Next Plc - Interim Results

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

 

+3.1%

Net external interest

(21.3)

 

(19.4)

 

Profit before tax

319.6

 

+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

 

 

____________

____________