effectiveness the Group’s the of overseeing management risk and controls internal systems to the Audit Committee. The Committee continuous policy of a has principal identificationof review and those risks how considers business risks and business of affectmay achievement the appropriate determines and objectives mitigation, the Group’s account taking into appetite. risk Committee the Executive implements The the put to processes and controls internal control and risk on policies Committee’s on assurance provides into effect and withcompliance these policies and the day-to-day basis, a On processes. managed is process management risk Group Counsel General the co-ordinatedand by & Company Secretary, supported the by a is there ensure to team, Assurance Business applying on focus deeper integrated, more internal and management risk evolving and business. the throughout controls talisation of costs may not be not may costs talisation of onsideration of the impact of COVID-19: evenue may not be correctly recorded: nventory not recorded correctly: having recorded not nventory Capi R I C given the significance of the impact of economy, global the on COVID-19 associated cash and behaviours customer flows, the carrying amount of assets and projected future cash flows in the context impairment and concern of going assessments. appropriate: given the high level of software of is there development internal a risk that staff costs are inappropriately capitalised. 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. regard to the significant level of inventory holdings in both the UK and overseas fast-moving the and warehouses, nature of the fashion market, there is an increased risk that the closing inventory is not accurately recorded or that the complete not is provisioning inventory statements. financial in the
– – – – The Committee reviewed the management’s appropriateness of accounting in relation to each of these significant risks and PwC reported to the performed work Committee the in on assessing Details each during their audit. of this work are provided in PwC’s Audit Report to on 80. pages 76 audit External The external auditors, PwC, were first appointed in the financial31 Marchyear to 2008. The fees paid to PwC for the financial August wereyear 2020 £420,325 to 31 In line with its Terms of £374,161). (2019: Committee undertakes Audit the Reference, a thorough assessment of the quality, independence effectiveness, and value of the audit provided PwC by each year, together Board, the of views the seeking with those of relevant members of the Executive Committee. The Board has discussed areas of risk with following the for agreed and auditors the areas of heightened risk to be reviewed and assessed in the audit of ASOS’ performance in the financial31 Augustyear 2020: to onitored the Group’s Risk Register, including the completeness of the process to identify the Group’s identify to process Group’s the the completeness of the including Register, Risk Group’s the onitored function. audit internal the effectiveness the of independence and reviewed and onitored onsidered the external audit fees and terms of engagement. of terms and fees audit external the onsidered onsidered reports on Gifts the Group’s & Hospitality Policy. onsidered the external auditor’s report on the full- and half-year audits. half-year and full- the report on auditor’s external the onsidered ppraised the effectiveness and performance of our external auditors, assessed effectiveness independence the their auditors, external performanceppraised our and of Committee. the for Reference of Terms revised pproved eviewed the robustness of the cyber security processes and systems, the work of the Cyber Security eviewed internal audit reports and monitored the implementation of internal audit recommendations. audit internal of implementation the reports monitored audit and internal eviewed eceived updates on tax matters and approved Strategy. Tax the Group’s eviewed progress with Business Continuity planning. eviewed the Annual Report and Accounts, including whether they were fair, balanced and eviewed the full- and half-year results announcements. eviewed the non-audit services and fees of the external auditor. systems. control internal and management risk effectiveness the Group’s the of eviewed matters. whistleblowing material litigation and on updates eceived team and the ASOS Security Strategy for the next three years. and objectivity, and recommended their reappointment. their recommended and objectivity, and R A R R R understandable, the material judgements and estimates, going concern and viability and statements. concern estimates, going and material judgements the understandable, A C R M and new particularly to relation in exposures, such in movements and risks emerging and principal pandemic. COVID-19 the to connected risks emerging R R C M R C R
– – – – – – – – – – – – – – – – Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Other matters Internal audit Internal External audit External Risk and internal controls Financial reporting 46 Committee membership and activities and membership Committee commercial possess necessary the who and Directors financial Non-executive of independent depth Committee the are of members The found be Committeecan all members of qualifications and skills experience, the information on Detailed role. expertise fulfil their to on pages to The 38. 37 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 activitiesKey during the year Audit CommitteeAudit continued Report Financial reporting externalauditor, the and management with review, reporting to is financial Group’s primary the to relation responsibility in Committee’s The quality accounting statements.the Committee on of financial The focuses half-yearly and annual the quality appropriateness of the and matters key audit management, by estimates made and judgements assumptions, underlying appropriateness of the practices, and policies ofan whetherassessment reporting financial with standards, compliance and claritythe disclosures the of externalauditor, the by identified information to necessary the provides for shareholders and understandable and balanced fair, is whole, a as taken Report, Annual the assess position the Group’s and performance, business model and strategy, and advising the Board on the form and basis underlying the identification accounting critical the of to relation in long-term reportsmanagement Viability Committee from The Statement. received year. financial current the during 16 IFRS of adoption the and policies accounting significant judgements, The Committee has engaged the following external advisers to help it meet its responsibilities, both of whom are invited Deloitte actand LLP toASOS attend to externalauditors (PwC)as act LLP PricewaterhouseCoopers interest: Committeeof conflict a have they unless meetings as our internal auditors. The Audit Committee Chair and members regularly meet with both the external and internal auditors, without theExecutive Directors or members of the Finance team being present. ASOS also receives advice as needed from EY KPMG, and Slaughter matters. corporate to relating issues legal and tax on LLP May and GOVERNANCE REPORT 49 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS During the year, the main focus of the Committee main focus of the the year, During the new Non- induction of the has been on the of the strengthening the executive Directors, Executive Committee, appointments key with for the succession planning year, made during the Executive Committee senior management, and further Group’s and the development of the to diversity and inclusion.approach Geary, Mai Fyfield, Luke welcomed Karen We as Board Jensen and Eugenia Ulasewicz to the These year. during the Non-executive Directors world- that we have the appointments ensure class experience, skills and expertise necessary its next stage of global through to guide ASOS were new Non-executive Directors The growth. induction with a comprehensive provided sufficiently were that they to ensure programme to begin to performand efficiently onboarded duties as quickly and successfully astheir included induction programme possible. The one-to-one Executive meetings with the leadership of the Committee, members key other a full suite of team and external advisors, company information, documents including and directors, duties as confirmation of their also were and guidance. They rules, regulations Centre, with a tour of our UK Fulfilment provided led by our Supply Chain Directors. 1/1 1/1 1/1 1/1 Attendance record
Luke Jensen Luke
Non-executive Director Non-executive Role Non-executive Director Non-executive Director Non-executive DirectorNon-executive DirectorNon-executive DirectorNon-executive applicable Not applicable Not applicable Not tee meeting was not held during the year following year following during the tee meeting was not held 2 Karen Geary
2 2 1 1
sure that an appropriate and tailored induction is is induction tailored and appropriate an that sure onitor the structure, size and composition of the Board versee talent and succession plans for senior management. senior for plans succession and talent versee eview the time commitment and independence of the of independence and commitment time the eview dentify the balance of skills, knowledge, diversity and Adam Crozier Adam Ian Dyson Ulasewicz Eugenia undertaken by all new Board members and that training and and training that and members Board new all by undertaken members. Board existing to available is development M Committees. and its I and/or Board new recommend and Board the on experience appropriate. as Board the Committee to members R Non-executive Directors, potential including conflicts of interest. O En the appointment of Karen Geary, Luke Jensen and Eugenia Ulasewicz Geary, Luke of Karen the appointment Committee.to the Rita Clif 2020. March on 31 and as Non-executive Directors A Nomination Commit
Ian Dyson Hilary Riva CliftonRita GearyKaren member Committee CrozierAdam Committee Chair 1 2 NominationCommitteeton andHilary the Rivasteppeddownfrom Committee Chair Committee Luke Jensen Luke Ulasewicz Eugenia Terms of reference of Terms The full Terms of Reference for the Committee are available on our corporate website, www.asosplc.com. Committee attendance Members Responsibilities principal to: responsibilities are Committee’s The – – – – – Nomination CommitteeNomination Report
schedule planned internal be of audits to focused which year, the during undertaken core re-assurance over providing on ASOS’ to relating risks and processes response In programmes. change largest pandemic,to the COVID-19 and the and organisational significant logistical, presented, this decision-making challenges Internal Audit reassessed the existing plan the for timings the amended and FY20 for majority of the audits that were due to be including year, financial completed this in deferring a number of audits to FY21. The following internal key audits were completed during the year: Assurance, TGR Business Continuity and Disaster Recovery, Digital Treasury, SecurityData incidents, Controls Data Key Protection and Marketing timely the Committee monitor the will and actions resulting any of implementation revised A management. by required projects schedule internal review of audit for the financial 31 Augustyear 2021 to was approved the by Audit Committee in October 2020. Ian Dyson CommitteeAudit Chair 2020 October 13 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS 48 Audit Plan for FY21. Beyond COVID-19, the Audit Beyond Plan COVID-19, for FY21. focus for the next financialyear will be on reviewing and refreshing the full suite of Group BCPto improve resilience and robustness, as well as to incorporate learnings,COVID-19 and improve scenario-specificBCP annual plans. An embedded, be also will cycle management to better track, review and evolve BCP. the Committee continued to During the year, further to made being progress the monitor cyber Group’s the develop strengthen and security of review a including measures, ASOS’ Security Strategy for the next three cyber security, to approach ASOS’ years. 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, particularly been has necessaryand the as security in change the to adopted Group threats caused pandemic. the by COVID-19 The Board is satisfied that the risk systems controls internal and management for all parts of the business operated effectively for the financialyear to and 2020 up to31 August and including the date of this report. audit Internal internal functionOur audit provides adequacy the to as assurance independent internal effectivenessand Group’s the of systems. management risk and controls Our internal audit function is outsourced to ongoing their report who on Deloitte LLP, each Committee at meeting.reviews The Executive Committee has responsibility of implementation timely the ensuring for resulting actions and recommendations any from the completion of an audit. The the monitor to Committee continues function.effectiveness audit internal the of Prior to the start of the financial year, the Committee reviewed and approved the Audit CommitteeAudit continued Report GOVERNANCE REPORT 51 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Remuneration CommitteeRemuneration statement Chair’s Dear Shareholder, the I am pleased to present Board, On behalf of the year to for the report Committee’s Remuneration year as Chair and was my first This 2020. 31 August Hilary to thank my predecessor, Riva,I would like supportfor her and guidance during the transition. has undoubtedly been a very challenging year This of outbreak for many UK companies. With the main priority in January, ASOS’ has COVID-19 and wellbeing of our health the been to protect in our strict as shown people and our customers, implemented and protocols social distancing our business. across to adhered and challenging economic environment In spite of the uncertain continued to deliver a landscape, ASOS performance year on year operational and strong in profitability year, this financial improvements We change. significant operational requiring dynamically and maintained a focus on trading to deliver final year business rigorously managing the performance start of expectations at the well ahead year on year and a 19% grew Revenue year. of the was achieved. PBT level of PBT of £142.1m record performance includes a one-off positive benefit of a beneficial from (resulting COVID-19 c.£45m from offset cost). by additional profile returns decided performance, Board the Given our strong support in full the we to repay it was appropriate Job UK Government Coronavirus the from received total early the as well as to repay Scheme, Retention Corporate Covid the down from amount drawn CEO has also taken (CCFF). The Financing Facility charitable donations make to personally the initiative pandemic. to the as part of his own response 4/4 5/5 3/3 3/3 3/3 Attendance record e Remuneration Committee on 1 November 2019. e Remuneration Mai Fyfield Mai Non-executive Director Non-executive Role Committee Chair Director Non-executive Director Non-executive Director Non-executive
1 2 3 3 y Riva stepped down as Chair of the Remuneration Committee on Remuneration y Riva stepped down as Chair of the onsidered the alignment of executive remuneration with the remuneration executive of alignment the onsidered Directors Executive for salary review ndertook 2021 the onsidered the relationship between executive pay and market and developments governance corporate onsidered et targets and performance measures for the 2021 annual annual 2021 the for performance and targets measures et eviewed and confirmed the outcome of the2020 annual eviewed and revised the TSR comparator group for 2021. eviewed and approved the levels and structure of Karen Geary Karen Ian Dyson C strategy of ASOS and the effectiveness of the current policy. R three-yearbonus and ASOS the Long-Term 2018 Incentive senior and Directors Executive for awards (ALTIS) Scheme management. U of array wide a to regard having management, senior and factors. external and internal R S bonus and ALTIS awards for Executive Directors and senior management. R Executive three of appointment the for remuneration year. the Committee during members C pay. workforce wider C pay. workforce wider and executive to relating practice K Committee and was appointed Chair of the 2019. on 1 December 2019 Mai Fyfield was appointed to th Hilar the and, along with Rita Clifton, stepped down from 1 December 2019 2020. March on 31 Plc Board Committee ASOS and the Remuneration
Ian Dyson CliftonRita Committee member GearyKaren 1 Committee on1October Geary Remuneration aren wasappointedtothe 2 3 Committee Chair Committee Mai FyfieldMai Members Activities during the year – – – – – – – – reference of Terms Committee, the for which are of Reference full Terms The available on our are annually, and approved reviewed last updated were These website, www.asosplc.com. corporate September 2020. on 17 Committee attendance Hilary Riva Directors’ Report Remuneration
The Committee believes that diversity and an inclusive culture driver is a key of business success and is committed to having a diverse range a provides which team, leadership of perspectives, insights and the challenge support decision-making. to good needed The Committee is pleasedthat the Board in recommended target the has exceeded as and, Review Hampton-Alexander the at thedate of thisreport, of the 33% Board to changes recent the Following is female. the Executive Committee, one position is currently while held a woman by (12.5%), of senior leadership37.5% roles are currently 28.5%). held women by (2019: The Committee committed is improving to the diversity in senior leadership roles and in leading the way in developing the pipeline of BAME candidates within ASOS and this will More be focus a key of FY21. information on ASOS’ diversity initiatives can be found on page 25. Nomination Committee Chair 2020 October 13 Adam Crozier Adam Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS The new Non-executive Directors Directors Non-executive new The 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, Board, diversity the and on experience capable of driving the Group forward successfully to achieve its strategic goals. The Committee considers all of the exception with the Directors, Non-executive in independent be Robertson, to Nick of they and requirements with UK accordance effective and contributions make to continue effectively management. challenge have alsoWe made progress with Committee, Executive the strengthening Robert Birge of appointment the following as Chief Growth Officer, Jo Butler as Chief People Officer andPatrik Silén as Chief Strategy Officer during the year. They sit alongside our existing CEO, CFO,CIO and COO and have been charged with scale to continuing strategy and developing 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 solid forming and relationships. have also We appointed a play will who Officer, Commercial Chief a pivotal role in leading and transforming our retail structure, to meet our three year ambitions. In the coming the year, Committee is there that ensuring to focus turn its will 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 matter experts. subject specialist 50 Nomination Committee continued Report GOVERNANCE REPORT 53 2,095 0 0 63,419,733 10,795,497 74,217,325 85.45% 2 2 growth rates at our competitors and positioned are targets these believes strongly in that context. The relative TSR vesting schedule is unchanged; however, following feedback from a number of our the refreshed have we shareholders, large TSR comparator group this year to include competitors fashion and online additional in Europe and the US to ensure we are key performance to our relative measuring global peers. have also We refined the UK provide to group the within comparators an increased focus on fashion retailers, particularly those with an established or is group new The presence. online growing shown on page 59. Annual Report and Accounts 2020 Annual Report 019 0 0 0 0 The Committee and I are extremely mindful regarding sentiment market current the of executive pay levels and the expectation that committees exercise should remuneration restraint. believe We that this proposal whilst prudence for need the balances has ASOS that changes the recognising undergone. Annual remuneration votes 2019 Votes against Votes Total votes cast votes Total for Votes withheld (abstentions) Votes 2 2 2 Historic annual remuneration votes 2 2 ASOS PLC PLC ASOS ) The ALTIS opportunity the ALTIS for The ) LTIS (ASOS Long Term Incentive Term Long (ASOS LTIS onus opportunityonus Currently the CEO Scheme 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 uncertainty the economic spite of caused It is important COVID-19. by that our incentive plans continue to offer the opportunity the to motivation the and growth exceptional drive to team senior over the coming years. There will be no with performance the to measures change awards continuing to be based 30% on relative TSR, on 35% 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 shareholders. reflect feedback from to and monthsThe next are 12 likely to be and market continuing with the challenging the to related disruption economic pandemicCOVID-19 as well as the uncertaintysignificant impact the around of Brexit. we remain However, confident that in the long term our strategy, business strongly us position operations and model opportunities growth future and exploit to targets have been set in this context. For EPS, threshold vesting will be achieved for FY23 and EPS maximum of 138.6p vesting will be achieved for FY23 EPS of 179.9p p.a. and 24.7% p.a. growth(14.3% one-off the excluding EPS to compared benefitCOVID-19 for For revenueFY20). threshold, vesting will be delivered for growth p.a. andof maximum 10% vesting for growth of 20% p.a. For both measures, outperformancesignificant of FY23 consensus is required to achieve maximum vesting. When setting targets the Committee also considered expected B A is entitled to a maximum bonus of 150% of salary and the CFO is entitled to a maximum bonus ofof 100% salary. The opportunity bonus CFO’s increase will of salary.to 150% Given the significant and scope operational the in increase responsibilities of the CFO role previously it considers Committee the described, the receives CFO the that appropriate opportunity bonus same CEO. the as There will be no change to the CEO’s bonus. Bonuses will continue to be based on30% on revenue, 15% 30% on PBT, free cash flow and 25% on strategic performance objectives.
– – In line with the UK Corporate nsion FO salary Financial Chief The Pe Governance Code, which ASOS has contributions pension adopt, to chosen to reduced be will Directors incumbent for be in-line with the wider workforce rate of of5% salary. From 1 December 2021, contributions will reduce to from 15% of salary10% for the CEO and from of salary to 10% 12.5% for the CFO. From 1 December they 2022, will be further reduced to of 5% salary for both Directors. improvementsin the last the year, Committeethat considers position this now needs to be addressed in the context strong the contribution to CEO’s the of recovery in performance, the increased complexity of the business,and a reward package that lags the market. The Committee a mindful also in that, is with digital market distressed retail demand, in hugely being skills retailing 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 sized similar to compared practice market intention the Committee’s companies. It is to position the salary for the role of CEO and practice with market line in more 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 salary the keep Committee therefore will further make to look and review under continued time subject to increases over performance contributionstrong and from the CEO combined with sustainable performance.Group C Officer’s salary will increase from increase (an to £461,000 of £431,000 effective 1 December7.0%) He 2020. joined ASOS last year and has made a strong start. During the year the scope and responsibility of his role has current the encompassing broadened, driving transformation and of programme These improvements. operational key initiatives have directly translated into profitability. and margin enhanced it considered therefore The Committee salary CFO’s the increase to appropriate to recognise the expanded scope of his role.
