Regulatory Story
Go to market news section View chart   Print
RNS
Next PLC   -  NXT   

Results for the Half Year Ending July 2019

Released 07:00 19-Sep-2019

RNS Number : 8882M
Next PLC
19 September 2019
 

 

 

Date:

Embargoed until 07.00hrs, Thursday 19 September 2019

 

 

Contacts:

Lord Wolfson, Chief Executive

 

Amanda James, Group Finance Director (analyst calls)

 

NEXT PLC

Tel:  0333 777 8888

 

 

 

Alistair Mackinnon-Musson

Email: next@rowbellpr.com

 

Rowbell PR

Tel:  020 7717 5239

 

 

Photographs:

http://www.nextplc.co.uk/media/image-gallery/campaign-images

 

 

 

NEXT PLC

Results for the

Half Year Ending

July 2019

 

 

To view the full half year report please refer to the associated PDF which is available at http://www.rns-pdf.londonstockexchange.com/rns/8882M_1-2019-9-18.pdf or on the NEXT corporate website www.nextplc.co.uk.

 

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

 

 

____________

____________

 

 

NOTES TO THE UNAUDITED CONSOLIDATED

INTERIM FINANCIAL STATEMENTS

 

 

1.        Basis of preparation

 

The Group's interim results for the 26 weeks to 27 July 2019 (prior year 26 weeks to 28 July 2018) were approved by the Board of Directors on 19 September 2019 and have been prepared in accordance with IAS 34 "Interim financial reporting", as adopted by the European Union.

 

The interim financial statements have not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance on "Review of interim financial information" and do not include all of the information required for full annual financial statements.

 

The financial information contained in this report is condensed and does not include all of the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual consolidated financial statements for the 52 weeks to 26 January 2019 which have been delivered to the Registrar of Companies.  The audit report for those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498(2) or (3) of the Companies Act 2006.

 

The financial statements have been prepared on the historical cost basis except for certain financial instruments, pension assets and liabilities and share-based payment liabilities which are measured at fair value.  Where applicable, disclosures required by paragraph 16A of IAS 34 are given either in these interim financial statements or in the accompanying Chief Executive's Review.

 

New accounting standards, interpretations and amendments adopted by the Group

 

The accounting policies adopted in the preparation of the interim financial statements are the same as those set out in the Group's annual financial statements for the 52 weeks ended 26 January 2019, except for the adoption of new standards effective as of 27 January 2019.  The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not effective.

 

The Group applies, for the first time, IFRS 16 "Leases".  The nature and effect of this change is disclosed below.  Several other amendments and interpretations apply for the first time in 2019, but do not have an impact on the interim consolidated financial statements of the Group.

 

IFRS 16 is effective for all accounting periods beginning on or after 1 January 2019.  The Group applied IFRS 16 retrospectively, restating prior year comparatives.  It applied the practical expedient to grandfather the definition of a lease on transition and apply the recognition exemption for both short term and low value assets.

 

Revised accounting policies for IFRS 16 are detailed below.

 

The Group as Lessee

At inception of a contract the Group assesses whether the contract is or contains a lease.  A lease is present where the contract conveys, over a period of time, the right to control the use of an identified asset in exchange for consideration.

 

Where a lease is identified the Group recognises a right-of-use asset and a corresponding lease liability, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets.

 

Lease liability - initial recognition

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date.  The lease payments are discounted at the Group's incremental borrowing rate.

 

Lease payments included in the measurement of the lease liability comprise:

 

·    fixed lease payments (including in-substance fixed payments), less any lease incentives;

·    variable lease payments such as those that depend on an index or rate (such as RPI), initially measured using the index or rate at the commencement date;

·    the amount expected to be payable by the lessee under residual value guarantees;

·    the exercise price of purchase options where the Group is reasonably certain to exercise the options; and

·    payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.

 

The lease liability is presented as a separate line in the Consolidated Balance Sheet, split between current and non-current liabilities.

 

Lease liability - subsequent measurement

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

 

Lease liability - re-measurement

The lease liability is re-measured where:

 

·    there is a change in the assessment of exercise of a purchase option, in which case the lease liability is re-measured by discounting the revised lease payments using a revised discount rate or

·    the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is re-measured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used) or

·    the lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is re-measured by discounting the revised lease payments using a revised discount rate.

 

When the lease liability is re-measured, an equivalent adjustment is made to the right-of-use asset unless its carrying amount is reduced to zero, in which case any remaining amount is recognised in profit or loss.

 

Where the lease liability is denominated in a foreign currency it is retranslated at the balance sheet date with foreign gains and losses recognised in profit or loss.

 

Right-of-use asset - initial recognition

The right-of-use asset comprises the initial measurement of the corresponding lease liability, lease payments made at or before the commencement date and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.

 

Where the Group has an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. The costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.

 

The right-of-use asset is presented as a separate line in the Balance Sheet.

 

Right-of-use asset - subsequent measurement

Right-of-use assets are depreciated over the shorter of the lease term and useful life of the underlying asset.

 

Impairment

The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the 'Impairment - non-financial assets' policy.

