TIDMNXT
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 sales(1) were up +4.3% and Brand total
sales(2) (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 GBP725m (up +0.3% on
last year) and EPS growth to be up +5.2%.
TOTAL SALES GBPm 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%
Other(3) 45.6 46.8
========== ==========
Total Group sales 2,058.8 1,986.2 +3.7%
=================== ========== ========== =======
PROFIT GBPm 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%
Other(5) 14.2 16.3
Recharge of interest to Finance(4) 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 GBPm and July 2019 July 2018
EPS
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 GBP1.6bn and
consisted of GBP1,075m of bonds and GBP525m of committed bank
facilities. In April, we successfully issued a GBP250m six-year
bond (maturity August 2025), with a coupon of 3.0%. We initially
retained GBP50m 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 GBP725m, up
+0.3% on last year. We estimate the enhancement to EPS from GBP300m
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 GBP725m
Group profit before tax versus 2018/19 +0.3%
Earnings Per Share growth versus 2018/19 +5.2%
=================
UNAUDITED CONSOLIDATED
INCOME STATEMENT
26 weeks 26 weeks
to to
27 July 28 July
2019 2018
GBPm Restated
GBPm
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 26 weeks
to to
27 July 28 July
2019 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 26 weeks
to to
27 July 28 July
2019 2018
GBPm Restated
GBPm
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 28 July 26 Jan 2019
2019 2018 Restated
GBPm Restated GBPm
GBPm
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 Cash Cost of Foreign Retained Total
Share premium redemption ESOT flow hedging currency Other Earnings Equity
capital account reserve reserve hedge reserve translation reserves Restated Restated
GBPm GBPm GBPm GBPm reserve GBPm GBPm GBPm GBPm GBPm
GBPm
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 26 weeks
to to
27 July 2019 28 July 2018
GBPm Restated
GBPm
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 GBP3.1m (2018: GBP3.0m) 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 Total Commission External Internal Total
July sales sales IFRS 15 revenue revenue segment
2019 excluding adjustment adjustments GBPm GBPm revenue
VAT GBPm GBPm GBPm
GBPm
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 Total Commission IFRS 15 External Internal Total
July sales sales adjustments revenue revenue segment
2018 excluding adjustment GBPm GBPm GBPm revenue
VAT GBPm GBPm
GBPm
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 26 weeks 26 weeks
27 July 2019 to to
GBPm 28 July 2018 28 July 2018
Restated As reported
GBPm GBPm
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 Credit Royalties Rental Total
goods account income
interest
GBPm GBPm GBPm GBPm GBPm
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 Credit Royalties Rental Total
goods account income
interest
GBPm GBPm GBPm GBPm GBPm
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 26 weeks to
27 July 2019 28 July 2018
GBPm Restated
GBPm
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 26 weeks to 26 weeks to 26 weeks to
27 July 2019 28 July 2018 27 July 2019 28 July 2018
Including IFRS Including IFRS Excluding IFRS Excluding IFRS
16 16 16 16
Basic Earnings Per
Share 204.4p 187.9p 199.5p 185.6p
--------------- --------------- ---------------
Diluted Earnings
Per Share 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 26 weeks to
27 July 2019 28 July 2018
GBPm Restated
GBPm
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 Cash Flow Statement July 2019
per Statement of Changes Balance
share GBPm in Equity Sheet
GBPm GBPm
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 Cash Flow Statement July 2018
per Statement of Changes Balance
share GBPm in Equity Sheet
GBPm GBPm
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 26 weeks to 52 weeks to
to 28 July 2018 26 January
27 July 2019 2019
GBPm GBPm GBPm
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 26 weeks to 52 weeks to
to 28 July 2018 26 January
27 July 2019 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 28 July 2018 26 Jan 2019
GBPm Restated Restated
GBPm GBPm
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 GBP1,150.0m. 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 28 July 2018 26 Jan 2019
GBPm Restated Restated
GBPm GBPm
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 28 July 26 Jan 27 July 28 July 26 Jan
2019 2018 2019 2019 2018 2019
GBPm GBPm GBPm GBPm GBPm GBPm
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 GBP1,185.6m (July 2018: GBP953.3m,
January 2019: GBP930.3m). 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 2019 2018 2018
Shares GBPm Shares GBPm
'000 '000
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 GBP280.2m (2018:
GBP274.0m).
15. Analysis of net debt
27 July 2019 28 July 2018 26 Jan 2019
GBPm Restated Restated
GBPm GBPm
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 28 July 2018 26 Jan 2019
2019 Restated Restated
GBPm GBPm
GBPm
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
26 weeks to Adjustments
27 July 2019 on 28 weeks to
Excluding IFRS adoption of 27 July 2019
16 IFRS 16
Impact on profit for the period GBPm GBPm GBPm
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
(____________) (____________) (____________)
26 weeks to Adjustments
28 July 2018 on adoption 26 weeks to
Excluding IFRS of 28 July 2018
16 IFRS 16 Restated
Impact on profit for the period GBPm GBPm GBPm
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 IFRS 16 27 January
2018 Adjustment 2018
GBPm GBPm Restated
GBPm
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 IFRS 16 28 July
2018 Adjustment 2018
GBPm GBPm Restated
GBPm
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 IFRS 16 26 January
2019 Adjustment 2019
GBPm GBPm Restated
GBPm
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
GBP109.6m (2018: GBP108.0m).
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 GBP67.4m (2018:
GBP68.7m).
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 GBP42.2m
(2018: GBP39.3m).
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
GBP32.1m (2018: GBP34.7m). Foreign exchange losses of GBP2.3m
(GBP2018: GBP0.8m) 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 GBP7.8m (2018: GBP3.8m).
(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 GBP50m retained element of the
GBP250m 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
(END) Dow Jones Newswires
September 19, 2019 02:02 ET (06:02 GMT)
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