– – The salary CEO’s will EO salary EO C increase from £573,000 to £620,000 (an increase of 8.2%) effective 1 December September in appointment his Since 2020. the business has grown2015, significantly in terms of revenue, profitability, complexity. and international presence increased 186% by Revenue for 2019/20 and 206% by PBT compared to 2014/15, ASOS over the same period. In 2014/15, business UK-based predominantly a was and today we are an increasingly complex and trade managing international business infrastructure on a global basis. Prior to the review this the year, CEO’s salary has increased only by c.4% since decided Committee the year Last 2015. salary CEO’s the re-positioning against in light of the prior year business CEO’s the despite performance, end lower the at remaining remuneration of the market. For reasons of retention, incentive, and to recognise the significant
– complexity of the organisation increased significantly. The market data showed that salary remuneration base total and the CEO’s opportunity lower the in positioned was quartile sized similar to compared total companies. Similarly the CFO’s opportunityremuneration positioned was between lower quartile and median. The Committee mindful the potential of was ratchetting effect of an over-reliance on pay current the given However, benchmarking. the market significantly behind is positioning Committee and Board believe that a failure now to better align pay with the remuneration a of companies other at arrangements complexity for and size comparable performance improved considerably could the of retention around challenges present current Executive team and the ability to recruit high quality executives in the future. arrangements remuneration of review The consideration with proper carried out was social and business external the for environment. In view of this, determined we it was prudent not to make any changes to our overall framework at this time, although Committee the and review under remains this further considering be whether our will during appropriate structure is reward the forthcoming year. factors, the of range a account into Taking and Board, the to Committee recommended changes following the approved, Board the for remuneration Directors’ Executive to as follows: 2021, In relation tothe annual bonus, the Committee mindful that the annual was maximum, to close were outcomes bonus in a year that has been very challenging people. formany we outcomes bonus determining When performance company overall considered over the period and particularly the impact on our businessof COVID-19 and the the noted Committee The market. broader excellent revenue, and PBT free cash flow 2019/20 over performance delivered which was significantly above market expectations at the start of the and year, of focus and commitment the commended and dynamically trading on team senior the performance business rigorously managing very challenging in these results deliver to circumstances. Committee The that noted even if the c.£45m one-off benefit from performance PBT removed was COVID-19 would still have significantlyexceeded the maximum target. The Committee also noted doubled than more has price share the that over the course of the last Overall, year. the that was view Committee’s the therefore, bonus outcome was fair and no discretion outcome. bonus the on exercised was A similar exercise was carried out for The the ALTIS awards granted in 2017. vesting ALTIS the that Committee considers of maximumoutcome fairly of 31.2% reflects performance delivered over the three-year was discretion no therefore and period, either. outcome ALTIS the on exercised ending year the for Remuneration August31 2021 This the year, Committee further reviewed framework, remuneration the executive particularly in the contextof the evolving significant the and environment, economic increase in the size, scale and complexity of the business. Our underpinning remuneration the that is philosophy support execution should the framework of our ambitious growth strategy and the other and shareholders for value of creation stakeholders in a way that is consistent with ASOS’ culture and values. As part of this process the Committee reviewed market data prepared Deloitte by understand to advisors) independent (our the positioning of Executive Director pay similar a other companies of to compared size and complexity. This was the first such exercise the Committee had carried out for a number of years during which time the and reach international size, financial
Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Directors’ Remuneration Report continued Report Remuneration Directors’ Remuneration for the year ended year the for Remuneration August31 2020 performance the of review a Following measures last the year, annual bonus for was based30% on revenue, 30% 2019/20 on free cash 15% on flow PBT, and 25% on performancestrategic Maximum objectives. the against achieved performance was revenue, and PBT free cash flow measures. In strategic the performance against of respect and personal objectives, an overall strong set of results was delivered. Net promoter score (NPS) performance was at on-target levels, performance growth exceeded revenue EU the maximum target and US revenuegrowth betweenperformance and threshold was target. For the personal objectives, the CEO’s people of number a performance against between target be to judged was measures and maximum, while the CFO achieved cost performance to maximum relative an in resulted This targets. management overallbonus of 93.7% and 96.5% of maximum for the CEO and CFO. Full details are provided on page 65. (ALTIS) Scheme Incentive Long-Term ASOS were subjectawards granted to in 2017 September 1 from performance measured August Performance 2020. to 31 was 2017 measured based 30% on sales growth, 30% on EPS growth, 30% on relative total shareholder return (TSR) on and NPS 10% compoundtargets. annual three-year The and growth in EPS and sales was 17.9% the demonstrating respectively 19.3% performance delivered, strong recovery particularly over the last EPS year. and sales and 14.1% performancegrowth in resulted vesting. TSR performance was below 17.1% whichmedian was below and NPS was 57, the nor TSR the neither therefore threshold, 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 metrics performance these four for Group’s audited were calculation vesting the and and approved our by auditors, PwC. The and didCFO not participate joined in 2019 in this award. Full details are provided on 66. page CommitteeThe carefully considered fairly reflected outcomes whether incentive underlying performance the business the of shareholders of experience the as well as period. the during stakeholders and During the we developed year, a discretion support year-end to the framework determine to decision-making process whether any discretion should be exercised. 52 GOVERNANCE REPORT 55 Annual Report and Accounts 2020 Annual Report Remuneration Policy components components Policy Remuneration Each component forms part of an overall package remuneration competitive appropriate attract to retain designed and necessary with the talent implement to skills strategythe Group’s in orderto create The shareholders. for long-term value summary each a of provides following Policy, Remuneration the of element along with details of how the Policy will ending year the for be implemented 2021. 31 August ASOS PLC PLC ASOS strategy and the market continue to evolve, whether an to consideration giving including appropriate be alternative structure would for ASOS. application practical the determining In Committee Remuneration the Policy, of the external and internal of range a considers is remuneration that ensure to factors proportionate. These and appropriate employees for conditions and pay include feedback and shareholder generally, with comparisons market appropriate FTSE-listed, in practices remuneration internet/ and retail other AIM-listed and technology-based companies. The satisfied Committee remains Remuneration that this Policy aligns the interests of and managers senior Directors, Executive long-term with the interests employees other of shareholders; as noted however, above we will continue to keep our approach proportion appropriate An review. under of total remuneration is directly linked to performancethe Group’s over both the for emphasis with an term, long short and on managers senior and Directors Executive long-term and share-based remuneration shareholding. The Committee followed a detailed included which decision-making process Policy the for proposals the on discussions at a number of Remuneration Committee of elements to changes Where meetings. the package were discussed, the Committee before approaches multiple considered reaching a decision. During this time the Committee from input considered advisers, independent its and management and sought the views of ASOS’major various that ensure to shareholders perspectives were considered. avoid To any conflicts of interest, no Directors were involved in conversations relating to their own pay. ke sure high performance is required performance required high is sure ke courage strong performancestrong and courage nable the Group to achieve its strategic nsure that the total reward cost to ASOS en short the and in both engagement, long term; e objectives and create sustainable value; shareholder ma to access high rewards; and e affordableis sustainable. and
Remuneration Policy Remuneration Committee determines Remuneration The the of remuneration the on policy ASOS’ senior other and Directors Executive executives. The principles that underpin this Policy aim to: – – – – attract, help must Policy Remuneration Our high high-calibre, motivate and retain must It performing, employees. engaged the to contributions their for people reward success of ASOS in a fair and responsible term. short long the both and over manner, Our Remuneration Policy must also be communicatedin a way that is simple, effective clearly understood. and Over the past few months, the Committee has been undertaking a review of the at framework remuneration executive environment economic the As ASOS. 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 the for consideration with proper done environment. social and business external As part of this review we considered a range current the Given approaches. potential of Committee the environment, external determined that it was prudent not to make any changes to our overall framework at this Committee The time. keep to continue will our as review under framework current the
arrangements and to understand understand to and arrangements the found feedback. I shareholder understand very to be useful process to remuneration our on views shareholders’ decisions the and general structure in From the made in respect of 2018/19. engagement, it was clear that our investors single a than rather different views held the 2019/20, During concern. common Committee reflected considerably theon comments including feedback received, on shareholders largest our of some from the adoption of alternative structures, and this was taken into account during the Committee The will review. remuneration alternative whether an consider to continue structure would be appropriate for ASOS. further exercise consultation A shareholder was carried out in September to obtain 2020 feedback on the changes I have outlined and time the for shareholders our thank to want I they have taken to engage with us. Our range a hold to continue shareholders of views in relation to our remuneration framework and we shall take these views into remuneration further we review as account months. 12 the next over arrangements The Committee and I are always pleased to discuss our approach with our feedback your welcome and shareholders forward to look We year. the throughout support arrangements the for your receiving described in this report at the upcoming November on 26 AGM 2020. Karen Geary Karen Committee Remuneration the of Chair 2020 October 13 have been applied and complied with, save non-compliance where those areas for has remained has Group The explained. been withwholly compliant its remuneration Directors’ 2019 the in summarised policy Report. Remuneration Committee and composition effectiveness As during noted on the page year 51, I Committee the of chairmanship assumed and Mai Fyfield also joined the Committee. Details of our respective experience can be found on pages and The 38. 37 Committee’s fully compliant remains and membership was Code. Thewith outcome the 2018 of the performance evaluation, Committee’s undertaken as part of internal the Group’s evaluation of the effectiveness of the Board and its Committees, was very positive and highlighted as a particular strength the the of approach transparent open and effective the of management Chair and Committee meetings. engagement Shareholder As an AIM-listed company, we voluntarily our for approval shareholder seek invaluable provide Report to Remuneration public accountability for the Board over the Policy Remuneration our appropriateness of and its implementation. At the last AGM of 85% shareholdersyear, voted in favour Report. Remuneration Directors’ the of support our for shareholder While the good, remained arrangements Committee is mindful that the level of years. recent in than lower support was Prior to the in November AGM 2019, my predecessor and I engaged in a consultation exercise with our largest the explain to sought I shareholders. remuneration our to taken approach Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Corporate governance Corporate governance developments we consideredIn 2020, the Principles and CodeProvisions and we kept of the 2018 and them to response in practice market under developments pay executive other Report Remuneration Directors’ The review. the Principles Provisions and how explains remuneration to relating Code 2018 the of CEO pay ratios This is the firstyear in which the Group is publishing its CEO pay ratios, comparing the remuneration total Executive’s Chief Group with that of our UK employees whose full time the at them ranks remuneration equivalent 25th, 50th and percentile 75th of UK employee These pay. ratios are, respectively, careful Following 24:1. and 73:1,38:1 satisfied Committee the is consideration, that the median pay ratio is consistent with reward pay, andthe progression Group’s policies. When setting the pay, CEO’s the Committee has regard to the same taken those as considerations fundamental team management UK the by account into employees. UK other settingwhen all for pay These includepolicy the Group’s to pay market rates of pay that reward employees fairly for work done and have due regard performance Group and to individual has performance individual the where the ability to influence wider Group ultimateperformance. has CEO The ability greatest the and for, responsibility performanceand Group’s the to influence, returns to shareholders. reflect To this, the higher a has package remuneration CEO’s performance on pay related weighting ALTIS) and bonus the annual (including majority with the workforce. the compared of This means the pay ratios are likely to of outcomes the on fluctuate depending incentive plans in each year. Directors’ Remuneration Report continued Report Remuneration Directors’ 54 GOVERNANCE REPORT 57
ntinued progress progress ntinued st managementst ntinue to lead and lead to ntinue S revenue growth 0% revenue 0% PBT 5% strategic U revenue growth xecute year one of build effective senior build develop team, leadership capabilityleadership and diversity at the Lead level. three-year stratgeic plan: plan: stratgeic three-year successful delivery of and programme; TGR successful virtual trial of fulfilment. 3 3 2 objectives U E E Co Co against Fashion with Integrity goals Co – – CEO only: – Approach to to Approach implementation in FY21 For FY21 theFor FY21 strategic objectives are: CEO and CFO: – – NPS – CFO only: – The maximum opportunity maximum The will continue to be 150% of salary for the CEO. The CFO’s opportunity will be increased from 100% of salary of salary to 150% to reflect his broader role. There are no changes to performancethe measures The for FY21. Bonus will be based on following: the – – free cash– 15% flow – – Annual Report and Accounts 2020 Annual Report Performance-related Performance-related framework Normally measured over a one-year performance period, based on a mix of financial targets(e.g. non-financial/ profit), performancestrategic objectives personal and relevant to the year, which are set taking Group’s the into account strategic objectivesover period.that ASOS PLC PLC ASOS Maximum opportunityMaximum of base150% salary for the CEO and 100% of base salary for other Directors. Executive 60% of that maximum is on-target for payable performance. The annual bonus is earned based on performance against targets set by the Committee. Targets are reviewed payments Bonus annually. awarded normally are 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 underlying the performance the of participants or business including year, the during Company’s the set against performance metrics, or that the payout is not appropriate in the circumstances of context that were unexpected or the when unforeseen set. were targets How it operates Provides a link between both and remuneration short-term Group and performance.individual Purpose Element Annual bonus Variable remuneration elements elements remuneration Variable
Approach to to Approach implementation in FY21 Our annual salary annual Our 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 significantreflect the increase in the sales, international profitability, complexity and reach appointment in his since and to bring2015 his salary more in line with other for practice market size similar a of companies complexity. and The CFO’s salary will be increased to by 7.0% on 1 December£461,000 2020. This increase is to reflect a broadening of the responsibility and scope of his role since joining. since role his of In order to reflect best comply to and practice with the Code, pension the for contributions Directors Executive current will reduce of to 10% salary from 1 December and 5% of salary2021 from 1 December 2022, at which point they will align with the rate majoritythe for available workforce. the of A flex allowance was introduced for the CEO for FY20 to align with the approach for the wider workforce. Performance-related Performance-related framework When reviewing salaries, we consider the performance the of individual in the period since the last review. Not applicable. Not Not applicable. Not Maximum opportunityMaximum There is no prescribed base annual maximum salary salary or increase. guided is Committee The by the general increase for employee broader the has but population, to decide to discretion award a lower or higher increase to Executive recognise,Directors to for example, an increase in the scale, scope or responsibility of the role. In set are salaries if addition, at a discount to a market rate on appointment, it may provide to appropriate be one or more increases at a broader the than rate higher population employee individual’s an on based performance and take and/or experience market relevant of account movements. Currently ASOS may contribute of up to 15% base salary (in the case of the CEO) and up to 12.5% of base salary (in the case Executive other of Directors). A cash be also may allowance paid in lieu of a pension contribution. Committee The the amend to discretion has should level contribution change. conditions market For any new Executive Director appointed to the Board, the pension opportunity line in be will with the rate available for the majority of the workforce. There is no maximum level of benefits provided to and Directors, Executive 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 annum. per esponsibilities, abilities, abilities, esponsibilities, he performance thehe of he salary Group’s and T R T period the individual in since the last review pay structures and workforce general salary increases experience and experience performance of an individual – Committee the Periodically reviews market data for and AIM-listed FTSE-listed, internet/ and retail other technology-based ensure to companies appropriate remain salaries context. this in Reviewed annually. Reviewed paid normally Salaries are When determining monthly. Committee the salary levels account: into takes – – Defined contribution contribution Defined salary or arrangement supplement. Only base salary is pensionable. contribution ASOS’ employee’s the on depends seniority and may be of level the to matched employee the contributions chooses to make. Package of taxable benefits flexibleoffered our through ASOS benefits scheme, Extras, which offers all employees a fixed value their upon depending seniority, and can be used either to buy a variety of benefits or be taken in cash. Other benefitsinclude insurance medical private Other assurance. life and benefits may be added to where package the appropriate. How it operates Annual Report and Accounts 2020 Annual Report Reflects an individual’s individual’s Reflects an responsibilities, and experience performancein their role. To contribute financially To post retirement. To supportTo the personal of wellbeing and health employees. reflectTo and support culture.ASOS Purpose ASOS PLC PLC ASOS Base salary Element Pension Other Other benefits 56 Fixed remuneration elements remuneration Fixed Remuneration Policy continued Policy Remuneration GOVERNANCE REPORT 59 Approach to to Approach implementation in FY21 No change. No There was noincrease in fees with effect from 1 September 2020. fees Non-executive therefore remain as follows: Non-executive Chair £350,000 – Director Non-executive base – £55,000 Committee Audit and SID Chair – £70,000 Committee Remuneration Chair – £65,000 Annual Report and Accounts 2020 Annual Report Pay gap reporting During the the year, Committee reviewed which report gap pay gender UK latest the was published in April It 2020. shows that we continue to close the gender pay gap which stands (mean) down at from 26.6% remain We (mean). of the29.7% view that the UK gender pay gap is not a symptom of unequal pay for equal work among men more being there rather but women, and the across roles senior in women than men relevant UK businesses. In addition, ASOS carries out an annual equal pay audit, checking the pay of men roles. similar or same the doing women and Our audits continue to show that our pay women and men pay practices and policies equally for equivalent roles. Our pay range system ensures ASOSers are paid fairly their skills,based qualifications, on performance. and experience Performance-related Performance-related framework Not applicable. Not applicable. Not ASOS PLC PLC ASOS Maximum opportunityMaximum Consistent with prevailing limits. HMRC There is no prescribed maximum annual fee or fee increase. The Board is guided by the general increase for the broader and population employee account into takes market relevant movements. 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 pay-at-risk incentives on through emphasis the through long-term remuneration and programme. ALTIS All employees areentitled to base pay, and contributions, benefitspension and employees 195 year during the financial received an award under the ALTIS. ASOS operates a Save Earn As scheme You information about More employees. all for the Scheme is given encourage above. We the across ownership of culture strong a ASOSers all encourage and organisation to behave and think like owners. For FY20, the general salary increase across the workforce salary was 1.5%. For FY21, increases for all employees will be based on a budget with of 1.5% the ability, as in FY20, receive to performing higher employees for increases of more than 1.5%. An HMRC-approved all-employee Save As You Earn share option scheme encourages (SAYE) employees to take a stake business, the aligning in their interests with those of shareholders. plans Other all-employee may be introduced if appropriate. Cash fee normally paid on a monthly basis. Fee levels are set taking the account into responsibilities the of for roles, additional Committee example SID. the and Chairs The Chair receives a consolidated fee. Fees are reviewed periodically. reasonable addition, In expenses business (together with any tax thereon) may be reimbursed. How it operates Increase alignment alignment Increase employees between and shareholders in a tax-efficient manner. Supports retention of employees. appropriate fees Provide to time commitments and responsibilities of role. each Purpose
Element All- employee share plans Non- executive Directors Variable remuneration elements (continued) elements remuneration Variable The TSR comparator group has been has group comparator TSR The updated for awards 2020 to reflect focused is and shareholders feedback from those with including fashion retailers on online. presence growing and established Boohoo companies: the following It includes Group, Boozt, Brown Group, Farfetch, Global Fashion Group, H&M, Inditex, JD Sports Fashion, Joules Group, Marks and Spencer, Next, Revolve Group, THG Zalando. Holdings, other for policy Remuneration employees Executive for Policy Remuneration The with developed been has Directors philosophy, reward the of consideration strategy and policy for ASOSers across the whole organisation. Where possible, we aim to create alignment between the way executive remuneration is structured generally more ASOSers way the and are rewarded. Inevitably, there are some and differences management between our the rest of the business. This is typically a arrangements reward developing of result 0% based on relative 5% based on EPS 5% based on revenue 3 TSR 3 growth 3 growth Approach to to Approach implementation in FY21 The normal maximum opportunity increase will from 200% of salary to 250% of salary to superior incentivise performance. for measures Performance awardsFY21 will be unchanged from last year: – – – TSR will be measured against a bespoke group international and UK of online and apparel retail peers. Targets for awards to be are granted in 2020/21 set out on page 60. The maximum target has been increased to reflect the increase in award levels. No change. No Performance-related Performance-related framework Subject to three-year performance conditions linked to the business ensuring and strategy strong alignment with the of long-term interests shareholders. Maximum opportunityMaximum 250% of base salary exceptional in (300% circumstances) in any year. financial The value of any dividends paid by ASOS over the vesting period will be payable on vesting, to the extent that awards vest. Not applicable.Not applicable. Not Annual awards of shares employees, selected to which vest after three years subject to the of achievement performance conditions. malus and Clawback provisions allow awards to be recouped in certain circumstances. The Committee retains the discretion to adjust the vesting level if it considers that the vesting outcome does not reflect the performance underlying of the business or participants the during the including year, performanceGroup’s metrics, customer against or that the payout is not context the in appropriate that circumstances of were unexpected or the when unforeseen set. were targets CommitteeThe continues to believe that a post- period holding vesting should not apply to ALTIS awards, given this is not in practice common businesses. AIM-listed The shareholding shareholding The guideline for the CEO and Directors Executive other 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 awards share subsequent thereafter (net of tax), required the until are shareholdings achieved. How it operates Annual Report and Accounts 2020 Annual Report Supports the strategy and business plan by and incentivising retaining the ASOS management senior team in a way that is aligned with both ASOS’ long-term financial performance the and shareholders. of interests Increases alignment alignment Increases between the Board and shareholders. Shows a clear commitment by all Executive Directors to creating value for long the in shareholders term. Purpose ASOS PLC PLC ASOS ASOS Long-Term Incentive Scheme (ALTIS) Element Share ownership guidelines 58 Variable remuneration elements (continued) elements remuneration Variable Remuneration Policy continued Policy Remuneration GOVERNANCE REPORT 61 £3,991k £2,958k 216k 20% £3, 20% £2,382k Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS 682k £1, 48% 39% 1,241k £ 39% 48% 23% appreciation appreciation 23% price e price price e price Shar Shar £736k 33% 29% 23% 538k 33% 29% 23% £ ALTIS ALTIS 100% 44% 23% 18% 100% 44% 23% 18% ual bonus ual bonus and share and share get d pay Ann get d pay Ann appreciation appreciation aking the appropriate adjustments required in certain circumstances, for instance for changes in capital structure, or to take into account account into take to or structure, capital in changes for instance for certain in circumstances, required adjustments appropriate the aking ndertaking the annual review of weighting of performance measures and setting targets for the annual bonus plan and other incentive incentive other and plan bonus setting annual the and performance for of targets measures weighting of review ndertaking annual the etermining whether malus or clawback shall be applied to any award in the relevant circumstances and, if so, the extent to which it shall etermining the timing of grants payments. of awards and/or etermining the quantum payments of awards and/or (within the limits set out in the Policy table). etermining the extent of vesting based on the assessment of performance as well as taking into account the experience of shareholders shareholders of experience the account into taking as performance assessment the well of on as based vesting of extent the etermining treatment. appropriate the applying and purposes plan incentive for status leaver’ ‘good etermining electing the participants in the plans on an annual basis. ar e e Fixe Fixe be applied.be items. exceptional S D D D period. vesting the over stakeholders other and D M D U year. to year from applicable, schemes, where inimum aximum aximum inimum aximum aximum
ric M On-tar M M pric On-t M M M p Mat Dunn The chart above shows the potential remuneration at different levels of performance for the CEO and financial CFO in the 2021 year from Policy. Remuneration ASOS’ opportunity by them remuneration the to granted Total potential remuneration for Executive Directors in the 2021 financial year 2021 Directors in the potential remuneration for Executive Total Nick Beighton – – – – – – – – longer no deemed being targets performance and/or conditions ALTIS or plan bonus annual the in results which occurs event an If performance the and/or ability the amend conditions to Committee have the will divestment), or material acquisition (e.g. appropriate 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 as appropriate, may, be the subject of consultation with the shareholders. major Group’s Committee discretion The Committee operates under the powers it has been delegated the by Board. In addition, it complies with rules that are either subject to shareholder approval or approval by from the Board. These rules provide the Committee with certain discretions which to discretions Committee has The serve also shareholders. the to and Director individual the to to both ensure that fair, is the Policy Remuneration the of implementation Committee better the enables to clawback provisions, and together with malus This, remuneration. of components various the of vary level the manage risks. The extent of such discretions is set out in the relevant rules, and the maximum opportunity for performance metrics is setPolicy out in the ensure table To the on pages efficient to 56 59. administration of thevariable incentive plans outlined, the Committee will apply certain discretions. operational These the include following: 179.9p 20% per annum quartileUpper Threshold performance (25% vesting) performance (25% Threshold vesting) performance Maximum (100% 138.6p Median Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS trategic objectives: US and EU revenue performance, to ensure reward is aligned with our strategic priority to deliver growth in these evenue captures top-line growth and element is a key of our progress towards our mission. evenue achieved PS is considered an objective and well accepted measure of Group performance which reinforces the objective of achieving BT ree cash flow SR provides strong alignment with shareholders and will be measured against a bespoke group of online and retail competitors in Europe E profitable growth. R T and the US (companies are set out on as page this provides 59) a robust and relevant benchmark. Following feedback from various stakeholders, the TSR comparator group for award the was reviewed FY21 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 our by shareholders. R P F S areas, and Net Promoter Score (NPS) to ensure that we continue to reflect our customerexperience. 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, theperformance CEO’s will be assessed in relation to progress in continuing to lead andbuild an effective senior leadership team, developing leadershipcapability 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, buildingon the progress made during the year to continue to reduce our cost base.