 

Variable rents that do not depend on an index or rate are not included in the measurement of the lease liability and the right-of-use asset. The related payments are recognised as an expense in the period in which the event or condition that triggers those payments occurs. 

 

As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient.

 

Short term leases and low value assets

For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

 

The Group as Lessor

 

The Group enters into lease agreements as a lessor with respect to some of its properties.

 

Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

 

When the Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.

 

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

 

Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group's net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group's net investment outstanding in respect of the leases.

 

The impact of IFRS 16 on the Income Statement and Balance Sheet is set out in Note 17 of these Interim Financial Statements.

 

Going concern

 

The directors report that, having reviewed current performance and forecasts, they are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report.  Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

 

 

2.        Risks and uncertainties

 

The Board has considered the principal risks and uncertainties for the remaining half of the financial year and determined that the risks presented in the 2019 Annual Report, described as follows, also remain relevant to the rest of the financial year:  Business strategy development and implementation; Management team; Product design and selection; Key suppliers and supply chain management; Warehousing and distribution; Customer experience; Retail store network; Information security, business continuity and cyber risk; Financial, treasury, liquidity and credit risks.  These are detailed on pages 54 to 58 of the 2019 Annual Report, a copy of which is available on the Company's website at www.nextplc.co.uk.

 

 

3.        Segmental analysis

 

The Group's operating segments have been determined based on the Group's internal reporting to the Chief Operating Decision Maker (CODM).  The CODM has been determined to be the Group Chief Executive, with support from the Board.  The performance of operating segments is assessed on profits before interest and tax, excluding equity-settled share option charges recognised under IFRS 2 'Share-based payment' and unrealised foreign exchange gains or losses on derivatives which do not qualify for hedge accounting.  Where third-party branded goods are sold on a commission basis, only the commission receivable is included in statutory revenue.  Total sales represent the amount payable by the customer, excluding VAT.

 

The activities, products and services of the operating segments are detailed on page 50 of the 2019 Annual Report.  The Property Management segment holds properties and property leases which are sublet to other segments and external parties.  The NEXT International Retail segment comprises franchise and wholly owned stores overseas.  International online sales are included in the NEXT Online segment.

 

During the 2020 financial year the CODM has altered the internal reporting of finance costs allocated to NEXT Finance.   The NEXT Finance segment revenue represents the interest charged to customers on their credit account balances.  Previously all of the external debt and the associated interest, excluding lease debt, was allocated to the NEXT Finance segment.  Following a review of this allocation it was decided to allocate 85% of the debt and associated interest costs to the Finance Business with the remaining element held as part of the overall group funding.  This allocation better reflects the utilisation of funds across the business.  The impact of this change has increased the NEXT Finance profit by £3.1m (2018: £3.0m) but had no impact on overall Group profit.

 

In common with many retailers, revenue and trading profit are subject to seasonal fluctuations and are weighted towards the second half of the year which includes the key Christmas period for the business.

 

Segment sales and revenue

 

26 weeks to 27 July 2019

Total sales

excluding

VAT

£m

Commission

sales

adjustment

£m

 

IFRS 15

adjustments

£m

 

External

revenue

£m

 

Internal

revenue

£m

Total

segment

revenue

£m

 

 

 

 

 

 

 

NEXT Retail

874.3

(1.5)

(0.5)

872.3

1.6

873.9

NEXT Online

1,004.9

(63.5)

21.2

962.6

-

962.6

NEXT Finance

134.0

-

-

134.0

-

134.0

NEXT International Retail

28.9

-

-

28.9

-

28.9

NEXT Sourcing

3.4

-

-

3.4

262.7

266.1

 

____________

____________

____________

____________

____________

____________

 

2,045.5

(65.0)

20.7

2,001.2

264.3

2,265.5

Lipsy

5.9

-

-

5.9

32.1

38.0

Property Management

7.4

-

-

7.4

98.5

105.9

 

____________

____________

____________

____________

____________

____________

Total segment sales/revenue

2,058.8

(65.0)

20.7

2,014.5

394.9

2,409.4

Eliminations

-

-

-

-

(394.9)

(394.9)

 

____________

____________

____________

____________

____________

____________

Total

2,058.8

(65.0)

20.7

2,014.5

-

2,014.5

 

____________

____________

____________

____________

____________

____________

 

Segment sales and revenue

 

26 weeks to 28 July 2018

Total sales

excluding

VAT

£m

Commission

sales

adjustment

£m

 

IFRS 15

adjustments

£m

 

External

revenue

£m

 

Internal

revenue

£m

Total

segment

revenue

£m

 

 

 

 

 

 

 

NEXT Retail

925.1

(0.6)

(2.0)

922.5

2.3

924.8

NEXT Online

892.3

(39.7)

18.1

870.7

-

870.7

NEXT Finance

122.0

-

-

122.0

-

122.0

NEXT International Retail

30.9

-

-

30.9

-

30.9

NEXT Sourcing

2.9

-

-

2.9

261.5

264.4

 

____________

____________

____________

____________

____________

____________

 

1,973.2

(40.3)

16.1

1,949.0

263.8

2,212.8

Lipsy

7.8

(0.1)

-

7.7

32.9

40.6

Property Management

5.2

-

-

5.2

102.6

107.8

 

____________

____________

____________

____________

____________

____________

Total segment sales/revenue

 

1,986.2

 

(40.4)

 

16.1

 

1,961.9

 

399.3

 

2,361.2

Eliminations

-

-

-

-

(399.3)

(399.3)

 

____________

____________

____________

____________

____________

____________

Total

1,986.2

(40.4)

16.1

1,961.9

-

1,961.9

 

____________

____________

____________

____________

____________

____________

 

In the CEO report, Label commission sales include sales of all Lipsy stock on the NEXT website, as NEXT trades on a commission basis with Lipsy.  However, as Lipsy is a group company no commission adjustment is required in respect of this for external revenue in the notes above.

