Next PLC – Half Year Results Ending June 2019
FINANCIAL HEADLINES
NEXT Brand full price sales1 were up +4.3% and Brand total sales2 (including markdown sales) were up +3.8% on last year. Group profit before tax was up +2.7% and Earnings Per Share (EPS) were up +7.5% on last year. We are declaring an ordinary interim dividend of 57.5p per share, which is up +4.5% on last year. We are maintaining our guidance for the full year, as set out in our July Trading Statement, for profit before tax to be £725m (up +0.3% on last year) and EPS growth to be up +5.2%.
|
TOTAL SALES £m |
July 2019 |
|
July 2018 |
|
|
Retail |
874.3 |
|
925.1 |
– 5.5% |
|
Online |
1,004.9 |
|
892.3 |
+12.6% |
|
Finance |
134.0 |
|
122.0 |
+9.9% |
|
Brand |
2,013.2 |
|
1,939.4 |
+3.8% |
|
Other3 |
45.6 |
|
46.8 |
|
|
Total Group sales |
2,058.8 |
|
1,986.2 |
+3.7% |
|
PROFIT £m and EPS (excluding IFRS 16) |
July 2019 |
|
July 2018 |
|
|
Retail |
56.0 |
|
73.2 |
– 23.5% |
|
Online |
177.1 |
|
163.3 |
+8.4% |
|
Finance (after funding costs)4 |
75.8 |
|
60.9 |
+24.6% |
|
Brand |
308.9 |
|
297.4 |
+3.9% |
|
Other5 |
14.2 |
|
16.3 |
|
|
Recharge of interest to Finance4 |
17.8 |
|
16.8 |
|
|
Operating profit |
340.9 |
|
330.5 |
+3.1% |
|
Net external interest |
(21.3) |
|
(19.4) |
|
|
Profit before tax |
319.6 |
|
311.1 |
+2.7% |
|
Taxation |
(59.1) |
|
(56.9) |
|
|
Profit after tax |
260.5 |
|
254.2 |
|
|
Earnings Per Share |
199.5p |
|
185.6p |
+7.5% |
|
Ordinary dividends per share |
57.5p |
|
55.0p |
+4.5% |
1 Full price sales are VAT exclusive sales, excluding items sold in our mid-season, end-of-season Sale events and our Clearance operations.
2 Total sales are VAT exclusive sales including the full value of commission based sales (refer to Note 3 of the financial statements).
3 Other sales includes: NEXT Sourcing external sales, Franchise and Lipsy non-NEXT business.
4 Finance profit for the half year to July 2018 has been restated to reflect a change in treatment of funding costs.
5 Other profit includes NEXT sourcing, franchise and Lipsy.
Statutory sales were up +2.7% and profit before tax, including the effect of IFRS 16, was up +4.0%.
|
STATUTORY BASIS £m and EPS |
July 2019 |
|
July 2018 |
|
|
Sales |
2,014.5 |
|
1,961.9 |
+2.7% |
|
Profit before tax |
327.4 |
|
314.9 |
+4.0% |
|
Profit after tax |
266.9 |
|
257.3 |
+3.9% |
|
Earnings Per Share |
204.4p |
|
187.9p |
+8.8% |
INTERIM DIVIDENDS
We are declaring an ordinary dividend of 57.5p, up +4.5% on last year, to be paid on 2 January 2020. Shares will trade ex-dividend from 5 December 2019 and the record date will be 6 December 2019.
BOND AND BANK FACILITIES
At July 2019 our committed financing amounted to £1.6bn and consisted of £1,075m of bonds and £525m of committed bank facilities. In April, we successfully issued a £250m six-year bond (maturity August 2025), with a coupon of 3.0%. We initially retained £50m of these bonds which were issued in early August. In addition, we are in the process of renegotiating our bank facilities which we expect to complete by the end of the year.
OUTLOOK FOR PROFITS AND EARNINGS PER SHARE
Our guidance for the full year remains unchanged since our July 2019 Trading Statement was issued and, for completeness, it is set out below.