Remuneration Policy continued Policy Remuneration – – ALTIS targets for awards due to be granted in October are 2020 as follows: – – Revenue and continue PBT to be measures key of success for the business, while a free cash flow reflects ongoing the Group’s focus on maintaining a cash-positive position to enable further growth and expansion. The strategic objectives reflect our evolving customers. on areas focus continued of our reflect business NPS, through and focus performance: relative and absolute of combination a on based are Long-term performance FY21 for targets – – – Performance measureselection and approach to target setting 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 ASOSers. and customers shareholders, benefit that our outcomes driving performance culture, The Committee reviews metrics each year to ensure they remain appropriate and reflect the strategic direction of ASOS. The measures used annualin the FY21 bonus are unchanged from last year and reflect ASOS’ KPIs for theyear. They are based on: 60 There will be straight-line vesting in between each point. Targets for each performance measure are set the by Committee with consideration of an extensive set of reference points opportunity including ALTIS in increase the Given expectations. external and sector benchmarks internal relevant sector, the for budgets, forecasts and plans for the Executive Directors the stretch in FY21, of the maximum EPS and Revenue targets set has been increased. months The next are 12 likely to be challenging with the continuing market and economic disruption related pandemic to the COVID-19 as well as the significant uncertainty around the impact of Brexit. we remain However, 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 p.a. and 24.7% 14.3% p.a. growth compared to EPS for FY20 (excluding the one-off benefit).COVID-19 The revenue target represent an increasep.a. 15% growth from 20%to 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 growthrates 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. EPS (FY23) Revenue growth (FY23 compared to FY20) TSR Relative per 10% annum GOVERNANCE REPORT 63 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS ASOS also retains flexibility to pay reasonable legal fees and other costs incurredby the individual that are associated departing a which in services.with outplacement circumstances In provide to the and termination ASOS) against settlement brought the claims of (including Remuneration the of negotiate settlement approval with the may and, terms ASOS claim, legal a pursue entitled to be may Director legal any honour would ASOS addition, In settlement accordingly. a into agreement enter therein, elements remuneration Committee the on entitlements, such as statutory redundancy payments or awards madeany by tribunal or court, which executives may have on, or in respect termination.of, The individual is expected to take reasonable steps to seek alternative income to mitigate the payments. shareholdings Post-employment The Committee believes that the leaver provisions currently in placeensure the alignment of the interests of our Executive Directors and review. under our approach this Committee keep The will post-cessation employment. shareholders of appointment of letters Directors’ Non-executive 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 the by Company or the individual at any time, with no pre-determined amounts of compensation. ‘Good’ leaver ‘Good’ 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 date leaving ‘Bad’ leaver ‘Bad’ Provided up to the effective leaving date Up to a maximum of one year’s salary; normal Provided up to the effective leaving date – no benefits would be provided after that date, unless this is in the interests of ASOS None lapse Awards Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS ike” basisike” unless this is considered the by Committeenot to be practical or appropriate. Any such proposal for Executive Directors l ‑ or f inimum – fixed pay only(salary + benefits + pension or pension allowance). Salary and pension are those effective from 1 December aximum – fixed plus pay, maximum bonus opportunity150% of salary, of plus the full face value of the ALTIS award on grant(i.e. 250% aximum plus 50% share price growth – as per the maximum scenario outlined above including an assumed 50% share price growth ‑ arget – fixed plus pay, target bonus opportunity of 90% of salary, plus 25% of the face value of the ALTIS award on 62.5%grant(i.e. T M salary). of M for the ALTIS award. of salary). of salary). M and2020 benefits are based on actual 2019/20. figures for
Remuneration Policy continued Policy Remuneration 62 Salary in lieu of notice Salary of lieu in Remuneration component Remuneration Pension and other benefits other and Pension Bonus Long-term incentives – Recruiting new Executive Directors and senior executives When recruiting any Executive Director or senior executive, seek we to apply consistent policies on fixed and variable remuneration components in line with the Remuneration Policy set out This on helps pages to to ensure 56 59. 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 as employer previous forfeits opportunities a pay rights at individual contractual variable or an outstanding where considered only normally Committee the as form Committee such the offer may in compensatory these circumstances In awards, payments or appointment. of result a 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 – – – Basis of calculation: calculation: of Basis 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 months’ notice of 12 the by 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 with below, an scheme. applicable any of rules with the Committee accordance in Remuneration the by determined being status individual’s Consideration of shareholder and broader stakeholder views views stakeholder broader and shareholder of Consideration their and with them directly engage to is approach our and with shareholders dialogue committed open Committee to is Remuneration The Committee arrangements. The considers remuneration Director to Executive changes significant any considering when bodies representative shareholder feedback received following the as well AGM as any additional feedback and guidance received from Committee the time to adviser, time, independent its Assisted practices. by and and this framework is remuneration Group’s the developing when account into taken remains remuneration executive structurethe of ensure to practice market and governance corporate in developments monitors actively also appropriate. means customers and with suppliers exists that dialogue proactive the and ASOSers feedback from capture to used is forum employee The stakeholders. with all communication of channels are there that requires the prior approval of the Remuneration Committee. The Committee may also agree that ASOS will meet certain relocation and/or certain and/or meet relocation will ASOS that agree Committee Committee. also The may Remuneration the of approval prior the requires appropriate. as expenses incidental GOVERNANCE REPORT 65 Target Outcome Maximum Maximum Maximum Maximum Maximum Maximum Between threshold and target and Between threshold Between target and maximum and Between target Annual Report and Accounts 2020 Annual Report 57 18% 22% £142.1m £258.6m £3,264m ASOS PLC PLC ASOS Performance achieved Performance 59 17% 25% £24.1m £75.2m £3,144m Maximum £9.1m £60.1m Target £3,075m Net Promoter Score U revenue performance revenue U st management (CFO only) (CFO management st E US revenue performance revenue US Co eveloping strength and depth in the the in depth and strength eveloping senior leadership team (CEO only) D 15% 25% 30% Weighting Strategic objectives Strategic Free cash flow 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 management cost his exceeded CFO the and team leadership senior the in depth strength and the enhancing in progress strong achieved objectives.Overall the Committee determined that the CEO should be awarded of maximum 18.7% and that the CFO should be awarded of maximum.21.5% The maximum bonus opportunity for the of base CEO was salary 150% and for the CFO of 100% base salary. Based on theoutcomes 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 for the the CEO CFO. and £414,468 particularly and period of the impact the performance Group over overall Committee the considered outcomes bonus determining When on the businessCOVID-19 and the broader market. The Committee noted the excellent revenue and performance PBT delivered over FY20 which was significantly above marketexpectations at the start of theandyear, commended the commitment and focus of the senior team The circumstances. very challenging in these results deliver performance to business rigorously managing and dynamically on trading Committee noted that even if the c.£45m one-off benefit was removed, from COVID-19 PBT performancewould 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. Payments to past Directors Directors past to Payments During August the no payments year 2020, to 31 were made to any past Directors. Payments for loss of office During August the no payments year 2020, to 31 were made for loss of office. Annual bonus for the year ended August 31 2020 For Nick Beighton and Mat Dunn, the annual bonus plan for the August year ended was based 2020 31 on the following metrics: Profit BeforeTax (PBT)Revenue growth 30%
£ Total
574,852 848,487 917,038 1,423,339 1,689,682 2,606,720 remuneration
£ 202,481 602,481 414,468 1,021,818 Total variable Total 1,436,286 £ – – – award Buy out 400,000 400,000 400,000 2 £ –– LTIP Remuneration Committee until Chair Remuneration 2019 December 1 Basis for additional fee additional for Basis SID and Audit Committee Chair Committee Audit and SID Remuneration Committee Chair Remuneration Remuneration Committee Chair Remuneration SID and Audit Committee Chair Committee Audit and SID Variable remuneration Variable 202,481 202,481 £ 219,563 219,563 Total £ – –– – 57,010 57,953 34,619 20,661 55,036 70,036 45,869 45,869 32,448 514,263 265,537 Bonus 712,527 350,036 remuneration 414,468 802,255 1,216,723 3 £ 36 36 36 36 36 36 36 36
474 70,474 201 65,201 385 653 365 £ 4 ,111 2,010 1,041 56,041 Total Taxable fixed expenses 174,852 820,858 667,864 502,570 1,170,4 3 4 £ – – – – – – – – – £ 7,50 0 2,500 25,000 25,000 18,916 91,965 Pensions 73,049 646,006 73,828 53,687 127,515 ector on 16 April 2020. ector on 16 Additional fee Additional £ £ Fixed remuneration Fixed 7,957 4,610 Benefits 12,567 42,419 23,036 Base fee 55,000 55,000 10,000 55,000 55,000 15,000 50,417 45,833 45,833 20,625 32,083 32,083 55,000 55,000 15,000 265,152 485,152
686,874 £ 350,000 Base salary 151,326 716,326 565,000 571,000 429,500 19,383 2019 2019 2019 2019 2019 2019 1,000,500 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 Annual Report and Accounts 2020 Annual Report 8 2019 2019 2019 4 2020 2020 2020 5 7 5 7 ASOS PLC PLC ASOS 6 1
obertson Foundation. all of his base service donated ASOS fee to the y Riva and Rita Clifton stepped down as Non-executive Directors on 31 March 2020. March on 31 y Riva and Rita Clifton stepped down as Non-executive Directors
e Jensen and Mai Fyfield were appointed as Non-executive Directors on 1 November 2019. on 1 November appointed as Non-executive Directors e Jensen and Mai Fyfield were
aren Geary was appointed as Non-executive Director on 1 October 2019 and Chair of the Remuneration Committee on 1 December 2019. Remuneration and Chair of the Geary on 1 October 2019 aren Director was appointed as Non-executive or 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 price for the financial of the share average being the price of £37.2015, as detailed on page 66. Based on a share award ALTIS FY18 this includes the or 2020, he taxable expenses include travel and other expenses related to their role and have been grossed up for tax, where applicable. up for tax, where and have been grossed role to their expenses related and other taxable expenses include travel he Nick R K Luk Eugenia Ulasewicz was appointed as Non-executive Dir Hilar F for figures price gain. The to share relates no portion award of the vesting period and therefore during the price depreciated share The August 2020. 1 June to 31 from year, £150,915). (previously 2019 31 October on vesting date at the price of £35.30 actual share the to show adjusted figures the are 2019 T T
Total Mat Dunn Hilary Riva Hilary Directors’ remuneration table (audited) (audited) table remuneration Directors’ The remuneration of theDirectors is set for August out the in and the year August 2020 the totables 31 year 2019 to 31 below.
on Remuneration Remuneration on Annual ReportAnnual 64 Nick Beighton Executive Director Details of how ASOS’ Remuneration Policy has been applied in the year applied in the has been Policy Remuneration ASOS’ how Details of Committee that the considers The set out below. are August 2020 to 31 Certain within this information year. as intended in the operated Policy as highlighted. section has been audited Non-executive Director Crozier Adam 5 6 8 4 1 2 pandemic. tothe charitabledonationsaspart make ofhisownresponse initiativetopersonally the CEOhasalsotaken he 3 7 Luke Jensen Luke Eugenia Eugenia Ulasewicz Clifton Rita Robertson Nick Total Mai FyfieldMai Ian Dyson Ian Karen Geary Karen GOVERNANCE REPORT 67 0% 0% 0% No Yes 25% 25% 25% N/A N/A N/A N/A N/A N/A N/A 100% 100% 100% 31.10.19 16.12.19 31.10.21 31.10.21 31.10.20 31.10.22 31.10.22 Exercise date/period Exercise 01.08.20-31.01.21 Percentage vesting Percentage – – – – – Shareholding guideline met guideline Shareholding Between and 25% 100%* Between and 25% 100%* Between and 25% 100%* price price (pence) Exercise 4,869.0 – – – – – – – –– –– 369 49,389 71,535 2020 27,173 22,216 21,027 31,609 18,899 31 August31 Annual Report and Accounts 2020 Annual Report (no. of shares) 71.0p Targets Median 10% p.a. – – – – – – 2020 Outstanding share options options share Outstanding Below 71.0p 5,736 Below median Below (SAYE/ALTIS) (no.(SAYE/ALTIS) of shares) ASOS PLC PLC ASOS 17,236 Exercised Below p.a. 10% 121.8p or above 121.8p to 31 Augustto 31 15% p.a. or above15% (no. of shares) during the year – Upper quartile or above 641 9,800 1,500 2,000 Between and 121.8p 71.0p Between p.a. and 10% 15% – – – – – – – 12,002 2020 20,770 Lapsed Lapsed 180,538 15,509 3,636,414 to 31 Augustto 31 (no. of shares) Between median and upper quartileBetween upper and median during the year Beneficially owned as at – – – – – – 2020 27,173 35% 35% 30% Granted 31,609 31 August31 2020 (no. of shares) to 31 Augustto 31 (no. of shares) during the year Weighting – – – – – 994 7,950 – – 369 2019 169,903 17,236 22,216 21,027 21,245 18,899 4,636,414 31 August31 (no. of shares) Beneficially owned as at grant Date of 11.10.17 20.11.19 20.11.19 16.12.16 24.10.18 31 August 2019 (no. August of shares)31 2019 28.06.19 30.08.19 08.06.17 1 1 1 1 1
Share ALTIS ALTIS ALTIS ALTIS SAYE ALTIS ALTIS option option scheme Buy-out Per
Mat Dunn Mat Ian Dyson Mat Dunn Mat The performance conditions for these awards are in the table below, with performance measured over the three-year period from from period three-year the with over performance measured below, table the in are these awards performance for The conditions August and vesting 2022, October to 31 1 September on 31 2022: 2019 Measures Revenue growth (FY22 compared to FY19) Directors’ shareholdings The Directors who held office31 August 2020 had at the following interests, including family interests, in the shares of ASOS Plc. A shareholding guideline is in place forthe Executive Directors; this is 500% of salary for the CEO and 200% ofsalary for the CFO. Director Crozier Adam 1 setoutonpage66. are awards forthese formance conditions BeightonNick GearyKaren *Straight-line interpolation between range *Straight-line points in the Directors’ interests in share plans (audited) Director BeightonNick Diluted EPS for FY22 TSR Relative Luke Jensen Luke Mai FyfieldMai Nick Robertson Eugenia Ulasewicz Eugenia 1 0% 0% 17.1% 14.1% Vesting £219,563 to 31 Augustto 31 2022 to 31 Augustto 31 2022 1 September 2019 September 1 1 September 2019 September 1
57 Value of awards vesting awards of Value Actual 25% 25% 17.9 % p.a . 19.3% p.a. 19.3% achievement Bottom quartile performance Performance period 31.10.2020 % vesting for target Date of vesting 0% 0% 0% 0% 25% 25% 25% 25% 100% 100% 100% 100% 1 £849,971 £988,730 5,902 Between and 25% 100%* Between and 25% 100%* Between and 25% 100%* Between and 25% 100%* Face value of award 67 15% 15% Targets vesting Percentage Median 27,173 31,609 Below 67 granted 69 or69 more Below 15% Below 15% 25% or25% more 25% or25% more Below median Below Between and 67 69 Number of shares Between and 25% 15% Between and 25% 15% Upper quartile or above 18,899 Between median and upper quartileBetween upper and median 175% of salary175% 200% of salary Basis of award of Basis 10% 30% 30% 30% Number of shares granted shares of Number vesting shares of Number Weighting Annual Report and Accounts 2020 Annual Report e 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. 2020, 31 August 1 June to last quarter from financial year, price for the of the share average being the e price of £37.2015, ASOS PLC PLC ASOS e five-day average share price of £31.28 as at 19 November 2019. 19 November as at e five-day price of £31.28 share average Based on th Based on a shar
Mat Dunn Mat 66 1 Executive Director Executive BeightonNick ALTIS awards granted in the year In the year under ALTIS awards review, were granted The to award the CEO’s was CEO reduced and CFO from on November 20 2019. of salary200% in to light 175% of the fall in share price awards since were granted. FY19’s The award CFO’s was not reduced given he had only recently joined the Group at the time of grant. Details of the awards are as follows: The CFO joined in 2019 andThe as such CFO joined did not receive in award. 2019 an FY18 The Committee considers that the ALTIS vesting of maximum outcome fairly of 31.2% reflects performance deliveredover the three-year outcome. ALTIS the on exercised was discretion no therefore and period, Executive Director Executive BeightonNick 1 Details of vesting for eachindividual Executive Director: *Straight-line interpolation between range *Straight-line points in the NPS Sales growth Measures FY18 ALTISFY18 awards vesting for performance August to31 2020 The ALTIS awards with a performance period August ending are October 2020 due on to 31 vest on These 31 2020. 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 August The 2020. performance to 31 1 September 2017 targets and level of achievement against those targets were as follows: Annual Report on Remuneration continued on Report Annual Compound annual annual Compound fully diluted EPS growth TSR versus FTSE All-Share General Index Retailers GOVERNANCE REPORT 69 P75 P75 24:1 £70,559 £54,595 3 — — +100% — — +100% +100% — — — Bonus P50 P50 38:1 £32,360 £44,795 Annual Report and Accounts 2020 Annual Report 2019 to 2020 2019 1 2 5 5 5 ASOS PLC PLC ASOS -97% — +19.6% — +13.2% -92% — — -91% +9.1% Benefits P25 P25 73:1 £21,017 £23,320 2 0% N/A +1% N/A +7.1% +1% 0% N/A N/A 0% Salary/Fees 2.5k in FY20. Method Option C Option id not receive a bonus in FY19. id not receive e 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 for the for FY19 his salary and benefits have been pro-rated therefore April 2019, on 23 FY19 part way through e Board 4 ozier 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. for the for FY19 his fee has been pro-rated therefore November 2018, on 29 FY19 part way through Board was appointed to the ozier eduction in benefits is due to a reduction in expenses claimed during the year. reduction in expenses claimed during the eduction in benefits is due to a Nick Beighton was given a flexible benefits allowance of £1 Nick Beighton was given a flexible benefits allowance of Mat Dunn was appointed to th calculation. Nick Beighton and Mat Dunn d Adam Cr R
Nick Robertson Mai FyfieldMai Executive Directors BeightonNick Luke Jensen Luke Base salaryBase remuneration Total The Committee is satisfied that the ratio is consistent with widerthe Group’s policies on employee reward pay, and progression. Executive which participation performance, ALTIS the including to tied elements in in remuneration their proportion of greater a receive Directors operates at the most senior levels, and this is reflected in the ratio. The Company has chosen Option C as it enabled the use of readily availabledata that was current to ASOS’ year end. The employees at were identified andP25, P50 P75 based on salaries31 August and2020, theirat total remuneration was calculated, including salary, benefits, flex allowance bonus andoutturns pension as at(all that three2019/20 dateemployees plus are outsideALTIS the population). calculation. the in included were adjustments estimates or omissions, No determine to compared quartile each were around positioned others of number small a and these individuals of remuneration total The whether the employees were most at and P25, P50 P75 representative of pay levels at these quartiles. The remuneration of the individual at P25 was determined to be representative of that quartile; the however, individual at was furloughed P50 during the year and the individual was notat in the P75 business for the full and year, so in both cases the employee one place away from them in the rankings was chosen as the most representative of those quartiles. follows: as are calculations above the in used employees the for salary remuneration base total The and 2019/20 Percentage change in Directors’ remuneration Directors’ in change Percentage The table below shows the percentage change in the Directors’ salary/fees, benefits and annual bonus between the financial years compared ended with all employees August August 2019, and of 2020 ASOS. 31 31 2 All employees All 1 3 4 5 CEO pay ratio The table below shows the ratio against of the the total CEO’s upper remuneration quartile, for median 2019/20 and lower quartile full-time equivalent remuneration of ASOS’ UK employees. This is the firstyear we have provided a pay ratio and as such, no prioryear comparator data is shown. Executive Director Mat Dunn Non-executive Directors Crozier Adam Ian Dyson GearyKaren Ulasewicz Eugenia % change
2020 2020 Year to Year Year to 31 August 31 31.2% 31 August 140.5% 1,689,682
2019 2019 Year to Year Year to 27.0 % 31 August 31 31 August 848,487
–– 2018 2018 100% Year to Year to Year 31 August31 31 August 31 2,904,614
65% 2017 2017 99.1% Year to Year to Year 31 August31 31 August 31 3,072,259 4 2016 70% 2016 Year to Year to Year FTSE All-Share General Retail Index 31 August 31 August 31 1,199,520
2015 2015 Year to Year to Year 81,280 31 August31 31 August 31
–– 2014 Year to 337,193 2014 31 August31 Year to Year
–––– 31 August 31 2013 FTSE AIM 100 Index Year to 31 August 803,843
2013 Year to Year 2012 31 August 31 60% 60% Year to 100% 31 March31 55,210,388 2012
ASOS Plc Year to Year 31 August 31 2011 Year to 31 March31 1,740,821 2012
Year to Year –––– 31 March 31 2010 Year to Annual Report and Accounts 2020 Annual Report 31 March31 centages show the percentage of the award that vested in the financial year. that vested in the award of the percentage the centages show 2,084,510 e 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 award FY17 value for the The relate. performance financial year of the above in the period to which they recognised e long-term incentive plans are 2 011 Year to Year centage figure shows the percentage of the individual’s maximum bonus percentage received in that financial year. maximum bonus percentage individual’s of the percentage the shows centage figure 2 31 March 31 1 ASOS PLC PLC ASOS 3 e 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 Nick Robertson opted to waive receipt August 2015, year to 31 Nick Robertson to Nick Beighton. During the CEO changed from the August 2016, e year to 31
0 2010
200 400 600 800 Year to Year
120 0 1000 (Rebased £) (Rebased price of was calculated using a share award FY18 for the value The October 2017. vesting date on 31 price at the actual share being the price of £56.84, calculated using a share actual being the price of £35.30, was calculated using a share award FY19 for the value shown The October 2018. vesting date on 31 price at the actual share being the £54.48, 2020. 31 August last quarter financial year to price for the of the share average is based on the August 2020 year to 31 for the value shown The October 2019. price on 31 share 2020. 31 October point of vesting on price at the share the will be adjusted to reflect This of his base salary, and any entitlement to bonus. £442,580 Annual bonus per Long-term incentive per During th Gains made under th 31 March 31
Annual bonus % Annual Report on Remuneration continued on Report Annual Long-term % incentive 68 2 4 remuneration. CEO’s annual to give a consistent view of the 2012 31 August five-month periods only and excludes the period to data above is for 12-month * Note that the 3 1 Total (£) remuneration The table below sets out the remuneration data for Directors undertaking the role of CEO during each of the past ten financialyears. CEO remuneration history* Performance and CEOPerformance and remuneration comparison The market and £23.80) the price range of ordinary during August 2019: August the year (31 August shares to 31 was £49.09 2020 at 31 to £62.22). £21.07 to August £50.64 was from2020 2019: (year to £10.50 31 This compared graph invested shows August March with the in of ASOS £100 invested value, 2020, Plc 2010 that 31 on by 31 inof the £100 FTSE AIM and 100 the FTSE All-Share General Retail Indices. The other points plotted are the values at the intervening financialyear ends, including the five-month 31 Augustperiod2012. to GOVERNANCE REPORT 71 Annual Report and Accounts 2020 Annual Report At the 2019 AGM, the DirectorsAt the 2019 were also authoritygranted ordinary in allot shares to of aggregate amount an to up Company the £564,470. This authority will expire at the AGM, at2020 which the Directors will be authority. this renew to seeking the April 2020, 8 on informtation, For the successful announced Company non-pre-emptive the of placingcompletion new ordinaryof a total of 15,805,943 shares (Placing) and the subscription by Executive the of certain members Directors, associates for close Committee their and newa total ordinary of 42,537 shares (Subscription) at a price pence of 1,560 per aggregate The Price). (Placing ordinary share the under issues ordinary shares new Subscription represented the Placing and Company’s the of 18.8% approximately the to prior capital ordinaryissued share a represented Price Placing The Placing. price share closing the to premium slight pence on 7 Aprilof 1,559.5 2020. net Subscription raised the and Placing The proceeds which provided of £239.4m sufficient liquidity flexibility and to manage the Group through and beyond this period of unexpected and continuing disruption put pandemic, COVID-19 the from resulting the Group in a stronger financial position to continue to invest in the growth of the business supportively long-standing with work its and supplier base to mutual advantage, and to preserve flexibility the Group’s to restructure prolonged a of case the in business the 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 institutional shareholders major and its Placing. the of announcement the ahead of The Board concluded that the Placing was in wider and shareholders of interests best the success the promote would and stakeholders of the Group, a conclusion which was with major consultation the by endorsed three- the Over institutional shareholders. the Placing, the preceding period year the for shares issued only has Company purpose of fulfilling its obligations under of schemes. Details share employee shares alloted during the period are shown toin Note the financial 18 statements on 98. page ASOS PLC PLC ASOS ASOS maintains Directors’ and Officers’ and Directors’ maintains ASOS liability appropriate which gives insurance cover for any legal action brought against its Directors. TheGroup has also provided an indemnity for its Directors, which is a qualifying third-party indemnity provision, for the purposes of section of the234 Companies Act 2006. This was in place throughout the year and up to thedate of statements. financial the of approval Articles of Association ASOS’ Articles of Association can only be are and resolution special by amended available at www.asosplc.com. It is being proposed at the that AGM 2020 the Articles Association new adopt of Company practice market in reflect developments to since the Company’s Articles of Association were last amended in September Due 2009. to the nature of the changes, the Company is Articles new of of adoption the proposing amendmentsAssociation making than rather Articles current the Association.to of The new the in proposed being changes principal Articles of Association can be found in the General Annual of Notice the Appendix of Meeting which is available at: www.asosplc. com/investors. capital Share The issued share capital of the Company at ordinary August was 99,764,802 2020 31 shares of 3.5p. Full details of the issued share shares of details the with together capital, issued during August the year 2020, to 31 are shown to in the Note financial 18 statements on page to 99. 98 As far as the Company is aware, there are no restrictions on the voting rights attaching the and ordinary shares Company’s to the agreements any of aware not is Company which may result in restrictions in the transfer of securities or voting rights. No securities carry special rights. any Powers for the allotment and acquisiton of the Company’s own shares The Company was authorised by purchase to AGM 2019 the at shareholders being of 5% in the market up to 4,193,613, shares No ordinary issued the capital. share were bought back under this authority during the August year ended This 2020. is a 31 standard authority which is renewable annually and the Directors will be seeking to renew this authority at the AGM. 2020 Directors’ Report provided informationpreviously the of Much as part of the Directors’ Report is now required, under company to law, be presented as part of the Strategic Report. This Directors’ be to information required the Report includes included under the Companies Act 2006 or, appropriate an elsewhere, provided where Corporate The given. is cross-reference Governance Report approved the by Board is provided on pages and to 70 36 incorporated Report. Directors’ this into reference by Subsidiaries The subsidiaries; Group has 21 a complete list is provided at Note 8 of the parent 116 pages on statements financial company t o 117. Dividends recommend not do Directors the year, last As the payment £nil). of a dividend (2019: Strategic Report This is set out on the pages 2 to of 35 the Report indicationAnnual includes an and of likely future developments. Significantevents since the end of the financialyear There have been no material events affecting the Group since 1 September 2020. principal and management Risk risks A description of the principal risks facing to approach Group’s the and the business, managing those risks, is on pages 30 to 35. Directors and their interests Details of the Directors as at the date of this Directors the to changes any report and during the year are set out on pages 37 to 38. closely their and Directors the of interests The associated persons in the share capital of the Company August along 2020, as at 31 with details of Directors’ share options and awards, are contained in the Directors’ time no At 67. page Report on Remuneration during the year did any of the Directors have contract significant any in material interest a with ASOS or any of its subsidiaries. -2.2% +329% £219.7m £214.8m £142.1m Annual Report and Accounts 2020 Annual Report £33.1m ASOS PLC PLC ASOS 2020 2020 2019 2019 1 aging with shareholders in relation to our approach to remuneration for 2021/22. for remuneration to approach our to relation in with shareholders aging hen required, ASOS also receives advice relating to remuneration matters from Lewis Silkin LLP, KPMG LLP, and Slaughter and May LLP LLP May and Slaughter and LLP, KPMG LLP, Silkin matters Lewis from remuneration to relating advice receives also ASOS required, hen onitor, review and approve the levels and structure of remuneration for other senior managers and employees. employees. and managers senior other for remuneration structure of and levels the approve and review onitor, ontinue to monitor regulatory and legislative developments. regulatory legislative monitor and to ontinue etermine 2020/21 annual bonusetermine outcome ALTIS awards and vesting. 2020/21 FY19 uring the year, Deloitte LLP provided advice on all remuneration matters considered by the Committee. For that advice, Deloitte advice, that LLP Committee. the For by matters considered remuneration all on advice Deloitte provided LLP year, the uring etermine the headline targets for any performance-related schemes. pay or any for targets bonus headline the etermine other the and Directors performance-relatedthe Executive for schemes pay or any for objectives bonus and specificetermine targets etermine and recommend to the Board the remuneration of Executive Directors, the Chair and the other members of the Executive the of members other the and Chair the Directors, Executive of remuneration the Board the to recommend and etermine etermine and recommend to the Board the Group’s overall remuneration policy, and monitor the ongoing effectiveness of that policy. effectiveness ongoing the policy. that of monitor and policy, remuneration overall Group’s the Board the to recommend and etermine pprove 2021/22 ALTIS targets and awards, and 2021/22 annual ALTIS targets bonus. and awards, andpprove 2021/22 2021/22 eview and approve any salary increases for the Executive Committee. eview and approve any material termination payment. any approve and eview C Eng R D A W on reward, tax and legal matters respectively. D Consultants’ Remuneration the to signatories Deloitteare LLP 2020. August 31 to year financial the in £150,630 totalling fees received Code of Conduct, and the Committee is satisfied that the advice that it receives is objective and independent. The Deloitte Group with the LLP connections any have Committee not the do to advice partner remuneration engagement advisory and provide that team in year the during parts other Group Deloitte the advised of also Separately, independence. their impair may that Directors individual or analysis. and planning support partbusiness as servicesmodelling of audit financial internal and to relation D R members of the Executive Committee. D D Committee. M D