 

Segment profit

 

The prior year segment profit results for the first half of 2018 have been restated to reflect the impact of IFRS 16 "Leases" and the change in the allocation of finance costs to NEXT Finance.  Finance costs associated with the leases have been assigned to the segments to which the lease relates. 

 

 

 

26 weeks to

27 July 2019

 

£m

26 weeks to

28 July 2018

Restated

£m

26 weeks to

28 July 2018

As reported

£m

 

 

 

 

 

NEXT Retail

 

61.3

73.7

73.2

NEXT Online

 

180.4

165.8

163.3

NEXT Finance

 

75.8

60.9

57.9

NEXT International Retail

 

3.2

3.7

3.0

NEXT Sourcing

 

16.9

14.9

14.8

 

 

____________

____________

____________

 

 

337.6

319.0

312.2

Lipsy

 

5.5

3.4

3.6

Property Management

 

(0.4)

4.6

4.4

 

 

____________

____________

____________

Total segment profit

 

342.7

327.0

320.2

Central costs and other

 

(4.5)

(4.6)

(4.6)

Recharge of interest

 

17.8

16.8

19.8

Interest associated with leasing

 

32.1

34.7

-

Share option charge

 

(6.4)

(6.8)

(6.8)

Unrealised foreign exchange (losses)/gains

 

(0.9)

1.8

1.8

 

 

____________

____________

____________

Trading profit

 

380.8

368.9

330.4

Share of results of associates and joint venture

 

0.1

0.1

0.1

Finance income

 

0.1

0.1

0.1

Finance costs

 

(21.5)

(19.5)

(19.5)

Interest associated with leasing

 

(32.1)

(34.7)

-

 

 

____________

____________

____________

Profit before tax

 

327.4

314.9

311.1

 

 

___________

____________

____________

 

 

4.        Revenue

 

The Group's disaggregated revenue recognised under contracts with customers relates to the following categories and operating segments:

 

26 weeks to 27 July 2019

 

 

 

 

 

 

 

Sale of

goods

Credit

account

interest

 

 

Royalties

 

Rental

income

 

 

Total

 

£m

£m

£m

£m

£m

 

 

 

 

 

 

NEXT Online

962.6

-

-

-

962.6

NEXT Finance

-

134.0

-

-

134.0

NEXT Retail

872.3

-

-

-

872.3

NEXT International Retail

26.1

-

2.8

-

28.9

NEXT Sourcing

3.4

-

-

-

3.4

Lipsy

4.8

-

1.1

-

5.9

Property Management

-

-

-

7.4

7.4

 

____________

____________

____________

____________

____________

Total

1,869.2

134.0

3.9

7.4

2,014.5

 

____________

____________

____________

____________

____________

 

 

26 weeks to 28 July 2018

 

 

 

 

 

 

 

Sale of

goods

Credit

account

interest

 

 

Royalties

 

Rental

income

 

 

Total

 

£m

£m

£m

£m

£m

 

 

 

 

 

 

NEXT Online

870.7

-

-

-

870.7

NEXT Finance

-

122.0

-

-

122.0

NEXT Retail

922.5

-

-

-

922.5

NEXT International Retail

28.0

-

2.9

-

30.9

NEXT Sourcing

2.9

-

-

-

2.9

Lipsy

6.8

-

0.9

-

7.7

Property Management

-

-

-

5.2

5.2

 

____________

____________

____________

____________

____________

Total

1,830.9

122.0

3.8

5.2

1,961.9

 

____________

____________

____________

____________

____________

 

 

5.        Operating Profit

 

Group operating profit is stated after charging/(crediting):

 

 

26 weeks to

27 July 2019

 

£m

 

26 weeks to

28 July 2018

Restated

£m

Impairment charges on tangible assets

-

1.4

Write down of inventories to net realisable value

56.9

51.5

 

 

 

Customer and other receivables:

 

 

   Impairment charge

20.8

27.5

   Amounts recovered

(1.6)

(2.8)

 

 

 

Depreciation of right-of-use asset

67.4

68.7

Interest on lease liabilities

32.1

34.7

Foreign exchange loss on lease liabilities

2.3

0.8

 

 

6.        Taxation

 

Income tax expense is recognised based on management's best estimate of the full year effective tax rate based on estimated full year profits. 