At our central guidance of full price sales growth of +3.6%, we estimate that Group profit before tax would be around £725m, up +0.3% on last year. We estimate the enhancement to EPS from £300m of share buybacks to be +5.1%. As a result, EPS for the full year is expected to rise by +5.2%. Our central guidance for sales, profits and EPS is set out in the table below.
|
Full year estimate to January 2020 |
Central guidance |
|
Total full price sales versus 2018/19 |
+3.6% |
|
Group profit before tax |
£725m |
|
Group profit before tax versus 2018/19 |
+0.3% |
|
Earnings Per Share growth versus 2018/19 |
+5.2% |
UNAUDITED CONSOLIDATED
INCOME STATEMENT
|
|
26 weeks to 27 July 2019
£m |
26 weeks to 28 July 2018 Restated £m |
|
|
|
|
|
Continuing operations |
|
|
|
Revenue |
2,014.5 |
1,961.9 |
|
Cost of sales |
(1,249.6) |
(1,248.9) |
|
|
____________ |
____________ |
|
Gross profit |
764.9 |
713.0 |
|
Distribution costs |
(249.6) |
(214.5) |
|
Administrative expenses |
(131.4) |
(130.6) |
|
Other (losses)/gains |
(3.2) |
1.0 |
|
|
____________ |
____________ |
|
Trading profit |
380.7 |
368.9 |
|
Share of results of associates and joint venture |
0.1 |
0.1 |
|
|
____________ |
____________ |
|
Operating profit |
380.8 |
369.0 |
|
Finance income |
0.1 |
0.1 |
|
Finance costs |
(53.5) |
(54.2) |
|
|
____________ |
____________ |
|
Profit before taxation |
327.4 |
314.9 |
|
Taxation (Note 6) |
(60.5) |
(57.6) |
|
|
____________ |
____________ |
|
Profit for the period attributable to equity holders of the Parent Company |
266.9 |
257.3 |
|
|
____________ |
____________ |
|
|
|
|
|
|
|
|
|
|
26 weeks to 27 July 2019
|
26 weeks to 28 July 2018 Restated |
|
|
|
|
|
Earnings Per Share (Note 7) |
|
|
|
Basic |
204.4p |
187.9p |
|
Diluted |
203.3p |
186.8p |
|
|
|
|
The 26 weeks to 28 July 2018 Income Statement and Earnings Per Share have been restated to reflect the impact of IFRS 16 'Leases' (Refer to Note 1 and 17).
Please refer to Note 7 for Earnings Per Share excluding the impact of IFRS 16.
UNAUDITED CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
|
|
26 weeks to 27 July 2019
£m |
26 weeks to 28 July 2018 Restated £m |
|
|
|
|
|
Profit for the period |
266.9 |
257.3 |
|
|
|
|
|
Other comprehensive income and expenses: |
|
|
|
|
|
|
|
Items that will not be reclassified to profit or loss |
|
|
|
Actuarial gains on defined benefit pension scheme |
16.6 |
60.4 |
|
Tax relating to items which will not be reclassified |
(2.8) |
(10.3) |
|
|
____________ |
____________ |
|
Subtotal items that will not be reclassified |
13.8 |
50.1 |
|
|
____________ |
____________ |
|
Items that may be reclassified to profit or loss |
|
|
|
Exchange differences on translation of foreign operations |
(1.0) |
(4.3) |
|
Foreign currency cash flow hedges: |
|
|
|
– fair value movements |
46.8 |
64.8 |
|
– reclassified to the Income Statement |
(7.2) |
(4.5) |
|
– recognised in inventories |
(8.8) |
18.3 |
|
Cost of hedging |
|
|
|
– fair value movements |
0.7 |
2.1 |
|
– reclassified to the Income Statement |
– |
– |