1 The above includes capitalised staff costs. 1 The above includes capitalised PBT Staff costs Annual Report on Remuneration continued on Report Annual – 70 – – – – Key areasKey of focus for the year ahead – 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. – – – Advisers to Remuneration the Committee responsibilities. its meet it help to below listed advisers external the engaged has Committee The – – – – Committee’s responsibilitiesCommittee’s principal to: responsibilities are Committee’s The Composition Remuneration the of Committee Mai and Dyson Ian Geary (Chair), Karen Directors: Non-executive independent Committee three comprises currently Remuneration The appropriate, attendas to meetings invited are advisers, Committee’s the as well as team, Fyfield. management the of members Appropriate interest. of conflict potential a there’s unless The remuneration of Non-executive Directors, other than the Chair, is determined the by Chair of the Board and the Executive Directors. Remuneration governance governance Remuneration 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 ASOS by 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. GOVERNANCE REPORT 73 2.46 2,955 14,062 4.31 global Total Total global Total 50,451,739 11,0 8 4 23 5,046
1,359 5,408 portionUK UK portionUK 24,679,429 4,026 23 1,703 Annual Report and Accounts 2020 Annual Report Anna Suchopar Anna Company SecretaryCompany 13 October 2020 October 13 COVID-19, including the relatedCOVID-19, public health guidance and legislation issued the by UK Government. In light of the continuously the to with respect developments changing pandemicCOVID-19 and, in particular, the UK Government’s response (including the use working on guidance and lockdowns local of has Board the gatherings), and home from concluded that the interests of all our stakeholders would be best served running by this as a closed AGM year’s meeting. to able be not therefore will Shareholders attend in person. The Notice of Meeting will be available to view on www.asosplc.com, sufficiently in advance of that meeting. orderBy of the Board e e revenue e/£m e e e revenue e/£m 2 2 2 2 2 2 2 ASOS PLC PLC ASOS tCO tCO measurement of Unit tCO tCO Unit of measurement of Unit kWh tCO tCO tCO We have followed the 2020 HM Government Environmental Reporting Guidelines. Environmental Government HM 2020 the followed have We Stakeholder engagement engagement Stakeholder Group the how to Information relating found be can stakeholders its with engages on pages to 22 23. donations Political made been have donations political No during this£Nil). financial year (2019: Authority will be sought to authorise the the to up donations political make to Company atvalue the AGM. of The £100,000 2020 policyGroup’s is that is does not, directly or donations; political make subsidiary, a through thishowever, resolution has been proposed to ensure the Group and its subsidiaries do not, because of the wide reaching definition in the a make unintentionally 2006, Act Companies Act. the of breach Meeting General Annual Company the of Meeting General Annual The will noon be held November on 26 at 12 monitor to continuing are We 2020. of outbreak the to relating developments This year we have onboarded our first ever dedicated energy management and procurement partner, partner, procurement and management energy dedicated ever first our onboarded have we year This e/£m revenuee/£m – location based e/£m revenuee/£m – market based 2 2 Energy and carbon emission reporting emission Energy carbon and Scope 2 – emissions from purchased electricity location - based Intensity ratio – tCO emissions based Market Scope 2 – emissions from purchased electricity – market based Energy consumption used to calculate emissions – for gas, electricity and transport emissions Scope 1 – emissionsfrom combustion of gas Quantification reporting methodology:and impact Ofgem environmental boundary), Control (Operational Standard Corporate – Reporting GHG the Protocol used also have We Reporting. Other intensity Company for Factors Conversion Government’s UK 2020 the used have and sources, fuel for measurements 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.1% of totalOnly energy data presented is estimated. Data for emissions from staffvehicles used for business purposes are accurate to the Global level but currently difficult to separate based on location; the same figure for the UK used. been portion therefore has Statement:Energy Management electricity renewable performance and energy analysis availability, data energy improve to with them closely worked have and Energy, Amber energy of level the increased have platform, and management data Fabriq, energy company-wide a launched have we Together procurement. performance reporting to stakeholders. key continue We to improve the data quality on this platform assets and key are all using at the procurement energy analysis our consolidate to Energy with Amber closely to worked identify also have We reduced. be ways can consumption energy and during the year transitioned renewable to 75% electricity across our operations. aim to We achieve renewable 100% electricity across capacity. generation energy all renewable own our increase and 2025 by sites Scope 3 – emissionsfrom staff vehicles used for business purposes emissions gross Total Intensity ratio – tCO Employees with disabilities disabilities with Employees ASOS gives full and fair consideration to disability long-term with a or applicants with external work We condition. health Leonard partners, as charities such including opportunities job to promote to Cheshire, are candidates with disabilities. We opportunitiescommitted equal providing to our demonstrate to continue and interviewingcommitment by candidates criteria. the meet minimum who supportTo learning for our employees with a wedisability long-term condition, health or make and spaces accessible in training deliver and content the to adjustments reasonable approach. As an example, we use technology to caption video content, work with third party all sure make to providers psychometric employees can complete these fairly and will support a when bespoke or offer 1:1 always need is identified.We are committed to giving and learning same the to access employees all another. one as development 3.17% 5.41% 9.77% 4.06% 5.53% 3.64% 5.20% 3.59% 26.41% 10.97% Asof a % issued shares Holding 5,190,613 3,162,328 5,515,021 9,745,597 3,581,222 3,636,414 4,057,046 5,398,786 10,953,397 26,346,819 During the the year, 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 August on 28 The 2020. performance current reviewed have Directors and cash flow forecasts, and are satisfied projections, and forecasts Group’s the that potential changes in of account taking Group the that performance, show trading will be able to operate within the level of its future foreseeable the for facilities current and at a minimum months for from 12 the date of signing financial the Group’s therefore have statements. Directors The basis concern going the adopt to continued statements. financial Group’s the preparing in of disclosure Statement on information auditors to The Directors confirm that, so far as each is aware, there is no relevant audit information of which auditors the Group’s are unaware. Each of the Directors has taken all the steps he or sheshould have taken as a Director to make himself or herself aware of any relevant audit Group’s the that establish to information and that information. of aware are auditors engagement Employee Group the how to Information relating found be can workforce its with engages on pages to 22 25. impact. In all scenarios modelled and tested and modelled scenarios all In impact. the directors concluded that ASOS not only remains a viable entity, but is well positioned to shift online. channel the to from growth capture assessment of cadence the this, of top On performed is processes annual of outside quarterly part central monthly as of and reporting and processes.forecasting cashShort- both long-term for forecasts and any profitability and and maintained are threats to future performance is mitigated, and any opportunities assessed are speed. at captured, 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 August 2023. up to 31 concern Going financial activities, business Group’s The together with the flows, cash and position affect to performance future its likely factors and position, are set out in the Strategic details addition, In 35. to 2 pages on Report of objectives the Group’s and policies on financial risk management are set out in Note 99 pages on statements financial the to 19 to 102. The Group ended the year with net cash August The 2020. position at 31 of £407.5m Group has a £350m revolving credit facility which is available until July (with 2023 a applicable 2024 July to extension one-year subject to the agreement of all parties). Substantial shareholders Substantial As at 1 October the 2020, Company was aware of the followinginterests in or 3% more of its ordinary capital: share Goldman Sachs International Sachs Goldman UK Mgmt CenturyAmerican Investment As at 31 August 2020, the EBT and LT (combined) held 245,567 shares in ASOS Plc (2019: 271,468 shares). The total The shares). 271,468 Plc (2019: in ASOS shares 245,567 (combined) held EBT and LT the August 2020, As at 31 recognised both are EBT and LT The of £1.3m). balance credit balance of £2.0m (2019: was a credit value in reserves to the within Note 24 detailed are accounting policies Group’s for accounting purposes. The EBT reserve within the 82. Statement of Changes in Equity Consolidated detailed in the on page financial statements and movements are Major shareholder Major Aktieselskabet af 5.5.2010 Rowe PriceT. Group The Capital Group Companies, Inc Companies, Group Capital The Allianz Global Investors Global Allianz Nick Robertson Jupiter Fund Management Fund Jupiter Baillie Gifford & Co Partners Capital Camelot Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS he LT holdshe LT shares awarded under the he EBT is a discretionary trust, the sole T current benefitof the for solely SIP Executive Directors) (including employees who participate in it. The trustee of the SIP is Link Asset Services Limited, an trustee professional independent company based in the United Kingdom. Under the terms of the Trust Deed, ASOS funds to the buy LT the shares on the open market and retain those shares on behalf underlying beneficiaries. the of T (includingbeneficiaries employees being employees former and Directors) Executive of the Group who have received awards under the Save Earn As scheme You (or their close relations in the event of their death). The trustee of the EBT is Apex Services Financial Company) (Trust professional independent an Limited, trustee company based in Jersey. Under the terms of the Trust Deed, ASOS funds the EBT to purchase on own the EBT’s Company the ordinary in account shares on the open market in return for the EBT the in ordinary the shares use to agreeing Company that it holds to satisfy certain made options and awards outstanding schemes. share Company’s the under
72 – Viability statement The Directors have also assessed the Group’s prospects and viability over a three-year period August This three-year 2023. to 31 assessment period was selected as it strategic Board’s the with corresponds planning horizon as well as the time period are management senior which over plans. long-term via incentive remunerated Directors assessment, the this making In and tests stress of number performed a Group’s the determine to analysis scenario Directors the testing, stress the Within viability. assessed both how long the business could demand, in reduction sustained with a operate in line with the worst impacts seen in the first and inwave a zero of COVID-19 revenue scenario. Directors also assessed a more likely macroeconomic prolonged of scenario – Employee Benefit Trust Benefit Employee ASOS uses an Employee BenefitTrust to in ordinary shares of acquisition facilitate the the Company for the purpose of satisfying awards and options granted under ASOS year, financial the schemes. During share ASOS used both the Employee BenefitTrust (EBT) and the Link to Trust satisfy (LT) awards granted under its Save Earn As and You SIP schemes: share Directors’ continued Report FINANCIAL STATEMENTS 75 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS mpany Statement of Financial Position Financial Statement of mpany otes to the Financial Statements Financial the to otes Statements Financial Company the to otes onsolidated Statement of Total Comprehensive Income Comprehensive Total Statement of onsolidated Equity in Changes Statement of onsolidated Position Financial Statement of onsolidated Flows Cash Statement of onsolidated ompany Statement of Changes in Equity ompany Statement of Cash Flows Information ompany ive-Year Financial Summary Financial (unaudited) ive-Year C C C C C N C Co C N F I
120 82 83 84 85 111 112 113 114 118 Financial Financial Statements 76 81 Plc ASOS of Members the Report to Auditors’ ndependent
o far as the Director is aware, there is hey have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant the that establish to information and audit auditors Company’s parent and Group are aware of that information. s no relevant audit information of which the auditors Company’s parent and Group and unaware; are t
Directors’ confirmations Report Annual the that consider Directors The and Accounts, taken as a whole, is fair, provides understandable and and balanced information necessarythe shareholders for to assess the Group and parent Company’s performance, model business and position strategy. and In the case of each Director in office at the approved: Report is Directors’ the date – – Anna Suchopar Anna SecretaryCompany 2020 October 13 The Directors are also responsible for safeguarding the assets of the Group and taking for hence and Company parent and prevention the for steps reasonable detection other irregularities. and fraud of keeping for responsible are Directors The that adequate are accounting records sufficient to show andexplain the Group transactions and Company’s parent and any at accuracy with reasonable disclose time the financial position of the Group and ensure to them enable and Company parent with statementsthe comply financial the that Companies Act 2006. the for responsible are Directors The integrity and maintenance parent the of Company’s website. Legislation in the United and preparation the governing Kingdom statements may financial of dissemination jurisdictions. other differ in legislation from Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS
ke judgements and accounting accounting and judgements ke epare the financial statements on financial the epare
elect suitable accounting policies and tate whether applicable IFRSs as as IFRSs whether applicable tate ma pr the going concern basis unless it is Group the that presume to inappropriate in continue will Company parent and business. estimates that are reasonable and and reasonable estimates are that prudent; and then apply them consistently; them apply then adopted the by European Union have been followed for the Group financial the by adopted as IFRSs statements and European Union have been followed for statements, subject financial Company the material departures and disclosed any to statements; financial the in explained s s
– – – – Company law requires the Directors to each statements for financial prepare Directors the law that Under year. financial statements financial group the prepared have with International Financial accordance in by adopted as (IFRSs) Reporting Standards company parent and Union European the with accordance statementsin financial Reporting Standards International Financial (IFRSs) as adopted the by European Union. Under company law the Directors must not statements unless they financial the approve 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 statements, financial the preparing In period. the Directors are required to:
Responsibility Statement of Directors’ of Statement 74 The Directors are responsible for preparing the Annual Report and the and Report Annual the preparing for responsible are Directors The regulation. with applicable law and in accordance financial statements FINANCIAL STATEMENTS
77
Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS How our audit addressed the audit key matter at rates consistent with the accounting group’s policies once the respective projects operational. became performedWe additional procedures over furloughed staff to confirm that staff time incorrectly capitalised. not was Nothing was identified from any of the work performed to suggest a material error in relation to capitalisation of internal staff costs. We have gained an understanding through walkthroughs performed and discussion performed discussion and walkthroughs through understanding an gained have We with management ofthe process in place for evaluating capital approval for staff time capitalised in relation to capital projects. testedWe management’soperational control in relation to capital funding request forms which evidenced that the appropriate capitalisation criteria had been place to able were We authorised. appropriately was funding the and considered reliance on these controls for the purpose of our audit. Our testing approach covered capitalisation of employee time for internal staff and selected capitalised various of understanding an obtained external contractors. We assessed independently and data timesheet to back charged time tested projects, whether sufficient economic benefits were likely to flow from the projects to support capitalised. values the 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 costspreviously capitalised relating to these projects were moved out of assets under construction at the point that the associated assets became operational. We projects these on amortisation commenced or further depreciation that confirmed discussedWe the revenue recognition policy with management and performed a process. recognition revenue the of understanding our reconfirm to walkthrough In order to get substantive comfort over the occurrence of revenue, we have taken the totalrevenue 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 evidence contractual is there that determined We customers. by receipt on than rather 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 material. not was and provision returns the calculate to methodology used the understood We 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 impacton of current Covid-19 return rates. also We compared the provision to actual returns of sales made pre year end, which were processed in the period post year end. also We considered the disclosures in respect of this given the heightened level of uncertainty and volatility in returns rates due to the pandemic. the of impact No evidence arose from our work that the provision for returns was materially misstated. in excess of materiality being investigated, leaving an immaterial untested balance. haveWe 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. performedWe testing to identify unusual journals impacting revenue which did not the over evidence gained and tested We processes. business expected follow 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 assessedthe financial impact of recognising revenue on despatch
Key auditKey matter staff costs internal of Capitalisation Refer (Accounting to pages 85 and (Note Policies) 110 1) The group continued to invest in its operational infrastructure spending £30.2m on property, plant and equipment as set out and in note 12, £85.4m on intangible assets as set out in note 11. focussedWe on this area due to the size of the costs capitalised and assessing the whether in involved judgement was there that fact 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. further We assessed whether costs were appropriately moved out of assets under point the from amortised/depreciated appropriately and construction at which they came into operational use. recognition revenue in Fraud Refer to pages 88 (Note (Accounting and 3) 107 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. deemWe the risk of fraud in revenue to be specific to journal postings of nature adjustments, the adjustments. judgemental Regarding and 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 inappropriately. profits and revenues significantly enhance 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 that in IFRS 15 revenue from sales with rights of return should only be recognised if it is highly probable that it will not reverse. talisation of internal stafftalisation of (group) costs SOS Plc – The parent entity holding investments throughout the group. SOS.com Limited – The trading entity that generates 99% of group revenue. A A verall company materiality: £250,000), based of total on assets, 1% £350,000 (2019: onsideration of the impact (group and of company) COVID-19 aluation of inventory (group) ull scope audit of: scope audit ull raud in revenue recognition (group)
O materiality. group of allocation an at capped F Capi F V C O total revenue with regard to profit before tax. – –
verall group £4,500,000), materiality: based (2019: on approximately £7,000,000 of 1% – – – – – – – Annual Report and Accounts 2020 Annual Report matters Key audit Materiality ASOS PLC PLC ASOS Audit scope ve been prepared in accordance with the requirements of the Companies Act 2006. Act Companies the of requirements with the accordance in prepared been ve ve been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union Union European the by adopted as (IFRSs) Reporting Standards with International Financial accordance in prepared properly been ve ive a true and fair view of the state and of the of the group’s company’s affairs August and 2020 as profit at of the 31 group’s and the ha and, as regards the company’s financial statements, as applied in accordance with the provisions of the Companies Act2006; and ha g and thegroup’s company’s cash flows for theyear then ended;
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 examplein respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits that directors the we also by bias addressed of evidence was whether there evaluating including controls, internal of override management of the risk fraud. to material misstatement due of risk a represented auditKey matters auditKey matters are those matters that, in theauditors’ 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) identifiedby the auditors, including those which had the greatest effect on: theoverall audit strategy; the allocation thereon, of resources procedures our of results the on in the make audit; we comments efforts the matters, These directing any team. and engagement and the of 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 identifiedby our audit. We have auditedWe the financial statements, included within the AnnualReport and Accounts“Annual(the 2020 Report”), Comprehensive which Total Statement of Consolidated the comprise: 2020; August 31 at as Position Financial Statements of Company and the Consolidated Equity in Changes Statements of Company and Consolidated the and Flows, Cash Statements of Company and Consolidated the Income, for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies. opinion for Basis conductedWe our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable Our law. 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 statements financial the of audit our to relevant are that requirements ethical with the accordance in group the of independent remained We in the UK, which includes the Ethical FRC’s Standard, as applicable to listed entities, and we have fulfilled our other ethical responsibilities in with these requirements. accordance approach audit Our Overview – – – Report on the Audit of the Financial Statements Opinion statements”): “financial (the statements financial company statementsand financial group Plc’s ASOS opinion, our In 76 to the Members of ASOS Plc of ASOS Members to the Independent Auditors’ Independent Report FINANCIAL STATEMENTS 79
Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Outcome We haveWe nothing material to add or to draw attention to. However, because not all future events or conditions can be predicted, this ability to company’s and group’s the to as guarantee a not statement is continue as a going concern. he directors’ confirmation on pages32 35 to of the Annual Report that they have carried out a robust assessment of the principal risks facing the he disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated. he directors’ explanation on page of 72 the Annual Report as to how they have assessed the prospects of the group, over what period they have done he statement given by the directors, on page 46, that they consider the Annual Report taken as a whole to be fair, balanced and understandable, he section of the Annual Report on page describing 47 the work of the Audit Committee does not appropriately address matters communicated T group, including those that would threaten its business model, future performance, solvency or liquidity. T T so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectationable to continue that the in operation group will be and meet its liabilities as they fall due over the period of their assessment, includingattention any related disclosures to any necessary drawing qualifications or assumptions. T and provides the information necessary for the members to assess the and group’s company’s position and performance,is materially business model inconsistent and strategy with our knowledge of the group and company obtained in the course of performing our audit. T by us to the Audit Committee.