 

 

7.        Earnings Per Share

 

 

26 weeks to

27 July 2019

Including IFRS 16

26 weeks to

28 July 2018

Including IFRS 16

26 weeks to

27 July 2019

Excluding IFRS 16

26 weeks to

28 July 2018

Excluding IFRS 16

 

Basic Earnings Per Share

204.4p

187.9p

199.5p

185.6p

 

 

 

 

 

203.3p

186.8p

198.4p

184.5p

 

Basic Earnings Per Share (EPS) is based on the profit for the period attributable to the equity holders of the Parent Company divided by the net of the weighted average number of shares ranking for dividend less the weighted average number of shares held by the ESOT during the period.

 

Diluted Earnings Per Share is calculated by adjusting the weighted average number of shares used for the calculation of basic Earnings Per Share as increased by the dilutive effect of potential ordinary shares.  Dilutive shares arise from employee share option schemes where the exercise price is less than the average market price of the Company's ordinary shares during the period.  Their dilutive effect is calculated on the basis of the equivalent number of nil cost options.  Where the option price is above the average market price, the option is not dilutive and is excluded from the diluted EPS calculation.  In the current period, there were 2.3 million non-dilutive share options which were excluded from the diluted EPS calculation (2018: 2.6 million). 

 

The table below shows the key variables used in the Earnings Per Share calculations:

 

 

 

 

26 weeks to

27 July 2019

 

£m

26 weeks to

28 July 2018

Restated

£m

 

 

 

 

Profit after tax attributable to equity holders of the Parent Company

 

 

266.9

 

257.3

 

 

 

 

Weighted average number of shares (millions):

 

 

 

      Weighted average shares in issue

 

136.2

142.0

      Weighted average shares held by ESOT

 

(5.6)

(5.0)

 

 

_______________

_______________

Weighted average shares for basic EPS

 

130.6

137.0

      Weighted average dilutive potential shares

 

0.7

0.7

 

 

_______________

_______________

Weighted average shares for diluted EPS

 

131.3

137.7

 

 

_______________

_______________

 

 

8.        Dividends

 

It is intended that this year's ordinary interim dividend of 57.5p per share will be paid to shareholders on 2 January 2020.  NEXT plc shares will trade ex-dividend from 5 December 2019 and the record date will be 6 December 2019.  Dividends paid or declared during the period were as follows:

 

26 weeks to 27 July 2019

 

 

 

Paid

Pence

per

share

 

Cash Flow

Statement

£m

Statement

of Changes

in Equity

£m

July 2019

Balance

Sheet

£m

 

 

 

 

 

 

Ordinary final dividend for year to Jan 2019

1 Aug 2019

     110p

-

140.3

140.3

 

 

 

___________

___________

___________

 

 

 

-

140.3

140.3

 

 

 

___________

___________

___________

 

26 weeks to 28 July 2018

 

 

 

Paid

Pence

per

share

 

Cash Flow

Statement

£m

Statement

of Changes

in Equity

£m

July 2018

Balance

Sheet

£m

 

 

 

 

 

 

Ordinary final dividend for year to Jan 2018

1 Aug 2018

     105p

-

141.9

141.9

 

 

 

___________

___________

___________

 

 

 

-

141.9

141.9

 

 

 

___________

___________

___________

 

 

9.        Defined benefit pension

 

The principal pension scheme is the 2013 NEXT Group Pension Plan, which includes defined benefit and defined contribution sections. 

The movement in the defined benefit pension surplus in the period is as follows:

 

 

26 weeks to

27 July 2019

26 weeks to

28 July 2018

52 weeks to

26 January 2019

 

£m

£m

£m

Surplus in schemes at the beginning of the period

125.0

106.2

106.2

Current service cost

(3.6)

(4.2)

(8.2)

Administration costs

(1.2)

(1.1)

(1.9)

Net interest

1.9

1.3

2.8

Employer contributions

3.5

0.5

7.8

Actuarial gains

16.4

60.4

18.7

Guaranteed Minimum Pension equalisation

-

-

(0.4)

 

___________

___________

___________

Surplus in schemes at the end of the period

142.0

163.1

125.0

 

___________

___________

___________

 

The main financial assumptions and actuarial valuations have been updated by independent qualified actuaries under IAS 19 "Employee benefits".  The following financial assumptions have been used:

 

 

26 weeks to

27 July 2019

26 weeks to

28 July 2018

52 weeks to

26 January 2019

 

 

 

 

Discount rate

2.20%

2.85%

2.90%

Inflation - RPI

3.10%

3.15%

3.15%

Inflation - CPI

2.10%

2.15%

2.15%

Salary increases

-

-

-

Pension increases in payment

 

 

 

-              RPI with a maximum of 5%

2.95%

2.95%

2.95%

-              RPI with a maximum of 2.5% and discretionary increases

 

2.00%

 

2.00%

 

2.05%

 

 

10.      Other financial assets and liabilities

 

Other financial assets and other financial liabilities include the fair value of derivative contracts which the Group uses to manage its foreign currency and interest rate risks.  All derivatives are categorised as Level 2 under the requirements of IFRS 13, as they are valued using techniques based significantly on observed market data.