|
– recognised in inventories |
– |
– |
|
Tax relating to items which may be reclassified |
(5.3) |
(13.8) |
|
|
____________ |
____________ |
|
Subtotal items that may be reclassified |
25.2 |
62.6 |
|
|
____________ |
____________ |
|
Other comprehensive income for the period |
39.0 |
112.7 |
|
|
____________ |
____________ |
|
Total comprehensive income for the period |
305.9 |
370.0 |
|
|
____________ |
____________ |
UNAUDITED CONSOLIDATED BALANCE SHEET
|
|
Notes |
27 July 2019
£m |
28 July 2018 Restated £m |
26 Jan 2019 Restated £m |
|
ASSETS AND LIABILITIES |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
569.7 |
555.6 |
564.9 |
|
Intangible assets |
|
44.5 |
42.8 |
42.6 |
|
Right of use asset |
17 |
916.6 |
975.3 |
943.8 |
|
Associates, joint venture and other investment |
|
5.1 |
5.1 |
5.1 |
|
Defined benefit pension asset |
9 |
142.0 |
163.1 |
125.0 |
|
Other financial assets |
10 |
60.5 |
53.4 |
41.5 |
|
Deferred tax assets |
|
42.2 |
45.0 |
43.6 |
|
|
|
____________ |
____________ |
____________ |
|
|
|
1,780.6 |
1,840.3 |
1,766.5 |
|
Current assets |
|
|
|
|
|
Inventories |
|
551.1 |
518.6 |
502.8 |
|
Customer and other receivables |
11 |
1,254.0 |
1,225.5 |
1,285.4 |
|
Right of return asset |
|
32.6 |
24.0 |
23.4 |
|
Other financial assets |
10 |
35.8 |
31.3 |
9.9 |
|
Cash and short term deposits |
|
156.9 |
66.1 |
156.3 |
|
|
|
____________ |
____________ |
____________ |
|
|
|
2,030.4 |
1,865.5 |
1,977.8 |
|
|
|
____________ |
____________ |
____________ |
|
Total assets |
|
3,811.0 |
3,705.8 |
3,744.3 |
|
|
|
____________ |
____________ |
____________ |
|
Current liabilities |
|
|
|
|
|
Bank loans and overdrafts |
|
(274.8) |
(327.6) |
(377.3) |
|
Trade payables and other liabilities |
12 |
(598.8) |
(572.1) |
(605.7) |
|
Lease liabilities |
16/17 |
(154.5) |
(171.7) |
(175.6) |
|
Dividends payable |
8 |
(140.3) |
(141.9) |
– |
|
Other financial liabilities |
10 |
(4.8) |
(2.5) |
(9.4) |
|
Current tax liabilities |
|
(77.9) |
(89.7) |
(85.1) |
|
|
|
____________ |
____________ |
____________ |
|
|
|
(1,251.1) |
(1,305.5) |
(1,253.1) |
|
Non-current liabilities |
|
|
|
|
|
Corporate bonds |
13 |
(1,114.6) |
(906.1) |
(905.2) |
|
Provisions |
|
(15.2) |
(17.6) |
(15.7) |
|
Other financial liabilities |
10 |
(13.1) |
(14.3) |
(9.2) |
|
Lease liabilities |
16/17 |
(1,176.3) |
(1,231.9) |
(1,190.7) |
|
Other liabilities |
|
(17.7) |
(8.7) |
(9.1) |
|
Deferred tax liabilities |
|
(4.4) |
(10.9) |
(2.8) |
|
|
|
____________ |
____________ |
____________ |
|
|
|
(2,341.3) |
(2,189.5) |
(2,132.7) |
|
|
|
____________ |
____________ |
____________ |
|
Total liabilities |
|
(3,592.4) |
(3,495.0) |
(3,385.8) |
|
|
|
____________ |
____________ |
____________ |
|
NET ASSETS |
|
218.6 |
210.8 |
358.5 |
|
|
|
____________ |
____________ |
____________ |
|
TOTAL EQUITY |
|
218.6 |
210.8 |
358.5 |
|
|
|
____________ |
____________ |
____________ |
The 28 July 2018 and 26 January 2019 Balance Sheets have been restated to reflect the impact of IFRS 16 'Leases' (Refer to Note 1 and 17).