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 – – – haveWe 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: – – haveWe nothing to report in respect of this responsibility. 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 Augustended and Directors’ 31 2020 is consistent Report with for the the financial year statements and has been prepared in accordance with applicable legal requirements.(CA06) In light of the knowledge and understanding of thegroup and company and their environment obtained in the course of the audit,any material we did not identify 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 theor liquidity solvency of the group if we have anything material to add or draw attention to regarding: Reporting obligationReporting are requiredWe to report if we have anything material to add or draw attention to in respect of the directors’ statement in the financial statements going the adopt to appropriate it considered directors the whether about the statementsand financial the preparing in accounting of basis concern the and group’s uncertainties material the to any identification of directors’ company’s ability to continue asa going concern over a period of at least twelve months from the date of approval of the financial statements. For eachcomponent in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of £6,650,000. and between £350,000 materiality was components across allocated agreedWe with the Audit Committee that we would report to them misstatements identified asduring well as misstatements our £10,000) audit (Companyabove £350,000(group audit) belowaudit) (2019: those amounts £250,000) and £17,500 that, in our view, (2019: warranted reporting for qualitative reasons. concern Going In accordance with ISAs (UK) we report as follows: information other on Reporting report The thereon. auditors’ our statementsand financial the than Report other Annual the information in the of all information comprises other The accordingly, information and, other the cover not statements does financial the on opinion Our information. other the for responsible are directors we do not express an audit opinion except or, to the extent otherwise explicitly stated in this report, any form of assurance thereon. whetherconsider so, doing in information and, other the read responsibility to is statements, our financial the of audit with our connection In otherwise or to appears audit, the in obtained knowledge our statements or financial with the inconsistent materially information is the other be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required based toinformation. other If, perform the misstatementof a material statements or financial the material misstatement of a is there proceduresto conclude whether 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. have nothingWe to report based on these responsibilities. With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required the by UK Companies Act 2006 included. been have 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 ISAs by (UK) unless otherwise stated).
The company does not trade. As a result we believe that total assets is the most appropriate benchmark to use for the Company. £350,000 (2019: £250,000). (2019: £350,000 Parent company financial statements financial company Parent How our audit addressed the audit key matter the included which forecasts, management’s evaluated we concern, going Regarding their with along business, the on pandemic the of impact potential the of consideration time the at available information the on Based scenario. downside plausible but severe 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. scenarios the within included assumptions key the on management challenged We modelled. haveWe considered the potentialimpact on of the COVID-19 balance sheet, and tangible of impairment potential inventory, of valuation the specifically around 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 statements. financial group the in reviewedWe management’s disclosures in relation to the potential impact of andCOVID-19 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 have reviewed and understood management’s provisioning policy, compared policy, provisioning management’s understood and reviewed have We it to the prior year and assessed its appropriateness given ourknowledge 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. Inan additional sample, we tested to supporting evidence that the net realisable value of inventory items was appropriate. testedWe the appropriateness of the data used as the basis for management’s noted. issues with no calculation, inventory provision haveWe obtained and reviewed the postyear-end level of stock write offs and did amounts. identifyunprovided significant not any
Within the group there is a focus on driving sales given the capital significant into profits reinvesting on focus group’s expansion to underpin future growth. At the same time, the acceptable an delivering on focussed remains business short term return as it expands sales. Having regard to both the size of the business and its profitability, was £7m viewed as an appropriate level to set materiality. 1% of total1% revenue with regard to profit before tax. 1% of total assets, capped at an allocation of group materiality. £7,000,000 (2019: £4,500,000). (2019: £7,000,000 Group financial financial statementsGroup
Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Rationale for benchmark for Rationale applied How we determined it determined we How Overall materialityOverall 78 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. determined We 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 influencedby 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 a in whole. aggregate statementsas financial the on follows: as a whole materiality determined statementsas financial we the for judgement, professional our on Based We determinedWe that there were no audit key matters applicable to the company to communicate in our report. How tailored we the audit scope tailoredWe the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements 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 assessments. impairment and concern going of context concern going group the on impact the assessment of Management’s downside plausible but severe modelling by made was conclusion March. since trading through obtained knowledge the utilising scenarios, Management has concluded that the group expect to trade solvently under these scenarios for at least twelve months from the date of this financial group the prepared therefore have directors The report. statements on a going concern basis, with no material uncertainty. Management also consideredthe impact on of the COVID-19 group’s materialimpact no was concluded that there statementsfinancial and on the financial statements, including in respect of the impairment of certain assets, or on provisions or estimates made. Consideration of the impact of COVID-19 Key auditKey matter Valuation of inventory The group held a significant amount of (£532m) inventory as at 31 August 2020. The nature of thebusiness group’s model is to service demand in a dynamic and fast moving fashion market which also inherently means there is a risk of inventoryfalling out of fashion andproving 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 carrying their of values. excess in of inventory The provisioning group’s 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 there where recognised are inventory of items fragmented and moving is a view that the net sales price achievable will be lower than cost. year increase relative its inventory balance, total the of quantum The on year, along with the level of judgement involved to ensure that individual line items are stated at the lowerof cost and net realisable value made this an area of focus. FINANCIAL STATEMENTS
– 81 £m 2.8 (2.0) (0.8) (8.5) 11. 7 33.1 35.1 24.6 24.6 (12.9) (14.9) 29.4p 29.4p Year to (415.6) (883.6) 1,334.3 2,733.5 (1,399.2) 31 August 31 2019
£m 0.1 2.9 0.5 (9.5) (13.9) (10.9) (28.8) 151.1 113.3 113.3 142.1 102.4 Year to (951.7) (444.6) 126.3p 125.6p 1,547.4 3,263.5 (1,716.1) 31 August31 2020 Annual Report and Accounts 2020 Annual Report 8 6 7 4 8 3 9 9 19 ASOS PLC PLC ASOS Note 1 Profit for the year for the Profit Income tax expense Finance income Finance expense Finance before tax Profit Profit for the year attributable parent company for the the to owners of Profit Administrative expenses Operating profit Income tax relating to these items year loss for the comprehensive Other Net translation movements offset in reserves Net fair value loss on derivative financial instruments Distribution expenses Gross profit Gross Total comprehensive income for the year attributable income for the to owners of the comprehensive Total parent company Consolidated Statement Statement Consolidated Income Comprehensive of Total For the year August to 31 2020 Revenue Cost of sales 1 All items of other comprehensive loss will subsequently be reclassified to profit or loss. to profit loss will subsequently be reclassified comprehensive 1 All items of other Earnings per share attributable to the owners of the parent company attributable owners of the to the Earnings per share year during the Basic per share Diluted per share
Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS ave not received all the information and explanations require we for our audit; or tain disclosures of directors’ remuneration specified by law are not made; or made; not are law by specified remuneration directors’ of disclosures tain dequate accounting records have not been kept the by company, or returns adequate for our audit have not been received from he company financial statements are not in agreement with the accounting records and returns. and records accounting with the agreement in not statementsare financial company he branches not visited or us; by cer t we h a
80 Andrew Latham (Senior Statutory Latham (Senior Auditor) Andrew The directors requested that we audit the part of the Directors’ Remuneration Report specifiedby the Companies Act2006 to be audited as if the company were a quoted company. Companies with the accordance in prepared properly been has audited be Report to Remuneration Directors’ part the the of opinion, our In Act 2006. LLP PricewaterhouseCoopers of behalf on and for Chartered Statutory and Accountants Auditors Watford 2020 October 13 We have noWe exceptions to report arising from this responsibility. reportingOther voluntary remunerationDirectors’ 2006. Act Companies the of provisions with the accordance Report in Remuneration Directors’ a prepares voluntarily company The – – – – Other required reporting Other required Companies Act 2006 exception reporting Under the Companies Act 2006 we are requiredto report to you if, in our opinion Responsibilities of the directors for the financial statements As explained more fully in the Statement of Directors’ Responsibility set the out on directors page 74, are responsible for thepreparation of the financial statements in accordance with the applicable framework and for being satisfied that they agive true and fair free Thestatementsare view. that financial directors of necessary preparation the is determine enable they to as control internal such for responsible also are error. or fraud to whether due material misstatement, from a going as ability continue to company’s the and assessing group’s for the responsible are statements,directors financial the the preparing In directors the unless accounting of basis concern going the using and concern going matters to related applicable, as disclosing, concern, 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 misstatement, material from free are a whole statementsas financial whether the about assurance reasonable obtain to are objectives Our 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 statements. financial these of be basis the on taken users of decisions economic the influence to expected A further description of our responsibilities for the audit of the financial statements is located on websitethe FRC’s at: report. www.frc.org.uk/ auditors’ our part of forms description This auditorsresponsibilities. Use of this report 3 with Chapter accordance in body a as members company’s the for only and for prepared been has opinions, the including report, This of theof Part Companies 16 Act 2006 and for no other purpose. do not, We 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 writing. in consent prior our Responsibilities for the financial statements and the audit FINANCIAL STATEMENTS – – – At 83 £m 1.1 0.1 2.9 1.3 6.9 2.6 (7.1) (2.2) (4.8) 11.0 72.8 (19.7) (12.6) (15.5) (12.7) (75.0) 325.1 623.2 449.5 449.5 622.3 296.0 536.8 453.6 453.6 (149.0) (669.0) (772.2) 31 August31 2019 – – – At £m 1.1 4.8 3.5 2.0 (2.1) (0.3) 19.6 60.3 (11.4) (15.8) (25.4) (22.3) (22.8) 577.0 616.8 810.3 810.3 407.5 165.7 969.6 346.9 245.7 532.4 (854.1) (806.1) (325.0) (290.8) 1,019.8 31 August31 2020 Annual Report and Accounts 2020 Annual Report 11 17 12 15 16 16 13 19 19 19 14 14 14 19 18 10 ASOS PLC PLC ASOS Note
Mathew Dunn Officer Financial Chief
Derivative liability financial Consolidated Statement Statement Consolidated Position of Financial As August at 31 2020 Non-current assets Goodwill assetsOther intangible equipment and plant Property, asset financial Derivative asset financial Derivative Current tax asset Current liabilities Trade and other payables Cash and cash equivalents cash and Cash Notes are 1 to 24 an integral part of the financial statements. The consolidated financial statements of ASOS werePlc, approved registered110, by the Board number 81 to 4006623, on pages of Directors andauthorised for October issue on 13 and 2020 were signed on its behalf by: Total equity Total Borrowings earningsRetained Bank overdraft Lease liabilities Current assets Inventories receivables other and Trade liability tax Current Net current assets/(liabilities) reserve Translation Derivative liability financial Net assets Share premium reserve Trust Benefit Employee Hedging reserve Hedging Non-current liabilities Lease liabilities Deferred liability tax Equity attributable parent to owners of the capital share up Called
£m 0.3 1.3 0.7 (0.6) 11. 7 24.6 Total (12.9) 12.9 453.6 (10.9) 438.8 113.3 810.3 equity 239.4 453.6 102.4
– – – – – – – – 3.4 – £m 0.6 0.6 0.1 0.1 (1.6) (2.2) (2.1) (2.2) reserve Translation – 7. 5 £m (4.8) (4.8) (12.3) (12.3) (11.0) (11.0) (15.8) reserve Hedging Hedging 2 –– – – –– –– –– –– – – –– –– £m 1.0 1.3 1.3 0.7 2.0 Trust Benefit reserve Employee 1 – – – – – 0.3 – £m 1.3 (0.6) 82.4 24.6 12.9 422.1 449.5 113.3 113.3 577.0 449.5 earnings Retained – – – – – – – – – 3.4 – £m Share 245.7 238.8 premium premium – – – – – – – – – – £m 2.9 6.9 2.9 6.9 2.9 6.9 0.6 3.5 share capital capital Called up 8 8 18 20 18 18 20 Note Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS At1 September 2019 82 1 Retained earnings includes the share-based earnings includes the payments reserve. 1 Retained Trust. Trust and Link 2 Employee Benefit For the year August to 31 2020 Consolidated Statement Statement Consolidated in Equity of Changes Profit for the year Other comprehensive (loss)/income (loss)/income Other comprehensive Total comprehensive comprehensive Total income/(loss) for the year Proceeds from share issue, net of costs transaction Net cash received on exercise of shares from Employee BenefitTrust Share-based payments charge scheme option share to relating Tax Balance as at 31 August 2020 Balance as at 31 At 1 September 2018 Profit for the year year the for loss Other comprehensive Total comprehensive income/(loss) for for income/(loss) comprehensive Total the year Net cash received on exercise of shares from Employee BenefitTrust Share-based payments charge Tax relating to share option scheme option share to relating Tax Balance August as at 31 2019 FINANCIAL STATEMENTS 85
Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS
Notes to the Financial Statements Financial the to Notes For the year August to 31 2020 1 SIGNIFICANT ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY judgements affectthat estimatesand application necessarily the statements, management makes financial the preparing of course the In other and experience historical on based are and reviewed continually are judgements reported Estimates and amounts. and of policies factors, including expectations of future events that are believed to be reasonable under the current circumstances. Actual time statementseffect the at financial with an the results for on accounted are changes subsequent may any differ and judgement estimate or initial the from detailed as management, by made judgements and estimates considers Committee Audit The available. becomes information updated such 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 are: and liabilities estimates Accounting 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 an overall value. charge to the statement £11.3m), of comprehensiveThe provision August is £36.5m income (2019: 2020 at 31 of £25.2m was recognised during the year. accrualsRefund 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 management with do not COVID-19, believe that the difference between the accrual estimate and actual returns will be material. The accrual for net £62.9m). refunds totalled August (2019: 2020 £62.5m at 31 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. on pages and 95. and 94 12 See Notes 11 Impairment of property, plant and equipment and other intangible assets indicate circumstances in changes or events if impairment for reviewed assets are intangible other and equipment and plant Property, that the carrying amount may not be recoverable. Where an impairment is required, the recoverable 95. and amount 94 is pages determined on 12 and based on estimates. 11 Notes See and assumptions management’s using prepared calculations value-in-use judgements Accounting Capitalisation criteria criteria the asset meets the that determining in judgement exercises management in-house, developed or acquired assets are Where 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 liability a respect the contingency. of in not recognise A liability is recognised only when a future economic outflow is probable and the amount of that outflow can be estimated.reliably reliably be can exposure measured. Group’s whether the to as probability determination and the of in required is Judgement Calculation share-based of payment charges The charge related to equity-settled transactions with employees is measured reference by 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 engagedto advise in this area where necessary. Judgements are also applied in relation to estimations of the number of options which are expected to vest, reference by to historic leaver rates and expected outcomes under relevant performance conditions. See Note on 20 pages 103 to 105. – – – £m 1.4 0.3 0.7 2.5 (1.4) (5.2) (0.2) 35.1 73.9 73.9 75.0 89.7 25.3 42.7 46.0 (58.0) (30.2) (96.7) (15.5) 143.3 143.3 Year to (129.2) (124.9) (221.6) 31 August31 2019 – £m 0.1 4.1 0.7 0.5 6.5 4.4 (8.0) 57.4 10.9 60.0 (15.5) (21.4) (75.0) (28.2) (20.5) (88.4) 151.1 407.5 129.4 135.7 422.9 239.4 403.3 (116.1) Year to 31 August31 2020 4 4 4 16 14 14 20 Note Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Net cash generated from financing activities Net cash generated from Net increase/(decrease) in cash and cash equivalents Opening cash and cash equivalents equivalents cash and cash Closing Finance expense Finance Effect of exchange rates on cash and cash equivalents Net cash inflow relating to Employee Benefit Trust 84 Amortisation assets intangible other of assetsImpairment of activities Financing Proceeds from share issue, net of transaction costs Adjusted for: Adjusted equipment and plant property, of Depreciation borrowings from of)/proceeds (Repayment Principal portion liabilities lease of Operating profit Operating profit Consolidated Statement ofCash Flows For the year August to 31 2020 Payments to acquire property, plant and equipment and plant property, acquire to Payments Decrease/(increase) in inventories in Decrease/(increase) receivables other and trade in Decrease/(increase) Increase in trade and other payables Share-based payments charge Other non-cash items Income tax paid operating activities Net cash generated from activities Investing Payments to acquire intangible assets income Finance activities Net cash used in investing FINANCIAL STATEMENTS 87 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS 2 CHANGES TO ACCOUNTING POLICIES continued continued POLICIES ACCOUNTING TO CHANGES 2 The effect of these changes has resulted in EBITDA and increasing depreciation £27.6m by increasing therefore £25.0m; by EBIT has increased £2.6m by for the August year ended Net 2020. finance 31 costs have increasedby £5.0m and therefore profit before tax reduced £2.4m. by Within the cash flow statement, while there is no additional impact on cash flows, there are changes in the classification of cash flows, of leasewith £21.4m payments classified as financing cashflows and£5.0m as interest payments. lease theFrom 1 September Group’s policy is summarised 2019 as follows: A right-of-use asset and lease liability is recognised at the lease commencement date. The right-of-use asset is initially recognisedcomprising at cost, 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 term. lease the of end the asset or the of life useful depreciated the of end the of earlier the to date commencement the from method straight-line usingthe 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 dilapidationprovision 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 assessment the Group’s 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 thoseadopted and disclosed in the Group financial statements for theyear to 2019. 31 August Accounting policy references are included in the relevant notes throughout the financial statements and also in Note24. Standards, amendments and interpretations to existing standards that are not yet effective and haveearly not been adopted the by Company Group and/or There have been no changes to standards published that are applicable to the Group or Company.