 

 

11.      Customer and other receivables

 

 

27 July 2019

 

£m

28 July 2018

Restated

£m

26 Jan 2019

Restated

£m

 

 

 

 

Gross Online customer receivables

1,415.0

1,340.4

1,417.2

Less: Refund liabilities

(60.7)

(48.4)

(44.5)

 

___________

___________

___________

Net Online customer receivables

1,354.3

1,292.0

1,372.7

Less:  Allowance for expected credit losses

(168.5)

(150.5)

(165.5)

 

___________

___________

___________

 

1,185.8

1,141.5

1,207.2

Other trade receivables

19.4

27.2

23.8

Less: Allowance for doubtful debts

(0.1)

(0.1)

(0.5)

 

___________

___________

___________

 

1,205.1

1,168.6

1,230.5

Prepayments

36.6

42.7

37.2

Other debtors

10.4

11.5

14.7

Amounts due from associates and joint venture

1.9

2.7

3.0

 

___________

___________

___________

 

1,254.0

1,225.5

1,285.4

 

___________

___________

___________

 

No interest is charged on customer receivables if the statement balance is paid in full and to terms; otherwise balances bear interest at a variable annual percentage rate of 23.9% at the year-end date (2018: 22.9%).  

 

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on a very low credit risk characteristic, representing management's view of the risk, and the days past due. The expected credit losses incorporate forward looking information.

 

The fair value of customer receivables and other trade receivables is approximately £1,150.0m. This has been calculated based on future cash flows discounted at an appropriate rate for the risk of the debt. The fair value is within Level 3 of the fair value hierarchy (refer to the Fair Value Hierarchy table in Note 26 of the January 2019 Annual Report).

 

Expected irrecoverable amounts on balances with indicators of impairment are provided for based on past default experience, adjusted for expected behaviour. Receivables which are impaired, other than by age or default, are separately identified and provided for as necessary.

 

 

12.      Trade payables and other liabilities (current)

 

 

27 July 2019

 

£m

28 July 2018

Restated

£m

26 Jan 2019

Restated

£m

 

 

 

 

Trade payables

229.8

190.6

218.8

Refund liabilities

6.1

7.6

6.2

Other taxation and social security

64.1

60.2

68.3

Deferred revenue from the sale of gift cards

60.3

62.2

75.4

Share-based payment liability

0.4

0.9

0.2

Other creditors and accruals

238.1

250.6

236.8

 

___________

___________

___________

 

598.8

572.1

605.7

 

___________

___________

___________

 

 

13.      Corporate bonds

 

The table below shows the nominal and balance sheet values of the Group's outstanding corporate bonds:

 

 

         Nominal value

       Balance Sheet value

 

27 July 2019

28 July 2018

26 Jan

2019

27 July

2019

28 July

2018

26 Jan

2019

 

£m

£m

£m

£m

£m

£m

 

 

 

 

 

 

 

Corporate bond 5.375% repayable 2021

325.0

325.0

325.0

327.6

328.1

327.5

Corporate bond 3.000% repayable 2025

200.0

-

-

200.0

-

-

Corporate bond 4.375% repayable 2026

250.0

250.0

250.0

287.0

278.0

277.7

Corporate bond 3.625% repayable 2028

300.0

300.0

300.0

300.0

300.0

300.0

 

_________

_________

_________

_________

_________

_________

 

1,075.0

875.0

875.0

1,114.6

906.1

905.2

 

_________

_________

_________

_________

_________

_________

 

As explained in the January 2019 Annual Report, the Group uses interest rate derivatives to manage part of the interest rate risk associated with its corporate bonds, whereby the carrying value of the relevant bonds is adjusted for changes in fair value attributable to the hedged risk.  At July 2019, the fair value of the Group's corporate bonds was £1,185.6m (July 2018: £953.3m, January 2019: £930.3m).  The fair values are market values at the balance sheet date (IFRS 13 Level 1).

 

 

14.      Share buybacks

 

Movements in the Company's issued share capital during the year are shown in the table below:

 

 

2019

Shares

'000

2019

 

£m

2018

Shares

'000

2018

 

£m

 

 

 

 

 

Shares in issue at start of year

        138,605

         13.9

        144,882

         14.5

Shares purchased for cancellation in the period

           (5,040)

          (0.5)

           (5,197)

          (0.5)

 

           __________

__________

     ____________

__________

Shares in issue at July

        133,565

         13.4

        139,685

         14.0

 

__________

__________

____________

__________

 

The total cost of shares purchased for cancellation as shown in the Statement of Changes in Equity was £280.2m (2018: £274.0m).

 

 

15.      Analysis of net debt

 

 

27 July 2019

 

£m

28 July 2018

Restated

£m

26 Jan 2019

Restated

£m

 

 

 

 

Cash and short term deposits

156.9

66.1

156.3

Overdrafts and short term borrowings

(114.8)

(42.6)

(122.3)

 

__________

__________

__________

Cash and cash equivalents

42.1

23.5

34.0

 

 

 

 

Unsecured bank loans

(160.0)

(285.0)

(255.0)

Corporate bonds

(1,114.6)

(906.1)

(905.2)

Fair value hedges of corporate bonds

39.2

31.1

30.4

 

__________

__________

__________

Net debt excluding leases

(1,193.3)

(1,136.5)

(1,095.8)

 

 

 

 

Current lease liability

(154.5)

(171.7)

(175.6)