UNAUDITED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
|
|
Share capital £m |
Share premium account £m |
Capital redemption reserve £m |
ESOT reserve £m |
Cash flow hedge reserve £m |
Cost of hedging reserve £m |
Foreign currency translation £m |
Other reserves £m |
Retained Earnings Restated £m |
Total Equity Restated £m |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 26 January 2019 |
13.9 |
0.9 |
16.0 |
(271.6) |
0.4 |
0.4 |
(2.0) |
(1,443.8) |
2,044.3 |
358.5 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Profit for the period |
– |
– |
– |
– |
– |
– |
– |
– |
266.9 |
266.9 |
|
Other comprehensive income/(expense) for the period |
– |
– |
– |
– |
25.6 |
0.6 |
(1.0) |
– |
13.8 |
39.0 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Total comprehensive income/(expense) for the period |
– |
– |
– |
– |
25.6 |
0.6 |
(1.0) |
– |
280.7 |
305.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share buybacks and commitments |
(0.5) |
– |
0.5 |
– |
– |
– |
– |
– |
(280.2) |
(280.2) |
|
ESOT share purchases |
– |
– |
– |
(46.2) |
– |
– |
– |
– |
– |
(46.2) |
|
Shares issued by ESOT |
– |
– |
– |
15.0 |
– |
– |
– |
– |
(3.3) |
11.7 |
|
Share option charge |
– |
– |
– |
– |
– |
– |
– |
– |
6.4 |
6.4 |
|
Tax recognised directly in equity |
– |
– |
– |
– |
– |
– |
– |
– |
2.8 |
2.8 |
|
Equity dividends (Note 8) |
– |
– |
– |
– |
– |
– |
– |
– |
(140.3) |
(140.3) |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
At 27 July 2019 |
13.4 |
0.9 |
16.5 |
(302.8) |
26.0 |
1.0 |
(3.0) |
(1,443.8) |
1,910.4 |
218.6 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 27 January 2018 |
14.5 |
0.9 |
15.4 |
(231.6) |
(42.9) |
– |
3.3 |
(1,443.8) |
1,962.8 |
278.6 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Profit for the period |
– |
– |
– |
– |
– |
– |
– |
– |
257.3 |
257.3 |
|
Other comprehensive income/(expense) for the period |
– |
– |
– |
– |
65.2 |
1.7 |
(4.3) |
– |
50.1 |
112.7 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
Total comprehensive income/(expense) for the period |
– |
– |
– |
– |
65.2 |
1.7 |
(4.3) |
– |
307.4 |
370.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share buybacks and commitments |
(0.5) |
– |
0.5 |
– |
– |
– |
– |
– |
(274.0) |
(274.0) |
|
ESOT share purchases |
– |
– |
– |
(41.9) |
– |
– |
– |
– |
– |
(41.9) |
|
Shares issued by ESOT |
– |
– |
– |
14.9 |
– |
– |
– |
– |
(4.1) |
10.8 |
|
Share option charge |
– |
– |
– |
– |
– |
– |
– |
– |
6.4 |
6.4 |
|
Tax recognised directly in equity |
– |
– |
– |
– |
– |
– |
– |
– |
2.8 |
2.8 |
|
Equity dividends (Note 8) |
– |
– |
– |
– |
– |
– |
– |
– |
(141.9) |
(141.9) |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
|
At 28 July 2018 |
14.0 |
0.9 |
15.9 |
(258.6) |
22.3 |
1.7 |
(1.0) |
(1,443.8) |
1,859.4 |
210.8 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
_______ |
UNAUDITED CONSOLIDATED
CASH FLOW STATEMENT
|
|
26 weeks to 27 July 2019
£m |
26 weeks to 28 July 2018 Restated £m |
|
Cash generated from operations |
474.8 |
412.6 |
|
Corporation taxes paid |
(70.2) |
(68.5) |
|
|
____________ |
____________ |
|
Net cash from operating activities |
404.6 |
344.1 |
|
|
____________ |
____________ |
|
Cash flows from investing activities |
|
|
|
Additions to property, plant and equipment |
(65.1) |
(58.2) |
|
Movement in capital accruals |
2.2 |
4.1 |
|
|
____________ |
____________ |
|
Payments to acquire property, plant and equipment |
(62.9) |
(54.1) |
|
Proceeds from sale of property, plant and equipment |
0.2 |
0.2 |
|
Purchase of shares in associate |
– |
(3.0) |
|
|
____________ |
____________ |
|
Net cash from investing activities |
(62.7) |
(56.9) |
|
|
____________ |
____________ |
|
Cash flows from financing activities |
|
|
|
Repurchase of own shares |
(280.2) |
(275.0) |
|
Purchase of shares by ESOT |
(46.2) |
(41.9) |
|
Disposal of shares by ESOT |
11.7 |
10.8 |
|
Issue of corporate bonds |
198.6 |
– |
|
(Repayment)/proceeds from unsecured bank loans |
(95.0) |
150.0 |
|
Lease repayment |
(75.1) |
(67.6) |
|
Interest paid |
(48.1) |
(49.7) |
|
Interest received |
0.2 |
0.1 |
|
|
____________ |
____________ |
|
Net cash from financing activities |
(334.1) |
(273.3) |
|
|
____________ |
____________ |
|
Net increase in cash and cash equivalents |
7.8 |
13.9 |
|
|
|
|
|
Opening cash and cash equivalents |
34.0 |
8.5 |
|
Effect of exchange rate fluctuations on cash held |
0.3 |
1.1 |
|
|
____________ |
____________ |
|
Closing cash and cash equivalents (Note 15) |
42.1 |
23.5 |
|
|
____________ |
____________ |