– £m (5.0) (0.5) £m 23.0 (22.1) (12.7) (30.8) (36.4) 2019 352.1 388.9 (317. 2) 339.3 1 September 1 Annual Report and Accounts 2020 Annual Report
ASOS PLC PLC ASOS Notes to the Financial Statements continued 86 Current assets Prepayments liabilities Current liabilities lease liabilities – Financial Accruals liabilities Non-current liabilities lease liabilities – Financial provision Dilapidation Total movement in retained earnings at 1 September 2019 Non-current assets Right-of-use assets – property, plant & equipment Reconciliation of the lease liabilities at 1 September 2019 to the operating lease to the lease liabilities at 1 September 2019 Reconciliation of the August 2019: commitments at 31 Operating lease commitments disclosed under August IAS17 at 31 2019 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 incremental group’s borrowing rate at the date of initial application liability lease from excluded Short-term leases Lease liability recognised as at 1 September 2019 2 CHANGES TO ACCOUNTING POLICIES POLICIES ACCOUNTING TO CHANGES 2 Standards, amendments and interpretations to standards that are effective and Company have been adoptedand/or the by Group The group has adopted effective “Leases”, IFRS 16, for accounting periods commencing and applied 1 January the simplified 2019 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. property portfolio of lease comprised principally of leases is Group’s The equipment. and plant property, for leases into enters Group The land and buildings in relation to ASOS fulfilment centres and office space. The leases typically run for terms subject payments are lease between 7 20 and majority non-cancellableyears the The periods. Group’s the of beyond and renew to options or clauses break include may indices. economic or turnover on payments contingent rental include agreements lease every some 5-6 and usually years, review, market to 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 the by 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 thebalance sheet at transition and the right dilapidation A £36.2m is £339.3m, of use asset is £352.1m. 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 hence sheet a £30.8m movement for has the been August year ended 2019, 31 Position: Financial Statement of opening the across impact the showing below table the in included FINANCIAL STATEMENTS 89 £m 0.1 1.4 0.3 0.2 5.4 4.5 25.3 24.0 46.0 Year to 1,378.5 31 August31 2019 £m 0.1 4.1 0.3 5.5 0.4 2.5 57.4 23.3 60.0 Year to 1,677.8 31 August31 2020 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Impairment of assetsImpairment of 4 OPERATING PROFIT OPERATING 4 Cost of inventory recognised as an expense value realisable net to inventories of Adjustment a) Operating profit is stated after charging a) Operating profit equipment and plant property, of Depreciation Amortisation assets intangible other of losses exchange foreign Net leasesOperating Costs relating to the audit of the parent company are borne ASOS.com by Limited. The policy for the approval of non-audit fees is set out in the Audit Committee Report on pages45 to 48. Costs related to non-audit services provided auditors the by Group’s were less than less than £0.1m). (2019: £0.1m No exceptional items were identified £nil). for31 August (2019: the year 2020 to b) Auditors’ remuneration: audit-related services: and Audit statements consolidated financial and Statutory company parent of audit Statutory audit of the Company’s subsidiaries pursuant to legislation to pursuant subsidiaries Statutory Company’s the of audit Total – £m £m 9.4 6.2 0.5 (2.0) Total (9.5) 35.1 66.4 Total 33.1 33.1 86.3 151.1 (415.6) 142.1 (883.6)
(951.7) (444.6) 1,334.3 2,733.5 (1,399.2) 3,171.0 1,547.4 3,263.5 (1,716.1) 1 1 – – £m £m 9.4 RoW RoW 16.0 497. 4 2,6 57. 7 506.8 587.9 603.9 US £m US 0.1 £m 0.1 12.1 13.3 341.2 401.9 415.3 Year to 31 AugustYear to 31 2019 – Year to 31 AugustYear to 31 2020 EU EU £m £m 0.3 17. 5 24.9 825.7 843.5 353.4 1,030.2 1,005.3 UK £m UK 9.0 £m 6.1 27. 4 32.1 993.4 1,029.8 1,175.9 1,214.1 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Third-party revenues Total revenues Total Cost of sales Gross profit Distribution expenses Administrative expenses profit Operating income Finance expense Finance tax before Profit Delivery receipts Notes to the Financial Statements continued Retail sales Retail (2019: £44.7m), and RoW: £nil (2019: £nil). £nil £44.7m), (2019: and RoW: (2019: 88 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 themonthly note. this in disclosed therefore is liabilities assets segmental or of measure No accounts. management US:The £80.1m total amount of non-current £113.0m), assets £463.4m), EU: £204.0m located (2019: (2019: in the UK is £679.6m 1 Rest of World of World 1 Rest Third-party revenues 1 Rest of World of World 1 Rest Retail sales Retail Delivery receipts 3 SEGMENTAL ANALYSIS ANALYSIS SEGMENTAL 3 Operating Chief reporting the internal to Group’s the on based determined be to segments operating requires Segments’ ‘Operating 8 IFRS information on Committee receives Executive the which be to determined been has Maker Decision Operating Chief The Maker. Decision reporting internal structure. and management Group’s the territories, on based geographical key in operations Group’s the of basis the reflecting territory KPIs performance. and customer and revenue on assesses based performance Board segment the each of The Executive SeeNote for 24 accounting the Group’s policy on revenue recognition. Total revenues Total Cost of sales Gross profit Distribution expenses Administrative expenses profit Operating income Finance expense Finance tax before Profit FINANCIAL STATEMENTS – – 91 £m £m £m £m 0.1 5.0 5.0 2.0 2.0 0.8 2.2 4.0 6.3 3.5 8.5 8.5 (0.5) (0.5) (0.4) 33.1 Year to Year to Year to Year to 25.7% 31 August31 2019 31 August31 2019 31 August31 2019 31 August31 2019 £m £m £m £m 1.9 0.1 3.1 3.1 9.5 0.2 0.2 0.2 5.0 0.5 4.5 (0.6) 27.0 25.7 25.5 28.8 28.8 142.1 Year to Year to Year to Year to 20.3% 31 August31 2020 31 August31 2020 31 August31 2020 31 August31 2020 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Tax onTax profit at standard rate of UK corporation19%) 19%(2019: tax of Effects of: Effects Expenses not deductible for taxation purposes tax differences: overseas Rate Interest receivable on cash and cash equivalents cash and cash on receivable Interest 7 FINANCE EXPENSE Finance expense payable on cash and cash equivalents, including short-term borrowings, is recognised in the Statement of Total relates. it which to period the in Income Comprehensive IFRS 16 leaseIFRS 16 interest Interest payable on cash and cash equivalents 8 INCOME TAX EXPENSE See Note for 24 accounting the Group’s policy on taxation. Adjustment in respect of prior year corporation tax current tax charge Total Deferred tax temporary of differences Origination reversal – and deferred tax charge Total on profit Tax Effective tax rate Tax onTax profit Reconciliation of tax charge tax Reconciliation of The tax on profit the Group’s before tax differs from the income taxexpense as follows: Profit before tax before Profit Rate differences: UK tax adjustmentsTax on share-based payments Adjustment in respect of prior years onTax profit 6 FINANCE INCOME INCOME FINANCE 6 Finance income receivable on cash and cash equivalents is recognised in the Statement of Total Comprehensive Income as it is earned. £m £m 7. 4 3.7 3.7 3.4 0.4 785 (0.4) 19.9 (43.1) 223.1 1,070 180.0 180.0 Year to Year to Year to 192.4 4,755 2,900 31 August31 2019 31 August31 2019 August31 2019 £m £m 7.0 7.3 0.3 3.5 792 12.9 18.5 10.8 (44.5) 227.7 189.0 183.2 1,969 1,063 3,824 Year to Year to Year to 31 August31 2020 31 August31 2020 August31 2020 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS 90 The highest-paid director exercised 5,736 share options during the year (2019: 36,194); all other components of the highest-paid director’s director’s highest-paid the of components other all 36,194); (2019: year the during options share 5,736 exercised director highest-paid The 64. page on table remuneration directors’ the in detailed are remuneration with along 63, to 51 pages Report on Remuneration Directors’ the in detailed payments are pension and emoluments aggregate Directors’ directors’ interests in issued shares and share options on page 67. Operations Technology Share-based payments charge (Note 20) benefitsShort-term employee The Group contributes to the personal pension plans of certain employees under a defined contribution scheme. The costs of these of costs The contribution defined scheme. a under certain of employees plans pension personal the contributes to Group The the under payable become they as basis accruals an on Income Comprehensive Total Statement of the to charged are contributions scheme rules. the plus non-executive) and (executive Plc ASOS of directors the being personnel, management key to compensation aggregate The members of the Executive Committee of ASOS.com Limited, was as follows: Wages and salaries and Wages The Group’s costsThe Group’s for employees, including directors, during the year were as follows: Social security costs costs Other pension total Gross Less: staff costs capitalised in relation to capital projects By activity: By Fashion 5 STAFF COSTS INCLUDING DIRECTORS’ REMUNERATION monthlyThe Group’s average number of employees during the year was as follows: Notes to the Financial Statements continued Post-employment benefits Post-employment Share-based payments charge/(credit) FINANCIAL STATEMENTS 93 £m 1.1 1.1 1.4 (0.3) Total Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Cost August 2020 and 31 August 2019 31 At 1 September 2018, losses Accumulated impairment August 2020 and 31 August 2019 31 At 1 September 2018, Carrying value August 2020 At 31 AugustAt 31 2019 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, subsidiary a 100% of the Group. as segments business geographical the cash-generating (CGUs); to units purposes testing impairment for allocated been has Goodwill described in Note The 3. assumptions key for the value-in-use calculations are the long-term growth rate and the discount rates. Value-in-use was calculatedfrom cash flow projections for threeyears using data from latestthe Group’s 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 value-in-use the in used assumptions the in change possible performance performance reasonably current No expectations. recent and goodwill. of material impairment a in result could calculations 10 GOODWILL 10 SeeNote and 24 details below for accounting the Group’s policy on goodwill. £m £m £m 1.4 2.8 2.6 0.2 (2.0) (0.6) 24.6 29.4p 29.4p Year to Year to Year to 159,117 83,565,283 83,724,400 31 August31 2019 31 August31 2019 August31 2019 – £m £m £m 0.1 1.3 1.3 2.9 3.3 2.8 11 Year to Year to Year to 126.3p 125.6p 443,417 90,140,451 89,697,034 31 August31 2020 31 August31 2020 August31 2020
Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Earnings (£m) Earnings attributable to owners of the parent company Basic earnings per share Weighted average shares in issue for diluted earnings per share (no. of shares) Diluted earnings per share 92 Deferred tax credit on movement of derivative financial instruments Weighted average effect of dilutive options (no. of shares) Weighted average share capital share average Weighted Weighted average shares in issue for basic earnings per share (no. of shares) 9 EARNINGS PER SHARE Basic earnings per share is calculated dividing by the profit attributable to theowners of the parent companyby the weighted average numberof ordinary shares in issue during the Own year. shares held the by Employee BenefitTrust and TrustLink are eliminated from the weighted average number of ordinary shares. Diluted earnings per share is calculated dividing by the earnings the by weighted average number ofordinary shares in issue during the adjustedyear, for the effects of potentially dilutive share options. Amounts which have been recognised in equity are included in the Consolidated Statement of Changes in Equity on page 82. Deferred tax credit on movement in tax base of share options Tax recognisedTax in the statement of changes in equity Current tax charge on exercise of share options Deferred tax credit on net translation movements offset in reserves 8 INCOME TAX EXPENSE continued income comprehensive other in recognised Tax Notes to the Financial Statements continued FINANCIAL STATEMENTS – – 95 £m (7. 6) (7. 6) 79.7 (4.3) (4.3) (0.5) (4.0) 52.8 (0.4) 25.3 70.5 57.4 Total 30.2 296.0 294.4 366.5 616.8 352.1 123.2 740.0 – – – – – – – – – – – – – £m 0.3 0.3 0.8 75.8 32.5 32.5 116.8 (33.0) (160.1) construction Assets under Annual Report and Accounts 2020 Annual Report – – – – 5.1 £m 9.4 0.6 6.0 2.9 6.2 3.8 (0.5) (0.5) 15.1 16.2 10.6 (2.0) (2.0) 25.7 15.6 14.8 30.4 Computer equipment ASOS PLC PLC ASOS – – – £m 3.3 (7.1) (7.1) 59.9 (0.5) (2.3) (2.3) 20.2 46.8 30.1 26.2 25.6 83.8 161.4 150.7 248.4 308.3 361.2 277.4 plant and machinery Fixtures, fittings, – – – – – – – – – – – – – – – £m (4.0) (0.4) 25.0 24.6 352.1 348.1 323.5 buildings Leasehold land &
Cost At1 September 2018 Transfers Additions Disposals 16 IFRS of adoption on Transition (Note 2) Transfers At 31 AugustAt 31 2019 FX There wereno significant assets under finalconstruction phase of 31 EuroAugust (2019: Hub 2020 automation,as at and development of office space at Leavesden and Greater London House.) 12 PROPERTY,12 PLANT AND EQUIPMENT equipment. and plant property, on policy accounting Group’s the for 24 Note See Disposals Charge for the year Impairments Additions August 2020 At 31 Disposals Accumulated depreciation At 1 September 2018 FX Disposals Net book amount August 2020 At 31 At 31 AugustAt 31 2019 August 2020 At 31 AugustAt 31 2019 Charge for the year – – £m (1.8) (0.4) (8.7) (8.7) 97.9 (4.1) (4.1) (0.9) (4.5) 46.0 Total 85.4 60.0 115.6 459.9 325.1 134.8 354.8 354.8 189.8 346.9 536.7 – – – – – – – – – – – – – £m 29.7 73.3 84.6 84.6 (18.4) 93.3 93.3 23.3 (14.6) construction Assets under £m (1.8) (0.4) (8.7) (8.7) 97.9 (4.1) (4.1) (0.9) 85.9 (4.5) 18.4 46.0 62.1 14.6 60.0 375.1 281.3 134.8 240.3 189.8 253.4 443.2 Software – – – – – – – – – – – – – – – – – £m 0.2 0.2 0.2 0.2 0.2 Domain names names Domain Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Net book amount August 2020 At 31 At 31 August 2020 At 31 AugustAt 31 2019 Disposals At 31 AugustAt 31 2019 Charge for the year Impairments At 31 AugustAt 31 2019 Disposals August 2020 At 31 Charge for the year Impairments Impairments Transfers Impairments Accumulated amortisation At 1 September 2018 Disposals Additions 94 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 territory the on based testing impairment for to allocated been have names Domain value-in-use. their on based annually impairment for which they relate. No impairment charge in respect of domain names has been recognised £nil). during the year (2019: Software and assets under construction August relate 2020 as at 31 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 end by of January 2021. Total additions arising from internal £97.8m). development projects (2019: were £69.0m Disposals Cost At1 September 2018 11 OTHER INTANGIBLE11 ASSETS SeeNote for 24 accounting the Group’s policy on intangible assets. Notes to the Financial Statements continued Transfers Additions FINANCIAL STATEMENTS – – – – – – – – – – – – – – – 97 £m £m 9.1 669.0 270.3 104.2 285.4 31 August31 2019 31 August31 2019 £m £m (0.1) (5.0) (2.3) 11.7 30.7 (67.3) (26.1) (25.0) 137.1 (22.3) (26.4) 806.1 304.1 353.2 (129.1) (313.1) (313.1) (121.3) (290.8) (343.8) 31 August31 2020 31 August31 2020 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Trade payables and accruals and payables Trade Taxation and social security accruals Non-trade Other payables Trade payables and accruals includes trade payables and goods received not invoiced, freight and duty accruals. The fair value of trade, other payablesand accruals is not materially different from their carrying value. LEASE LIABILITIES16 See Note for 24 accounting the Group’s policy on lease liabilities. The following amounts are included in consolidated the Group’s financial leases: its of respect in statements Total cash outflow for leases comprising interest and capital payments Expense relating to short-term leases short-term to relating Expense Expense relating to leases of low value assets that are not shown above as short-term leases Interest expense on lease liabilities lease on expense Interest Depreciation charge for right-of-use assets (excluding impairment) (see Note 12) liabilities Lease 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 liabilities lease on finance charge Future Present value of future leases Balance sheet lease liabilities lease sheet Balance Current Non-current 15 TRADE AND OTHER PAYABLES TRADE OTHER AND PAYABLES 15 Trade and otherpayables are non-interest bearing and are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method – £m £m £m (0.1) (0.1) (0.1) (0.2) 19.1 19.0 21.6 72.8 32.2 42.7 (15.5) (58.0) Year to 31 August31 2019 31 August31 2019 31 August31 2019 – £m £m £m 0.1 (0.1) (0.1) (0.1) 21.1 29.1 10.1 21.2 60.3 (15.5) 407.5 422.9 Year to 31 August31 2020 31 August31 2020 31 August31 2020 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Closing cash and cash equivalents cash and cash Closing 96 Cash and cash equivalents comprise highly liquid funds which the Group can access without restriction. Borrowings (b) The Group has in place a £350m Revolving Credit Facility (RCF) available August until the 2020 July At Group 31 2023. had drawn down of the RCF. £75.0m) £nil (2019: During the the year, Group also issued commercial paper to the as part value of £100.0m, of the government-backed Covid Corporate Financing Facility (CCFF). This was fully repaid August on 28 2020. Net movement in cash and cash equivalents 14 CASH14 AND CASH EQUIVALENTS Cash(a) and cash equivalents equivalents cash and cash Opening Effect of exchange rates on cash and cash equivalents As at 31 August 2020, trade receivables of £2.1m (2019: £0.8m) were past due August but not tradeAs impaired. 2020, at (2019: 31 receivables of £2.1m 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. At start of year The other The receivables fair value £25.7m). of trade balance receivables of and UK includes other VAT (2019: receivables £13.0m is not category Group’s the of receivables’ and ‘loans the into fall receivables other and Trade carrying their differentmaterially from value. financialassets. August £0.1m). the 2020, Atprovision 31 for impairment (2019: was £0.1m Movements in the provision for impairment of trade receivables are as follows: Trade receivables Trade doubtful debts for Provision year the during (Provided)/released 13 TRADE OTHER AND RECEIVABLES 13 Trade receivables are non-interest bearing and are initiallyrecognised at fair value and subsequently measuredat 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 caseby case basis for particular trade receivables with irregular payment patternsor history. Notes to the Financial Statements continued Trade receivables net of provision for doubtful debts for provision of net receivables Trade Prepayments Other receivables At end of year FINANCIAL STATEMENTS – 99 £m 11.1 51.2 (19.8) (750.4) 31 August31 2019 £m 24.4 (48.2) 457.7 (313.1) (794.4) 31 August31 2020 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Financial assets Financial Derivative assets used for hedging at fair value 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. management Risk TreasuryThe Group’s 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 treasury policies engage in Group’s The requirements. underlyingbusiness to relation in only transacts instruments and financial in trading speculative and procedures are periodically reviewed and approved the by Audit Committee. Capital management objectivesThe Group’s when managing capital are to safeguard ability the Group’s to continue as a going concern in order to provide a maintaining equity while and debt funding, of balance appropriate an through stakeholders benefitsother and for shareholders for returns conditions economic to changes of light structurein capital its to adjustments makes Group sufficientThe and headroom. rating credit strong and strategic the Group’s objectives. Liquidity risk and flows cash actual short- monitoring long-term and forecasts and continuously liquidity by risk to exposure its manages Group The ensuring it has the necessary banking and reserve borrowing facilities available to meet the requirements of the business. August At 31 the2020, Group had a revolving credit facility of £350.0m that is available until of July which 2023, £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. 18 CALLED 18 UP SHARE CAPITAL continued In April ASOS announced 2020, new a share ordinary placing shares issuing in ASOS 15,805,943 plc with an offer per price of £15.60 share. This resultedin the raising of £246.6m in gross proceeds.Directly attributable share issuance fees deducted from share premium resultingtotalled in net £7.2m, proceeds from the share issue of £239.4m. ordinary shares 242,514) of 3.5 penceDuring each the were 86,584 (2019: issued year, as a result of the exercise of various employee share options. Total consideration received in respect of the exercise of the employee share £nil). No shares options were was £nil (2019: issued nil), as to partthe Chairman of his remuneration (2019: package. Trust Benefit Employee The provision of shares to satisfy some of share the Group’s incentive plans is facilitated purchases by of own shares the by Group’s Employee BenefitTrust and TrustLink(the Trusts). Shares heldby Trusts the are valued at the weighted average historical cost of the shares acquired and the carrying value is shown as a reductionwithin shareholders’ equity. The costs of operating the Trusts are borne the by Groupand are not material. shares) were transferred 12,006 shares fromDuring (2019: the Trusts August the to 25,901 employees year 2020, to 31 in settlement of share options and awards in exchange nil) were purchased for cash Nil £0.3m). shares consideration the by (2019: Trusts (2019: of £0.7m to satisfy future options and £nil). The awards, Trusts at have a cost waived of £nil the (2019: right to receive dividends on these shares. shares). The August shares total 245,567 271,468 2020, valueAt were held 31 inreserves the by Trusts (2019: was a credit balance a credit balanceof £2.0m of £1.3m). (2019: FINANCIAL INSTRUMENTS 19 Categories financial instruments of Amortised cost liabilities Financial Derivative liabilities used for hedging at fair value Lease liabilities Amortised cost £m £m £m 2.9 2.9 1.3 3.5 (0.1) (8.2) (2.0) (2.4) 26.8 Total (12.6) 107.9 (11.4) 388.9 254.2 86,584 83,872,275 15,805,943 No. of shares of No. 99,764,802 31 August31 2019 31 August31 2019 – – £m (1.1) (1.6) (5.3) (6.4) (8.0) Other Other – – – – £m £m 3.5 3.5 – – £m 2.9 1.4 2.6 (1.2) 4.3 31 August31 2020 31 August31 2020 Derivatives £m 0.9 1.3 5.0 0.4 2.6 (2.6) (2.0) payments payments Share-based – – £m (1.3) (2.3) (8.0) (6.7) (10.3) capital capital allowances allowances Accelerated Accelerated Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Allotted, issued and fully paid: ordinary shares of 3.5p each 83,629,761) (2018: 83,872,275 New ordinary shares issued for cash – share placing issues scheme share Employee As August at 31 2020 98 Ordinary Shares (Issued) Shares Ordinary As at 1 September 2019 Authorised: each 3.5p of shares ordinary 100,000,000) (2018: 100,000,000 18 CALLED UP SHARE CAPITAL CALLED CAPITAL SHARE UP 18 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 the by temporary difference between the carrying value of outstandingshare-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 reference by to the Company’s share price at the reporting date and the number of share options outstanding, which has increased during August the year 2020. to 31 it was expected August that 2019 At 31 the corporation tax rate would from reduce 1 April to 17% and 2020 deferred tax in respect of amounts which were expected to unwind after this date was recognised Earlier at 17%. this year it was announced that the corporation tax rate would remain and this at 19% was substantively enacted March. As on a result, 17 a rate change adjustment has arisen in respect of brought forward balances which were not recognised and all at current 19% year movements and closing balances have been recognised at 19%. At 1 September 2018 17 DEFERRED17 TAX ASSET/(LIABILITY) Operating lease commitments lease Operating 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 16 LEASE16 LIABILITIES continued thePrior Group recognised to 1 September operating 2019, Leases leases where in line the with Group does IAS 17. 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 theStatement of Comprehensive Income on a straight-line basis over the lease the term. Group no From 1 September 2019, longer recognises operating leases in line and with instead IAS 17 recognises right-of-use assets and lease liabilities in line with IFRS 16. Therefore, thefuture aggregate minimum lease payments payable under non-cancellable operating leases as are at 1 September 2019 deemed to be £nil. Notes to the Financial Statements continued Total (Charge)/credit to the Statement of Total Comprehensive Income Comprehensive Total Statement the of to (Charge)/credit Credit to equity (see Note 8) AugustAt 31 2019 (Charge)/credit to the Statement of Total Comprehensive Income Comprehensive Total Statement the of to (Charge)/credit Charge to equity (see Note 8) August 2020 At 31 FINANCIAL STATEMENTS