Non-current lease liability

(1,176.3)

(1,231.9)

(1,190.7)

 

__________

__________

__________

 

(1,330.8)

(1,403.6)

(1,366.3)

 

__________

__________

__________

Net debt including leases

(2,524.1)

(2,540.1)

(2,462.1)

 

__________

__________

__________

 

 

16.      Lease liabilities

 

 

27 July 2019

 

£m

28 July 2018

Restated

£m

26 Jan 2019

Restated

£m

 

 

 

 

Maturity profile

 

 

 

Less than 1 year

154.5

171.7

175.6

More than 1 year

1,176.3

1,231.9

1,190.7

 

_________

__________

__________

Total

1,330.8

1,403.6

1,366.3

 

_________

_________

_________

 

 

17.      IFRS 16 transition note

Impact on profit for the period

26 weeks to

27 July 2019

Excluding IFRS 16

£m

Adjustments on

adoption of

IFRS 16

£m

28 weeks to

27 July 2019

 

£m

 

 

 

 

Total revenue

2,014.5

                                 -

2,014.5

Cost of sales                                                           (i)

(1,290.9)

41.3

(1,249.6)

 

____________

____________

____________

Gross profit

723.6

41.3

764.9

Distribution costs

(250.5)

0.9

(249.6)

Administrative costs

(131.4)

                                 -

(131.4)

Other gains/(losses)

(0.9)

 (2.3)

(3.2)

 

____________

____________

____________

Trading profit

340.8

39.9

380.7

Share of results of associates and joint venture

 0.1

                                 -

 0.1

 

____________

____________

____________

Operating profit

340.9

39.9

380.8

 

____________

____________

____________

Finance income

0.1

                                 -

0.1

Finance costs                                                         (i)

 (21.4)

 (32.1)

 (53.5)

 

____________

____________

____________

Profit before taxation

319.6

7.8

327.4

Taxation                                                                 (v)

(59.1)

(1.4)

(60.5)

 

____________

____________

____________

Profit attributable to equity holders

260.5

6.4

266.9

 

____________

____________

____________

 

Impact on profit for the period

26 weeks to

28 July 2018 Excluding IFRS 16

£m

Adjustments on adoption of

IFRS 16
£m

26 weeks to

28 July 2018

Restated

£m

 

 

 

 

Total revenue

1,961.9

-

1,961.9

Cost of sales                                                          (i)

(1,287.8)

38.9

(1,248.9)

 

____________

____________

____________

Gross profit

674.1

38.9

713.0

Distribution costs

(214.9)

0.4

(214.5)

Administrative costs

(130.6)

-

(130.6)

Other gains/(losses)

1.8

 (0.8)

1.0

 

____________

____________

____________

Trading profit

330.4

38.5

368.9

Share of results of associates and joint venture

0.1

 -

0.1

 

____________

____________

____________

Operating profit

330.5

38.5

369.0

 

____________

____________

____________

Finance income

0.1

-

0.1

Finance costs                                                        (i)

(19.5)

 (34.7)

(54.2)

 

____________

____________

____________

Profit before taxation

311.1

3.8

314.9

Taxation                                                                (v)

(56.9)

(0.7)

(57.6)

 

____________

____________

____________

Profit attributable to equity holders

254.2

3.1

257.3

 

____________

____________

____________

 

 

Impact on Net assets and Retained earnings as at 27 January 2018

 

 

 

 

 

Notes

27 January

2018

 

£m

IFRS 16

Adjustment

 

£m

27 January

2018

Restated

£m

ASSETS AND LIABILITIES

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

558.9

-

558.9

Intangible assets

 

42.9

-

42.9

Right of use asset

(ii)

-

948.9

948.9

Associates, joint venture and other investment

 

2.1

-

2.1

Defined benefit pension asset

 

106.2

-

106.2

Other financial assets

 

48.1

-

48.1

Deferred tax assets

(v)

5.8

45.7

51.5

 

 

____________

____________

____________

 

 

764.0

994.6

1,758.6

Current assets

 

 

 

 

Inventories

 

466.7

-

466.7

Customer and other receivables

(iv)

1,248.2

(55.7)

1,192.5

Right of return asset

 

23.4

-

23.4

Other financial assets

 

5.7

-

5.7

Cash and short term deposits

 

53.5

-

53.5

 

 

____________

____________

____________

 

 

1,797.5

(55.7)

1,741.8

 

 

____________

____________

____________

Total assets

 

2,561.5

938.9

3,500.4

 

 

____________

____________

____________

Current liabilities

 

 

 

 

Bank loans and overdrafts

 

(180.0)

-

(180.0)

Trade payables and other liabilities

(iv)

(580.2)

30.5

(549.7)

Lease liabilities

(iii)

-

(165.8)

(165.8)

Other financial liabilities

 

(59.3)

-

(59.3)

Current tax liabilities

 

(95.3)

-

(95.3)

 

 

____________

____________

____________

 

 

(914.8)

(135.3)

(1,050.1)

Non-current liabilities

 

 

 

 

Corporate bonds

 

(908.5)

-

(908.5)

Provisions

(iv)

(10.4)

(6.7)

(17.1)

Other financial liabilities

 

(12.4)