£m £m £m £m 1:1 0.1 0.6 0.2 5.4 (7.1) (7. 3) (7. 3) (7. 3) (7.0 ) (0.9) (8.7) 101 11.0 (14.9) (12.7) (20.5) 890.1 To MarTo 2021 31 August31 2019 31 August31 2019 31 August31 2019 31 August31 2019 Cash flow hedges flow Cash – £m £m £m £m 1:1 1.7 0.6 4.8 (3.8) 19.6 (13.9) (21.2) (21.2) (21.2) (15.6) (18.0) (23.8) (25.4) (22.8) 1,19 9 To JulTo 2023 31 August31 2020 31 August31 2020 31 August31 2020 31 August31 2020 Annual Report and Accounts 2020 Annual Report Cash flow hedges flow Cash ASOS PLC PLC ASOS Fair value of derivative financial instruments value of derivative Fair Non-current assets Fair value of derivatives Notional amount Notional Carrying amount Hedging risk strategy is 1:1. forwardThe Group’s foreign exchange contracts were assessed to behighly effective August and 2020, the at 31 net fairvalue of liability).outstanding Cash £7.3m flows liability contracts related to wasthese (2019: a £21.2m contracts will occur in the periods set periods: same the over Income Comprehensive Total Statement of the impact will and out below, The foreign currency forwards are denominated in the same currency as the highly probable forecast cash flows, therefore the hedge ratio hedge the therefore flows, cash forecast probable highly the as currency same the in denominated forwards are currency foreign The Cash flows relating to forward contracts: Cash flows relating to forward Within six months Cash flow hedges included within Other Comprehensive Income during theyear were as follows: Between six months and one year Between one and three years Gains/(losses) arising during the year on currency forward contracts: year on currency forward Gains/(losses) arising during the Gains previously in OCI, reclassified to revenue Gains previously in OCI, reclassified to property, plant and equipment year the during loss unrealised Net 19 FINANCIAL19 INSTRUMENTScontinued Current assets Fair value of derivatives Current liabilities Fair value of derivatives Non-current liabilities Fair value of derivatives Hedge ratio Hedge Maturity date hedge the of inception instruments since hedging outstanding of value fair in Change
Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS 100 is also exposed to foreign currency translation risks due to movements in foreign exchange rates on the translation of non-sterling assets liabilities. and The primary use of forward exchange contracts for sales per hedging the Group’s policy is to layer hedges over a 36-month period, with up to coverage 100% of the net unmatched exposure for12 themonths first and coverage increasing from 95% 20% between to months are contracts exchange forward These foreign currencies. 12 on risk exchange foreign protecting currently Hedges are 36. 13 and classified as Level 2 derivative financial instruments13, Value ‘Fair under Measurement’. IFRS effectiveness prospective periodic assessments through to and relationship hedge the of effectivenessHedge inception at determined is ensure that an economic relationship exists between the hedged item and hedging instrument. The derivatives have been fair valued at with 2020 31 August reference to forward exchange rates that are quoted in an active market, with the resulting value discounted Association Derivatives and back International Swaps under into entered are contracts exchange forward foreign Group’s The value. to present the under transactions outstanding all occurs, default a when as netting such certain master In arrangements. circumstances, (ISDA) agreement are terminated, the termination value is assessed and in general only a single net amount is payable in settlement of all exchange. further foreign for on details 24 Note See transactions. 19 FINANCIAL19 INSTRUMENTScontinued 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. financial The Group’s liabilities at amortised 31 August31 August 2019 cost 2020 and as at all mature in less than oneyear. 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 otherfinancial activities. principalThe Group’s financial assets are trade and other receivables, financial derivatives, and cashand cash equivalents. credit The Group’s 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 previousexperience, 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. trade The Group’s receivables are primarily with large advertising companies with which the Group has long-standing relationships, and the risk of defaultand write-offs due to bad debts is considered to be low. The Group has no significant concentration of credit risk, exposureas is spreadover a large number of counterparties and customers. The credit risk on liquid funds is considered as to the be low, 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 theextent that this is utilised.31 August £nil2020, was At drawn down from and therefore this £75.0m) facility the Group has (2019: not entered any interest rate derivatives to mitigate the interest rate risk. Foreign currency risk in denominated sales risk, transaction primarily on currency foreign to exposed therefore is internationally and operates Group The Group the therefore sterling, pound is currency presentational Group’s The Rubles. Russian and dollars Euros,Australian US dollars, Notes to the Financial Statements continued FINANCIAL STATEMENTS – 743 130 712 743 756 103 2,901 2,537 1,215 1,105 (pence) 4,869 average average Weighted Weighted exercise price exercise Exercise period Exercise 01.07.19 – 31.12.19 Total 01.08.21 –31.01.22 01.08.20 – 31.01.21 01.08.20 – 31.01.21 01.01.23 – 30.06.23 – 01.01.23 65,434 31,991 (95,504) (254,086) (298,467) 509,571 1,079,210 (457,307 ) 1,201,965 1,325 1,035,970 (no. of shares) 1,079,210 2,876 2,901 5,028 4,869 4,869 (pence) – – Exercise price ASOS Scheme 887,110 837,13 4 – – 429,798 429,798 (69,169) (137,3 0 8) (242,514) 313,773 887,110 818,050 (313,664) Annual Report and Accounts 2020 Annual Report (no. of shares) 2020 3 0,181 28,340 155,748 214,269 31 August31 Long-Term Incentive Incentive Long-Term (no. of shares) ASOS PLC PLC ASOS – – – – Plan – – – Share 5,212 5,212 6,844 (1,632) 3,651 3,651 5,212 (1,561) Incentive Incentive (147) shares) (24,774) (24,627) (no. of shares) the year (no. of Exercised during – scheme (9,940) 60,222 357,987 28,340 (161,159) 186,888 (24,774) (184) 214,269 195,798 186,888 186,888 (143,643) (no. of shares) the year (37,535) (35,595) (30,279) (40,050) (143,643) Save As Earn You (no. of shares) Lapsed during during Lapsed – – – – the year 195,798 195,798 (no. of shares) Granted during – 184 67, 716 58,766 60,222 186,888 (no. of shares) 1 September 2019 September 1 Exercised during the year Lapsed during the year August 2020 at 31 Exercisable Outstanding at 31 August 2020 Outstanding at 31 Exercised during the year Outstanding August at 31 2019 Exercisable August at 31 2020 Granted during the year Outstanding at 1 September 2019 September 1 Outstanding at 20.11.19 Granted during the year Lapsed during the year 08.06.18 Date of grant 06.06.16 Outstanding at 1 September 2018 September 1 Outstanding at The weighted average share price at date of exercise of shares exercised pence). during The 5,472 the year was pence 3,560 (2019: weighted average remaining contractual life of outstanding options years). The at the aggregate 1.3 end of the year years was 1.4 (2019: £20.5m). fair value of options (2019: granted in the year was £11.4m Save Earn As scheme You (SAYE) enter who employees to Company the in ordinary shares purchase to options grants Board the scheme, SAYE current the of terms the Under into an HMRC-approved scheme SAYE 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 contract. SAYE These option grants are settled on exercise through a transfer of shares from the Employee BenefitTrust. 08.06.17 15.12.17 20 SHARE-BASED PAYMENTS PAYMENTS SHARE-BASED 20 SeeNote for 24 accounting the Group’s policy on share-based payments. related£3.4m) and £0.9m) capitalised to share-basedThe Group (2019: recognised £2.0m (2019: payments a charge of £12.9m during Augustthe all year 2020, of which to 31 relates to equity-settled schemes. Summary of movements in awards
£m £m 0.8 0.3 0.3 (7.1) (0.8) (0.3) (0.3) 2019 (19.8) (12.7)
31 August31 2019
Equity £m 6.2 0.5 (6.2) (0.5) 11.1 2020 (11.1) £m (18.8) (40.8) (22.0) 31 August31 2020
£m 0.1 0.6 0.2 (0.1) (0.2) (0.6) 2019
£m 0.3 6.6 (0.3) (6.6) 11.7 2020 (11.7 ) Profit before tax before Profit Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS ll hedge relationships are fully effective ll sensitivities affecting the Statement of Total Comprehensive Income also impact equity impact also Income Comprehensive sensitivities affectingll Total Statement of the xchange rate fluctuations on currency derivatives that form part of an effective cash flow hedge relationship affect the fair value reserve ranslation of foreign subsidiaries and operations into the Group’s presentation currency has been excluded from the sensitivity the from analysis. excluded been has currency presentation Group’s the into operations and subsidiaries foreign of ranslation A T A E in equity and the fair value of the hedging derivatives, with no impact on the Statement of Total Comprehensive Income
Euro dollar Australian dollar Australian Sterling strengthens by 10% against: 10% by strengthens Sterling dollar US 102 The above sensitivities are calculated with reference to a single moment in time and are subject to change due to a number of factors of number a to due change to subject are and time in moment single a to with reference calculated sensitivities are above The including fluctuating trade payable and cash balances and changes in the currency mix. As the sensitivities are limited to financial instrumentbalances as at the reporting date hedging due to ASOS’s policy, they do not take account of revenues the Group’s 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 independently. move not do sensitivity rate Interest The Group has determined there was no significant August August that 2019 and 2020 31 at 31 sensitivity to changes in market interest rates. Positive figures represent an increase in profit before tax or in equity. – – – – Financial instrument sensitivities sensitivities instrument Financial Foreign currency sensitivity following The dollars. Australian and euros dollars, US to are exposures currency foreign instrument financial principal Group’s The table illustrates the hypothetical sensitivity of reported the Group’s profit before tax and closing equity10% increase a to 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 is deemed of 10% to represent a reasonably possible change based on historic exchange rate volatility. sensitivity the calculating in made analysis: were assumptions following The Forward foreign currency contracts – cash flow hedges foreign currency contracts – cash flow Forward Outflows within one year 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 Position. of Financial Maturity The table below analyses gross-settled the Group’s 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 undiscountedflows. cash Balances due12 monthswithin equal their carrying balances as the impact of discounting is not significant. Outflows between one and three years 19 FINANCIAL19 INSTRUMENTScontinued the during dates various at occur to expected are currency foreign in denominated transactions forecast probable highly hedged The next 36 months. Therefore, the fair value of a hedging derivativeis classified as a non-current asset or liability when the remaining maturity of the hedged item is months, more than 12 and as a current asset or liability when the remaining maturity of the hedged item Notes to the Financial Statements continued Euro Sterling weakens against: by 10% dollar US FINANCIAL STATEMENTS – – £m 21.4 105 49.3 33.9 2019 55.3 0.58 2,550 2,550 31 August31 2019 – – 2.7 2.3 0.78 46.6 1,873 1,548 3,085 3,085 £m 12.1 24.7 36.8 – – 3.0 0.83 34.3 3,510 5,782 5,782 Grant 1 Grant 2 Grant 3 31 August31 2020 Annual Report and Accounts 2020 Annual Report – – 2.7 ASOS PLC PLC ASOS 55.2 0.38 2020 3,073 3,073 – – 2.9 0.51 52.2 3,12 0 3,12 0 2,368 2,332 Grant 1Grant 2 Grant 1, 2 e Monte Carlo model for all three grants from 2019 were as follows: share price of 5,782 pence, exercise price of nil, expected volatility price of nil, exercise pence, life of 30.0%, expected price of 5,782 as follows: share were 2019 from grants e Monte Carlo model for all three of 3.0 years, risk-free rate of 0.753% and dividend yield of nil. and dividend 0.753% of rate risk-free of 3.0 years, Inputs to th yield of nil. and dividend 0.517% of rate risk-free of 3.0 years, Inputs to th 1 2 ofnil,expectedvolatility price exercise pence, 30.0%,expectedlife of priceof3,120 asfollows:share were 2020 from e MonteCarlomodelforbothgrants COMMITMENTS CAPITAL 21 Capital expenditure committed at the reporting date but not yet incurred is as follows: Intangible assetsIntangible Fixtures and fittings 22 CONTINGENT22 LIABILITIES 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 brand the Group’s and trading name or its product designs. All such cases brought against the Group are robustly defended anda liability is recorded only when it is probable that the case will result in a future economic outflow which can be reliably measured. August in relation the 2020, At Group 31 had to contingent supplier £21.6m) standby liabilities letters (2019: of£21.6m of credit, rent deposit, deeds and other bank guarantees. September On 10 the 2020 Group extended a supplier standby letter of credit £8.9m by bringing the total to £30.5m. The likelihood of cash outflow in relation to these contingent liabilities is considered to be low. RELATED TRANSACTIONS23 PARTY personnel management with key Transactions members family close their or personnel management key its and between balances Group the or material transactions no were There and August theduring other year 2020 to August the 31 than year 2019 to remuneration 31 disclosed in Note 5. Transactions with ASOS.com Limited Employee BenefitTrust and LinkTrust (the Trusts) £0.3m) was received the by During Trusts on (2019: exercise the £0.7m year, of employee share options. Transactions with other related parties During the the year, from Group Aktieselskabet made purchases of £47.7m) inventory, totalling af 5.5.2010, net of £55.6m VAT, (2019: a company which has a significant shareholding in 31 theAugust Group.2020, the amountAt due to Aktieselskabet 5.5.2010 af £8.5m). (2019: was £15.8m Share price (pence) price Share (pence) price Exercise Expected (%) volatility Expected life (years) Expected life Risk-free rate (%) Dividend yield Weighted average fair value of options for EPS performance (pence) condition Weighted average fair value of options for TSR performance (pence) condition 20 SHARE-BASED continued PAYMENTS the using calculated performance were EPS conditions ALTIS the under year prior and current the during granted options of value fair The Monte the using calculated performance were TSR conditions ALTIS the under granted options of value fair the and model Black-Scholes Carlo model. Both sets of inputs are shown below:
– 3.0 0.51 52.0 1,183 3,12 0 2,876 Year to 31.10.19 31.10.19 31.10.19 31.10.19 31.10.21 31.10.21 31.10.21 31.10.22 31.10.20 31.10.20 31.10.20 31.10.22 Exercise period Exercise Exercise period Exercise Post 15.11.2017 Post Post 28.12.2015 Post 30 August 2020 nil nil nil nil nil nil nil nil nil nil nil nil nil nil (pence) (pence) Exercise price Exercise price – – – – 2020 2020 1,917 1,734 3,651 7,579 11,739 18,313 16,416 35,287 31 August31 818,051 276,072 205,781 246,864 31 August31 (no. of shares) (no. of shares) – – – – – – – – (738) (823) (412) (1,561) shares) (7,845) (1,524) the year (69,169) (59,388) (no. of shares) the year (no. of Exercised during Exercised during – – – – (470) (1,112) (1,655) (1,857) (4,789) (2,379) the year the year (21,198) (59,651) (3 4 ,178) (21,285) (165,090) (313,664) (no. of shares) Lapsed during during Lapsed (no. of shares) Lapsed during during Lapsed – – – – – – – – – – – – – the year 16,416 the year 297,357 313,773 (no. of shares) (no. of shares) Granted during Granted during – – 6,313 5,212 1,524 2,740 9,436 2,472 Annual Report and Accounts 2020 Annual Report 14,118 19,968 29,043 35,757 887,111 239,959 306,515 224,478 (no. of shares) (no. of shares) 1 September 2019 September 1 1 September 2019 September 1 ASOS PLC PLC ASOS 27.02.20 Date of grant 16.12.16 14.09.17 11.10.17 22.05.18 24.10.18 01.03.17 07.06.17 01.03.18 26.02.19 28.06.19 20.11.19 104 Exercise price (pence) price Exercise Expected (%) volatility (years) Expected life Risk-free rate (%) Dividend yield Weighted average fair value of options (pence) Share price (pence) price Share 20 SHARE-BASED continued PAYMENTS The fair value options of SAYE granted during no options the current granted) year was (2019: calculated using the Black-Scholes model, inputs: following the assuming Notes to the Financial Statements continued ASOS Long-Term Incentive Scheme (ALTIS) (ALTIS) Scheme Incentive Long-Term ASOS value base the awards, conditional granted be may management of members and directors certain executive ALTIS, the of terms the Under of which is calculated as a fixed multiple of salary, and will onlyvest to theextent 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. 28.12.12 Date of grant Volatility has been estimated taking by the historical volatility in the Company’s share price over a three-year period. (SIP) Plan Incentive Share Under the terms the of the Board SIP, granted free shares to every employee under an HMRC-approved Awards must SIP. 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. 15.11.13 FINANCIAL STATEMENTS
107 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS 24 ACCOUNTING POLICIES continued continued POLICIES ACCOUNTING 24 Employee(ii) BenefitTrust and LinkTrust The Employee BenefitTrust and TrustLink(the Trusts) are considered to be controlled by the Group. The activities of Truststhe are conducted on behalf of the Group according toits specific business needs in order to obtain benefits from its operation and, on this basis, the assets held the by Trusts are consolidated into financial the Group’s statements. information policy accounting Additional recognition Revenue a) Revenue consists primarily of internet andadvertising 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 partiesand 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, netof 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. Foreign currency translationb) The trading results and cash flows overseasof subsidiaries are translated at the average monthlyexchange rates during differences the exchange year. resulting The rates. exchange year-end at translated subsidiary is overseas each of Position Financial of The Statement are recognised in the Translation Reserve within equity and are reported in Other Comprehensive Income. of date the on prevailing rates exchange the at functional currency the into translated are currencies foreign in denominated Transactions rates. exchange year-end at sterling into translated are currencies foreign in Monetary denominated liabilities assetsthe transaction. and Income. Comprehensive Total Statement of the in recognised monetary differencesExchange on are items Derivativec) financial instruments and hedging activities Euros, in denominated sales risk, transaction primarily on currency foreign to exposed therefore is internationally and operates Group The US dollars, Australian Dollars and Russian Roubles. manage To this exposure the Group hedge a proportion of sales based currency foreign to on the exposed also assessed is Group the therefore sterling, pound is currency presentational Group’s The exposure. currency net translation risks due to movements in foreign exchange rates on the translation of non-sterling assets and liabilities. policyThe Group’s is to match up to of 100% foreign currency transactions in the same currency, taking into account a proportion the ofappropriate, sales Where expenditure. currency foreign pre-approved hedge to is policy Group’s the expenditure, capital For approach. foreign forecast probable highly hedge future contracts to exchange forward foreign of form the instruments in financial uses Group 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 economic the alongside documented undertaking is strategy for hedge the and objective management risk the relationships, hedging instrument. hedging the and hedged between being item the relationship 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 Statementof Comprehensive Income, within other gains/(losses). Amounts accumulated in equity are reclassified in the periods when the hedged highly the as currency same the in denominated forwards are currency foreign The Income. item affects Comprehensive Statement of the primary The strategy. management risk the on based 1:1 be to assumed is ratio hedge the therefore flows, cash foreign forecast probable use of forward exchange contracts for sales per policy the Group’s is to layer hedges over a 36-month period, with up to coverage 100% of the net unmatched exposure for12 themonths first and coverage increasing from 95% 20% between to 13 36,and month with hedges currencies. currently 12 in These forward foreign exchange contracts are classified as Level
Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS 106 asresult a of the pandemic and has determined impacts that COVID-19 should not be treated as an exceptional item. The Group will continue to monitor closely the impact outbreak, of the COVID-19 and apply guidance issued the by World Health Organization paramount. remains colleagues and safety the customers our always, As of appropriately. governments local and viability and concern Going assessment The directors have, at the time of approving the financial statements, a reasonableexpectation that the Company and therefore the has accounting Group of basis have concern going The future. foreseeable the for existence operational in continue to resources adequate directors The 72. Report page on Directors’ the in contained Further statements.are financial the details preparing in adopted been have also assessed the prospects of the Company and the Group over a three-year period August and have 2023, a reasonable to 31 expectation that the Companyand the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year review. under period have which of none behaviours, and demand customer on COVID-19 impacts of the stress-testing given extensive conducted has Group The concern going the adopt to continued therefore have Directors The concern. going a as Group the assessment the of to change a in resulted statements. financial Group’s the preparing in basis preparation of Basis IFRS and (IFRS) Reporting Standards InternationalFinancial with accordance in prepared been statements have financial consolidated The Interpretations Committee (IFRS IC) interpretations, as adopted the by European Union and (EU), with those parts of the Companies related and amendments subsequent Act standards, the these reporting are the at date, As reporting IFRS. under companies to applicable 2006 EU. the by endorsed been have that (IASB) Board Standards International the Accounting by adopted and issued interpretations Accounting convention a) The financial statements are drawn up on the historical cost basis of accounting,excluding derivative financial where instrumentsexcept pounds thousand hundred nearest the to heldrounded atare values fair value.all and sterling in presented statementsare financial The otherwise indicated. Basisb) of consolidation Trust Benefit Employee the and subsidiaries, its all Plc, ASOS of statements financial the statementsinclude financial Group consolidated The 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. Subsidiaries (i) 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 theactivities of the entity. Subsidiariesare fully consolidated from the date on which control is transferred to the Group and are deconsolidated method acquisition the under recorded are period the Subsidiary ceases. during undertakings control which acquired on date the from of accounting. A list of all the subsidiaries of the Group is included in Note 8 of the parent company financial statements117. on page All apply accounting policies which are consistent with those of the rest of the Group. assets. net acquired the of proportionate the at share recognised subsidiary is a of acquisition on acquired interest non-controlling Any Subsequent to acquisition, the carrying amount of non-controlling interest equals the amount of those interests of at loss in initial result not do that interests with non-controlling recognition Transactions equity acquisition. in changes since of share plusthe non-controlling control are accounted for as equity transactions. Total comprehensive income is attributed to a non-controlling interest even if this results non-controllingin the deficit having interest a balance. 24 ACCOUNTING POLICIES POLICIES ACCOUNTING 24 information General 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, HampsteadRoad, London 7FB.NW1 impact COVID-19 has impactedCOVID-19 all aspects of business. the Group’s The Group has considered the additional costs and revenues incurred Notes to the Financial Statements continued FINANCIAL STATEMENTS 109
Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS 24 ACCOUNTING POLICIES continued continued POLICIES ACCOUNTING 24 Share-based paymentsg) shares for services exchange render in equity-settled employees issues Group whereby The share-based certain payments to employees, 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 thecharge adjusted to reflect actual and estimated levels of vesting. Where an equity-settled share-based payment scheme is modified during thevesting period, an additional charge is recognisedover theremainder of that vesting periodto the extent that the fair value of the revised scheme at the modification dateexceeds the fair value of the original scheme at the modification date. Where the fair value of the revised scheme does notexceed the fair value of the original scheme. original scheme, the of conditions the under required charge the recognise to continues Group the In accordance with IFRS ASOS.com 2, Limited is required to recognise share-based payment arrangements involving equity ASOS.com to contributions makes instruments Plc ASOS services entity way. the to this providing in those remunerated has Limited ASOS.com where Limited equal to the charge for the share-based payment arrangement which is reflected as an increase investment in ASOS Plc’s in ASOS.com Limited. ASOS.com Leases h) 2019. 1 September from 16 “Leases” IFRS adopted ASOS office and fulfilment centres space. their for leases hold currently Group The The Group recognises a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is initially recognisedat cost, comprising the initial amount of the lease liability plus any initial direct cost incurred. An adjustment is made for the reclassificationprepaid of lease expenses, dilapidation accruals less any lease incentives received. The right-of-use asset is subsequently term. lease the of end the asset or the of life useful depreciated the of end the of earlier the to date commencement the from method straight-line usingthe 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 ismeasured at amortised cost using the effective interest method and a subsequent financecharge 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 assessment the Group’s 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. thereon goodwill arising combinations and Business i) ‘Business 3, with IFRS accordance in combinations business for account to accounting of method acquisition the applies Group The Combinations’. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of assets given, equity instrumentscontingent and liabilities and Identifiableassets acquired acquiree. the issued of control for exchange in assumed or incurred liabilities and 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 share the Group’s 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 incurred. as Income Comprehensive Goodwill represents the excess of the cost of acquisitions over interest the Group’s 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 impairmentat 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 and CGUunit isthe to allocated goodwill carrying the the of reduce amount to first allocated is loss impairment carrying its the than less amount, then to the other assets of the unit on a pro rata basis. On disposal of a subsidiary, the attributableamount of goodwill is included in the disposal. on loss and profit the determination of
Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS 108 to be paid to the tax authorities. charged items to relates it when except Income, Comprehensive Total Statement of the in credited or charged is tax deferred and Current 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 correspondingthe 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 thatprobable it is that taxable profits will be available against which deductible temporary differences can be utilised. other of combination) business a Such in than assets (other recognition initial the from temporaryand or the goodwill if difference from liabilities arises recognised not are 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 reducedto 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 taxand when liabilities the deferred tax assets and liabilities relate to income taxes levied the by 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 continued POLICIES ACCOUNTING 24 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 Statementof Total Comprehensive Income. The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, hedge at assessment, both its as documents well also as Group its The transactions. hedging risk undertaking strategy for various and objectives management inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changesin fair values or cash flows of hedged items. Inventories d) 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 orobsolete inventory to net realisable value. items Exceptional e) Statement of Consolidated the in separately presented non-recurring are material and are which expenditure and income of Items underlying performance the of indication an provide to helps items reporting exceptional separate of The Income. Total Comprehensive of the Group. f) Taxation and Equity current comprises in Changes Statement of and Income Comprehensive Total Statement of the in included expense tax The tax.deferred 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 the by reporting date. Management periodically evaluates positions taken in tax returns with respect to situations expected amounts of basis the on appropriate where in which provisions establishes It interpretation. to subject is regulation tax applicable Notes to the Financial Statements continued FINANCIAL STATEMENTS £m 3.4 111 (0.9) (1.5) 33.1 35.6 Total 12.9 35.6 equity 239.4 286.4
1 – £m 3.4 (0.9) (1.5) 23.3 25.8 37.2 12.9 25.8 earnings Retained Retained Annual Report and Accounts 2020 Annual Report – – – – £m 6.9 6.9 6.9 Share 245.7 238.8 premium premium ASOS PLC PLC ASOS – – – – £m 2.9 2.9 2.9 0.6 3.5 capital capital Called up share Company Statement of Statement Company in Equity Changes For the year August to 31 2020 share-based earnings includes the payments reserve. 1 Retained At1 September 2019 Shares allottedShares Loss for the year and total comprehensive loss Share-based payments contribution At 31 August 2020 At 31 At1 September 2018 Loss for the year and total comprehensive loss Share-based payments contribution At 31 AugustAt 31 2019
depreciated over seven to twenty yearsdepending on lease term Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS omputer equipment: depreciated equipment: omputer over three to fiveyears according to the estimated life of the asset ixtures, fittings, plant and machinery: depreciated over fiveyears overor the remaining lease term where applicable easehold land and buildings: and land easehold F C L
– Depreciation is included in administrative expenses in the Statement of Total Comprehensive Income. Assets under construction are not depreciated. the that indicate circumstances in changes or events if impairment for reviewed is equipment and plant property, reporting each At date, carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount is assessed reference by 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. – Notes to the Financial Statements continued 110 – 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 calculatedline basis on a straight- 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 expensesin 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. Residualvalues 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 the lease liabilities for accounting policy. (h) Depreciation is recognised to write-off the cost of items of property, plant and equipment to their estimated residual values, on a straight-linebasis follows: as 24 ACCOUNTING POLICIES continued continued POLICIES ACCOUNTING 24 Otherj) 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 includeexternal direct costs of material and FINANCIAL STATEMENTS
– – – – – £m 1.0 (0.1) 113 (0.9) Year to 31 August 2019 August31 2019
– – – £m (1.2) (1.7) (0.3) 239.4 Year to (236.2) 31 August31 2020 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Interest paid Interest and cash equivalents in cash Net movement equivalents Opening cash and cash Closing cash and cash equivalents Proceeds from issue of ordinary shares of issue from Proceeds Company Statement Statement Company Flows of Cash For the year August to 31 2020 Operating loss Adjusted for: Adjusted receivables other in Increase (Decrease)/increase in payables in (Decrease)/increase £m 2.9 0.9 6.9 (1.7) (0.8) 25.8 35.6 35.6 36.4 31 August 2019 August31 2019 – £m 3.5 37.2 49.3 237.1 237.1 245.7 286.5 286.4 31 August31 2020 6 3 4 8 Note
Annual Report and Accounts 2020 Annual Report Mathew Dunn Officer Financial Chief ASOS PLC PLC ASOS Share premium earningsRetained Net assets Equity capital share up Called equity Total Net current assets/(liabilities) 112 Current assets Other receivables Current liabilities Other payables
Notes 1 to 8 are an integral part of the financial statements. As shown in Note the 2, Company loss incurred of £0.9m). a loss for (2019: the year of £1.5m The were financial approvedby the statementsBoard119, of Directors of ASOS Plc,to and registered111 number 4006623, on pages authorised for October issue on 13 and 2020 were signed on its behalf by: Non-current assets Investments Financial Position Financial As August at 31 2020 Company Statement of Statement Company
FINANCIAL STATEMENTS £m £m £m 1.0 2.9 0.9 3.5 115 (1.7) Year to 86,584 83,872,275 15,805,943 No. of shares of No. 99,764,802 31 August 2019 August31 2019 31 August 2019 August31 2019 31 August 2019 August31 2019 – £m £m £m 1.2 3.5 3.5 237.2 Year to 31 August31 2020 31 August31 2020 31 August31 2020 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Allotted, issued and fully paid: ordinary 83,872,275) shares of (2019: 3.5p each99,764,802 Financial assets Financial Amortised cost liabilities Financial Amortised accruals CALLED CAPITAL SHARE UP 6 Authorised: each 3.5p of shares ordinary 100,000,000) (2019: 100,000,000 Ordinary (Issued) Shares As at 1 September 2019 New ordinary shares issued for cash – share placing issues scheme share Employee In April ASOS announced 2020, new a share ordinary placingshares issuing in ASOS 15,805,943 plc with an offer per price of £15.60 share. This resulted in the raising of £246.6m in gross proceeds. Directly attributable share issuance fees deducted from share premium resultingtotalled in net £7.2m, proceeds from share issue of £239.4m. ordinary shares 242,514) of 3.5 penceDuring each the were 86,584 (2019: issued year, as a result of the exercise of various employee share options. Total consideration received in respect of the exercise of the employee share £nil). No shares options were was £nil (2019: issued nil), as to part the chairman of his remuneration (2019: package. RELATED TRANSACTIONS7 PARTY During the the year, Company entered into transactions in the ordinary course of business with related parties as follows: As at 31 AugustAs at 31 2020 Costs recharged by subsidiary by undertakings recharged Costs For transactions with directors and management key of ASOS Plc, see Note to the 23 consolidated financial statements 105. on page Notes to the Company Financial Statements continued 5 FINANCIAL5 INSTRUMENTS £m £m £m 0.9 1.7 0.98 31 August 2019 August31 2019 August31 2019 31 August 2019 August31 2019 – £m £m £m 0.9 237.1 31 August31 2020 August31 2020 31 August31 2020 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS 114 All accruals are due within one The year. fair value of accruals is not materially different from their carrying value Amounts due to subsidiary to Amountsdue undertakings 4 OTHER PAYABLES More than six months The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The fair value of other receivables is not materially different to their carrying value. August receivablesAs 2020, at 31 were unimpaired from £0.9m) subsidiary and considered (2019: undertakings by of £237.2m management to be fully recoverable. Receivables from subsidiary undertakings that are less than three months past due are not were considered more than £0.9m) three months past (2019: impaired. due August but receivables not As 2020, impaired. at 31 These of £237.2m relate to subsidiary undertakings for which there is no history of default. The ageing analysis of these receivables is as follows: Amounts due from subsidiary from Amounts due undertakings 3 OTHER RECEIVABLES RECEIVABLES OTHER 3 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. 2 LOSS FOR THE YEAR The Company has not presented its own Statement of Total Comprehensive Income as permitted section by 408 of the Companies Act 2006. The loss for the year and total comprehensive loss attributable loss of £0.9m). to shareholders (2019: was £1.5m 1 ACCOUNTING POLICIES POLICIES ACCOUNTING 1 preparation of Basis (IFRS), Reporting Standards InternationalFinancial with accordance in up drawn are Company the statementsof financial separate The as adopted the by European Union and with the Companies Act 2006. The Company’s principal accounting policies are the same as those set out in Note of the 24 Group financial statements, with the addition of those included within the relevant notes Unless below. otherwise stated, thesepolicies have been consistently applied to all the periods presented. Notes to the Company Financial Statements Financial Company the to Notes For the year August to 31 2020 FINANCIAL STATEMENTS 117
Internet retailer Internet retailer Internet Holding company Holding Holding company Holding Holding company Holding Holding company Holding Holding company Holding company Holding company Holding Natureof business Internet marketplace Internet Non-trading company Discontinued internet retailer Brand management company management Brand Payment processing company processing Payment company processing Payment Payment processing company processing Payment Discontinued internet marketplace internet Discontinued Vehicle for implementation of ALTIP of implementation for Vehicle ALTIP of implementation for Vehicle Employer of marketing staff based in the US Annual Report and Accounts 2020 Annual Report Employer of marketing staff based in Germany ASOS PLC PLC ASOS 95% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% ordinary ordinary shares held shares Proportion of Proportion US US UK UK UK UK UK UK UK UK UK UK UK UK China France France Canada Australia Australia Germany Country of incorporation 3 2 1 Crooked Tongues Limited Tongues Crooked Limited Covetique Name of company of Name Intermediate Holdings LimitedASOS of the Company. All others are indirect subsidiaries of ASOS Plc. the consolidated included in financial resultsstatements, are voting rights held. operating All percentage of based subsidiaries’ on Plc. ASOS statementsof financial consolidated the material to are that interests non-controlling have No subsidiaries Limited Co. Commerce (Shanghai) ASOS for except August, 31 is Plc ASOS of subsidiaries all of date reference accounting The statutory Chinese to due requirements. December 31 of date reference accounting an has which All UK incorporated entities share the same registered office as ASOS Plc and non-UK entities’ registered offices are detailed below: US TimberASOS US Inc: Creek 12 Lane, Newark, DE 19711, ASOS Germany GmbH: An der Anhalter Grossbeeren, Bahn 6, 14979 Germany ASOS France France SAS: TMF SAS, 3-5 Rue Saint Georges, Paris, 75009 France ASOS Transaction Services France France SAS: TMF SAS, 3-5 Rue Saint Georges, Paris, 75009 France ASOS Australia Pty Limited: Company Matters Pty Limited, 680 George Level Street, 12, Sydney NSW 2000, Australia ASOS Canada Services Limited: 777 Dunsmuir Street, BC Vancouver, V7Y Suite Canada 1700, 1K4, ASOS Transaction Service Australia Pty Company Limited: Matters c/o Pty Limited, Collins 4, 727 Tower Street, Docklands, VIC 3008, Australia US ASOS Timber US Sales Creek LLC: 12 Lane, Newark, DE 19711, China Shanghai, 200333 District, Putuo Road, Langao 587 Limited: Co. Commerce (Shanghai) ASOS ASOS Intermediate Holdings Limited, Mornington Limited & Co (No. 1) and Mornington Limited & Co (No. 2) are direct subsidiaries 1 ASOS.com Limited has a 7.2% interest in Needle and Thread Design Holdings Limited. Design Holdings in Needle and Thread interest Limited has a 7.2% 1 ASOS.com in Action Artificial Intelligence Limited. Limited has a 3.4% interest Projects 2 ASOS Limited. in Trackonomics has a 9.5% interest Limited Ventures 3 ASOS 8 INVESTMENTS continued INVESTMENTS 8 August the 2020, At Company’s subsidiaries 31 were as follows: ASOS Marketplace Limited Marketplace ASOS ASOS Ventures Limited Ventures ASOS ASOS (Shanghai) Commerce Co. Limited Co. Commerce (Shanghai) ASOS Mornington Limited & Co (No. 1) Mornington & Co (No. Limited 2) Limited ASOS.com ASOS Global Limited Eight Paw Projects Limited Paw Eight ASOS Transaction Services Limited ASOS France SAS France ASOS Transaction ServicesASOS SAS France Pty Australia ASOS Limited Services Limited Canada ASOS ASOS Transaction Services Australia Pty Limited ASOS US Sales, LLC ASOS US, Inc ASOS Germany GmbH ASOS Projects Limited ASOS £m 3.4 33.0 36.4 Total 12.9 49.3
£m 3.4 31.3 34.7 47.6 12.9 Capital contribution – – £m 1.7 1.7 1.7 Investment Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Notes to the Company Financial Statements continued At 31 August 2020 At 31 116 Additions The directors believe the carrying value of investments is supported their by underlying net assets. Cost and net book amount At 1 September 2018 Additions AugustAt 31 2019 8 INVESTMENTS Investments in subsidiary companies are stated at cost and are subject to review for impairment if an impairment indicatoris identified. In accordance with IFRS ASOS.com 2, Limited is required to recognise share-based payment arrangements involving equity ASOS.com to contributions makes instruments Plc ASOS services entity way. the to this providing in those remunerated has Limited ASOS.com where Limited equal to the charge for the share-based payment arrangement which isreflected as an increase capitalin ASOS Plc’s contribution to ASOS.com Limited. August For £3.4m) the ASOS.com in year respect 2020, to 31 Limited of (2019: recognised a charge of £12.9m share-based payment arrangements. Accordingly, this is increase) shown as an increase in the capital (2019: contribution balance in the below. table FINANCIAL STATEMENTS £m £m 0.1 119 As at 2020 2020 2020 (15.5) 810.3 407.5 135.7 854.1 422.9 969.6 325.0 403.3 (116.1) Year to 1,019.8 1,989.4 1,989.4 31 August31 31 August31 £m £m (0.2) As at 19.7 73.9 89.7 2019 2019 42.7 (15.5) (58.0) Year to 623.2 622.3 453.6 (221.6) 1,245.5 1,245.5 31 August31 31 August31 £m £m 1.5 (0.3) As at 93.9 2018 2018 10.2 42.7 (117. 3) 160.3 Year to 558.0 772.2 438.8 503.6 503.4 (212.7) 1,0 07.0 1,0 07.0 31 August31 31 August31 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS £m £m 9.1 1.8 0.3 As at 2017 2017 (13.3) 287.1 173.3 145.9 325.9 514.5 160.3 Year to (161.0) 544.2 31 August31 31 August31 £m £m 1.2 0.6 As at 21.0 52.9 2016 2016 (78.4) 119. 2 173.3 Year to 130.7 428.6 650.0 840.4 650.0 840.4 204.0 446.0 200.4 31 August31 31 August31 Closing cash and cash equivalents Effect of exchange rates on cash and cash equivalents Total liabilities, capital and reserves Total equivalents cash and cash Opening Non-current liabilities activities financing from generated cash Net Equity attributable to owners of the parent company liabilitiesCurrent Net movement in cash and cash equivalents Total assets Total Net cash used in investing activities Current assets Current Consolidated Statement Financial Position of Non-current assets Consolidated Statement of Cash Flows items activities operating after from exceptional generated cash Net – – – – – – £m 0.1 2.9 0.5 (9.5) 2020 (13.9) (10.9) (28.8) 151.1 151.1 113.3 113.3 113.3 113.3 142.1 102.4 102.4 Year to (951.7) (444.6) 126.3p 126.3p 125.6p 125.6p 1,547.4 3,263.5 (1,716.1) 31 August31 – – – – – – – £m 2.8 (0.8) (2.0) (8.5) 11. 7 11. 7 33.1 35.1 35.1 2019 24.6 24.6 24.6 24.6 (12.9) (14.9) 29.4p 29.4p 29.4p 29.4p Year to (415.6) (883.6) 1,334.3 2,733.5 (1,399.2) 31 August31 – – – – – – £m 0.3 0.3 (0.2) 67. 7 2018 55.2 82.4 82.4 82.4 82.4 (19.6) (12.8) 137. 6 137. 6 101.9 101.9 98.9p 98.9p 102.0 Year to 98.0p 98.0p (380.8) (754.4) 1,237.1 2,417.3 (1,180.2) 31 August31 – – – – – – – £m 0.4 (3.3) (0.3) 15.8 12.2 76.3 76.3 2017 64.1 64.1 64.1 (15.9) 79.6 79.6 64.1 80.0 7 7. 2p 7 7. 2p 76.6p Year to (579.5) 958.3 (299.2) (965.3) 1,923.6 1,923.6 31 August31 – – – £m 0.7 (8.1) (1.4) (0.2) 42.1 16.2 2016 42.8 63.0 24.4 24.4 24.4 34.7 (10.1) (67.5) (43.1) (43.1) (10.3) (20.9) (82.3) 61.9p 61.8p 29.3p 76.6p 29.4p Year to 722.2 (216.0) (443.2) (722.7) 1,444.9 1,444.9 31 August31 1 Annual Report and Accounts 2020 Annual Report ASOS PLC PLC ASOS Underlying earnings per share Non-controlling interest Net fair value (losses)/gains on derivative financial instruments financial derivative on (losses)/gains value fair Net Income tax relating to these items year income/(loss) for the comprehensive Other Total comprehensive income/(loss) attributable to: comprehensive Total company parent the Owners of Profit for the year attributable to owners of the parent company Net translation movements offset in reserves Profit attributableProfit to: company parent the Owners of Non-controlling interest Loss from discontinued operations after tax Tax from discontinued operations discontinued from Tax Profit from continuing operations from Profit Discontinued operations tax before operations discontinued from Loss Income tax expense Profit before tax Profit Finance expense Finance 118 1 Underlying EPS is calculated using profit after tax before exceptional items and discontinued operations. discontinued operations. exceptional items and after tax before 1 Underlying EPS is calculated using profit Basic Finance income Finance Diluted Gross profit Gross Revenue Summary (unaudited) Income Comprehensive Statement of Consolidated Five-Year Financial Financial Five-Year Diluted Operating profit after exceptional items afterexceptional Operating profit Cost of sales Earnings per share Basic Distribution costs Administrative expenses Exceptional items Exceptional Operating profit before exceptional items exceptional before Operating profit STRATEGIC REPORT
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Annual Report and Accounts 2020 Annual Report
ASOS PLC PLC ASOS
120 Designed, edited and produced by Salterbaxter by produced and edited Designed, An MSL Company Company Number 4006623 4006623 Number Company London NW1 7FB 7FB NW1 London England in Registered Hampstead Road Road Hampstead Karen GearyKaren Jensen Luke RobertsonNick Ulasewicz Eugenia Secretary Company Anna Suchopar Registered office House London Greater Mai FyfieldMai Ian Dyson Nick Beighton Nick Mat Dunn Annual General Meeting Meeting General Annual The will AGM be held noon at on 12.00 Thursday November 26 at2020 Greater London House, Hampstead Road, London NW1 the to relating developments monitor to continuing are We 7FB. health the related including public guidance COVID-19, outbreak of and legislation issued the by UK Government. In light of the COVID-19 the to with respect developments changing continuously response Government’s UK the particular, in and, pandemic from working on guidance and lockdowns local of use the (including of interests the that concluded has Board the gatherings), and home all our stakeholders would be best servedrunning by this year’s able be not therefore will Shareholders meeting. closed a as AGM to attend in person. The Notice of Meeting is available on our website setting out the business to be transacted. Directors (Chair) Crozier Adam Company Information Information Company ASOS plc Greater London House Hampstead Road London NW1 7FB, UK Tel: +44 (0)20 7756 1000
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