-

(12.4)

Lease liabilities

(iii)

-

(1,213.8)

(1,213.8)

Other liabilities

(iv)

(232.8)

212.9

(19.9)

 

 

____________

____________

____________

 

 

(1,164.1)

(1,007.6)

(2,171.7)

 

 

____________

____________

____________

Total liabilities

 

(2,078.9)

(1,142.9)

(3,221.8)

 

 

____________

____________

____________

NET ASSETS

 

482.6

(204.0)

278.6

 

 

____________

____________

____________

TOTAL EQUITY

 

482.6

(204.0)

278.6

 

 

____________

____________

____________

 

 

Impact on Net assets and Retained earnings as at 28 July 2018

 

 

 

 

 

Notes

28 July 2018

 

£m

IFRS 16

Adjustment

£m

28 July 2018

Restated

£m

ASSETS AND LIABILITIES

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

555.6

-

555.6

Intangible assets

 

42.8

-

42.8

Right of use asset

(ii)

-

975.3

975.3

Associates, joint venture and other investment

 

5.1

-

5.1

Defined benefit pension asset

 

163.1

-

163.1

Other financial assets

 

53.4

-

53.4

Deferred tax assets

(v)

-

45.0

45.0

 

 

____________

____________

____________

 

 

820.0

1,020.3

1,840.3

Current assets

 

 

 

 

Inventories

 

518.6

-

518.6

Customer and other receivables

(iv)

1,281.7

(56.2)

1,225.5

Right of return asset

 

24.0

-

24.0

Other financial assets

 

31.3

-

31.3

Cash and short term deposits

 

66.1

-

66.1

 

 

____________

____________

____________

 

 

1,921.7

(56.2)

1,865.5

 

 

____________

____________

____________

Total assets

 

2,741.7

964.1

3,705.8

 

 

____________

____________

____________

Current liabilities

 

 

 

 

Bank loans and overdrafts

 

(327.6)

-

(327.6)

Trade payables and other liabilities

(iv)

(606.1)

34.0

(572.1)

Lease liabilities

(iii)

-

(171.7)

(171.7)

Dividends payable

 

(141.9)

-

(141.9)

Other financial liabilities

 

(2.5)

-

(2.5)

Current tax liabilities

 

(89.7)

-

(89.7)

 

 

____________

____________

____________

 

 

(1,167.8)

(137.7)

(1,305.5)

Non-current liabilities

 

 

 

 

Corporate bonds

 

(906.1)

-

(906.1)

Provisions

(iv)

(10.2)

(7.4)

(17.6)

Other financial liabilities

 

(14.3)

-

(14.3)

Lease liabilities

(iii)

-

(1,231.9)

(1,231.9)

Other liabilities

(iv)

(220.7)

212.0

(8.7)

Deferred tax liabilities

 

(10.9)

-

(10.9)

 

 

____________

____________

____________

 

 

(1,162.2)

(1,027.3)

(2,189.5)

 

 

____________

____________

____________

Total liabilities

 

(2,330.0)

(1,165.0)

(3,495.0)

 

 

____________

____________

____________

NET ASSETS

 

411.7

(200.9)

210.8

 

 

____________

____________

____________

TOTAL EQUITY

 

411.7

(200.9)

210.8

 

 

____________

____________

____________

 

 

Impact on Net assets and Retained earnings as at 26 January 2019

 

 

 

 

Notes

26 January

2019

 

£m

IFRS 16 Adjustment

 

£m

26 January

2019

Restated

£m

ASSETS AND LIABILITIES

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

564.9

-

564.9

Intangible assets

 

42.6

-

42.6

Right of use asset

(ii)

-

943.8

943.8

Associates, joint venture and other investment

 

5.1

-

5.1

Defined benefit pension asset

 

125.0

-

125.0

Other financial assets

 

41.5

-

41.5

Deferred tax assets

(v)

-

43.6

43.6

 

 

____________

____________

____________

 

 

779.1

987.4

1,766.5

Current assets

 

 

 

 

Inventories

 

502.8

-

502.8

Customer and other receivables

(iv)

1,339.8

(54.4)

1,285.4

Right of return asset

 

23.4

-

23.4

Other financial assets

 

9.9

-

9.9

Cash and short term deposits

 

156.3

-

156.3

 

 

____________

____________

____________

 

 

2,032.2

(54.4)

1,977.8

 

 

____________

____________

____________

Total assets

 

2,811.3

933.0

3,744.3

 

 

____________

____________

____________

Current liabilities

 

 

 

 

Bank loans and overdrafts

 

(377.3)

-

(377.3)

Trade payables and other liabilities

(iv)

(640.7)

35.0

(605.7)

Lease liabilities

(iii)

-

(175.6)

(175.6)

Other financial liabilities

 

(9.4)

-

(9.4)

Current tax liabilities

 

(85.1)

-

(85.1)

 

 

____________

____________

____________

 

 

(1,112.5)

(140.6)

(1,253.1)

Non-current liabilities

 

 

 

 

Corporate bonds

 

(905.2)

-

(905.2)

Provisions

(iv)

(10.3)

(5.4)

(15.7)

Other financial liabilities

 

(9.2)

-

(9.2)

Lease liabilities

(iii)

-

(1,190.7)

(1,190.7)

Other liabilities

(iv)

(217.5)

208.4

(9.1)

Deferred tax liabilities

 

(2.8)

-

(2.8)

 

 

____________

____________

____________

 

 

(1,145.0)

(987.7)

(2,132.7)

 

 

____________

____________

____________

Total liabilities

 

(2,257.5)

(1,128.3)

(3,385.8)

 

 

____________

____________

____________

NET ASSETS

 

553.8

(195.3)

358.5

 

 

____________

____________

____________

TOTAL EQUITY

 

553.8

(195.3)

358.5

 

 

____________

____________

____________

 

(i)           Income Statement

                Under the previous accounting standard for leases, IAS 17, lease costs were recognised on straight line basis over the term of the lease.  The Group recognised these costs within cost of sales and distribution costs. 

                On adoption of IFRS 16 these costs have been removed and replaced with costs calculated on an IFRS 16 basis.  The impact of removing these costs on the July 2019 Income Statement was £109.6m (2018: £108.0m).

                Under IFRS 16 the right-of-use asset is depreciated over the lease term.  The Group has recognised the depreciation costs on the right-of-use asset in cost of sales. The impact of this adjustment in the July 2019 Income Statement was £67.4m (2018: £68.7m).

                The costs under IAS 17 were higher than the depreciation costs recognised under IFRS 16 which has resulted in a net credit under IFRS 16 to cost of Sales and distribution costs. The net impact of this adjustment in the July 2019 Income Statement was £42.2m (2018: £39.3m).

                Under IFRS 16 Finance costs are charged on the lease liability recognised.  These costs are recognised within finance costs.  The impact of this adjustment on the July 2019 Income Statement was £32.1m (2018: £34.7m).  Foreign exchange losses of £2.3m (£2018: £0.8m) on foreign currency denominated leases have been recognised in other gains and losses.

                The net impact of the above adjustments to the July 2019 profit before tax was £7.8m (2018: £3.8m).

 

(ii)          Right-of-use Asset

                IFRS 16 has resulted in the recognition of a right-of-use asset.  This asset represents the Group's contractual right to access an identified asset under the terms of the lease contract.

 

(iii)         Lease liability

                IFRS 16 has resulted in the recognition of a lease liability.  This liability represents the Group's contractual obligation to minimum lease payments during the lease term. 

                The element of the liability payable in next 12 months is recognised as a current liability with the balance recognised in non-current liabilities.

 

(iv)         Working capital

                Under IAS 17 certain lease incentives, rent prepayments, accruals and similar amounts were held on the balance as part of working capital.  Such balances are no longer recognised as all payments, lease incentives and related costs are reflected in either the right-of-use asset or the lease liability.  

 

(v)          Taxation

                A deferred tax asset has been recognised on the transition to IFRS 16 representing the timing difference on the amounts taken to reserves.

 

 

18.      Post balance sheet event

On 14 August the Group issued the £50m retained element of the £250m bond which had been issued in the 26 weeks to 27 July 2019.

 

 

RESPONSIBILITY STATEMENT

 

 

We confirm that to the best of our knowledge:

 

a)    The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim financial reporting';

 

b)    The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

 

c)    The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

 

By order of the Board

 

 

 

Lord Wolfson of Aspley Guise                                                       Amanda James

Chief Executive                                                                                 Group Finance Director

 

19 September 2019

 

 

The full half year report and the results presentation can be found on the Company's website at www.nextplc.co.uk.

 

To view our range of exciting, beautifully designed, excellent quality clothing and homeware go to www.next.co.uk

 

Certain statements which appear in a number of places throughout this document are "forward looking statements" which are all matters that are not historical facts, including anticipated financial and operational performance, business prospects and similar matters. These forward looking statements are identifiable by words such as "aim", "anticipate", "believe", "budget", "estimate", "expect", "forecast", "intend", "plan", "project" and similar expressions.  These forward looking statements reflect NEXT's current expectations concerning future events and actual results may differ materially from current expectations or historical results. Any such forward looking statements are subject to risks and uncertainties, including but not limited to the risks described in "Risks & Uncertainties" on pages 54 to 58 of the 2019 Annual Report and those matters highlighted in the Chief Executive's review; failure by NEXT to accurately predict customer fashion preferences; decline in the demand for merchandise offered by NEXT; competitive influences; changes in level of store traffic or consumer spending habits; effectiveness of NEXT's brand awareness and marketing programmes; general economic conditions or a downturn in the retail industry; the inability of NEXT to successfully implement relocation or expansion of existing stores; insufficient consumer interest in NEXT Online; acts of war or terrorism worldwide; work stoppages, slowdowns or strikes; and changes in financial and equity markets.  These forward looking statements do not amount to any representation that they will be achieved as they involve risks and uncertainties and relate to events and depend upon circumstances which may or may not occur in the future and there can be no guarantee of future performance. Undue reliance should not be placed on forward looking statements which speak only as of the date of this document.  NEXT does not undertake any obligation to update publicly or revise forward looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
IR LPMJTMBTBTTL
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Results for the Half Year Ending July 2019 - RNS