Interim Results

Next PLC 12 September 2000 Contacts: David Jones, Chief Executive Next plc Tel: 020 7796 4133 (12/09/00) Tel: 0116 286 6411 (thereafter) Alistair Mackinnon-Musson Philip Dennis Hudson Sandler Tel: 020 7796 4133 NEXT PLC RESULTS FOR THE HALF YEAR ENDED JULY 2000 * NEXT Retail turnover up 11% * NEXT Directory turnover up 8% * Group profit before tax up 18% to 80.7m * Earnings per share up 24% * Annual post tax return on capital employed of 27% * Interim dividend increased to 8p Sir Brian Pitman, Chairman, said 'This was another successful half year for NEXT. The combined turnover of NEXT Retail and NEXT Directory increased by 10%. Group profit before tax was up by 18% and, after a share buyback, earnings per share rose by 24%. The interim dividend has been increased by 14%. We expect further progress in the second half of the year.' NEXT PLC Chairman's Statement NEXT has had a successful first half of the year. The combined turnover of NEXT Retail and NEXT Directory increased by 10%. Group profit before tax was up by 18% and, after a share buyback, earnings per share rose by 24%. The annual post tax return on capital increased to 27%. During the period we purchased for cancellation 10% of our shares at an average price of 513p and a total cost of £192m, this contributed to the increase in earnings per share. The Board is pleased to announce an interim dividend of 8p per share, a 14% increase on the previous year. We expect further progress in the second half of the year. Sir Brian Pitman Chairman Chief Executive's Review In the six months to July 2000 NEXT achieved a profit before tax of £80.7m compared with £68.4m the previous year. The turnover and profit from each of our divisions was as follows: Turnover Profit before Tax Six months to July Six months to July 2000 1999 2000 1999 £m £m £m £m NEXT Retail 470.1 423.0 46.1 39.4 NEXT Directory 138.1 127.8 17.6 12.4 __________________ __________________ The NEXT Brand 608.2 550.8 63.7 51.8 NEXT Overseas 6.9 6.8 1.2 1.3 Ventura 49.1 55.0 5.1 4.4 Clydesdale 8.6 7.5 1.4 1.3 Other Activities 12.3 12.5 6.0 5.7 __________________ __________________ 685.1 632.6 77.4 64.5 __________________ Interest Income 3.3 3.9 __________________ Profit before Tax 80.7 68.4 __________________ The NEXT Brand The NEXT Brand has had a successful first half of the year. Combined Retail and Directory profit before tax was £63.7m compared with £51.8m the previous year, an increase of 23%. Total sales for the NEXT Brand were up 10% but the comparison of sales against last year is slightly distorted by the fact that this year's end of season Sale started on 29 July, one week later than last year. We had a successful Sale and all necessary provisions relating to end of season stock have been included in these half year results. NEXT PLC Chief Executive's Review continued The NEXT Brand continued Sales in NEXT Retail increased by 11%, full price sales increased by 14%. Like-for-like full price sales in the 273 stores that have been trading continuously for at least one year were 7% ahead of the previous year. Retail operating profit increased by 17% to £46.1m. During the six months we opened new stores in Canary Wharf, Dumfries, Dundee, Galway, Preston and Rotherham, and resited to larger stores in Banbury, Coleraine, Ipswich and Tunbridge Wells. At the end of July we had 338 stores with a total selling space of 1,519,000 square feet compared with 331 stores and 1,397,000 square feet the previous year, an increase of 9%. In the second half of the year we expect to increase our retail selling space by a further 120,000 square feet, the majority of which will open in November and December. The total new space for the current year will be approximately 175,000 square feet, making the total selling space 1,640,000 square feet at January 2001, an increase of 12% on last year. Sales in NEXT Directory increased by 8%. Full priced sales increased by 10% whilst reduced priced sales were negligible this year because of the later start to the end of season Sale. Directory operating profit increased by 42% to £17.6m. The number of active customers increased by 6% and at the end of July was 953,000. The home shopping environment has been a difficult one for several seasons, we recognised this and reduced our marketing spend to concentrate on improving the profitability of Directory. There is now evidence from our improved Spring/Summer 2000 recruitment results that the Directory can profitably increase its marketing activities targeted at the recruitment of new customers. We therefore expect to make further progress in the second half of the year. Sales through the Internet are increasing and currently represent 7% of NEXT Directory sales. We now expect to achieve £20m of sales through this channel for the full year. The Internet is used not only by existing Directory customers, but also by casual shoppers who can order NEXT products and the Directory from our website. NEXT Overseas During the six months to July, the performance of our overseas franchise stores was satisfactory. As stated in last years annual review we do not intend at this stage to increase our overseas activity. Ventura and Clydesdale Financial Services Ventura's profit for the half year was £5.1m compared with £4.4m the previous year. The second Customer Service Centre in the Dearne Valley provides us with additional capacity for expansion, and will be servicing new business such as that recently gained from Woolwich plc. Clydesdale has had a satisfactory first half with profit before tax of £1.4m against £1.3m last year. As previously announced we have invited offers for the Clydesdale business and we are currently in negotiations with interested parties. NEXT PLC Chief Executive's Review continued Other Activities Profits for the half year were £6.0m compared with £5.7m the previous year. The main contributors were NEXT Asia, our product sourcing company based in Hong Kong, and our Property Management company. Cash Flow During the period we purchased for cancellation 37.4 million shares at a total cost of £192m. The interest cost associated with the purchase was £3m, whereas the cash flow saving from the July dividend exceeded £5m. During the period this transaction increased our earnings per share by 2.5% and we expect the enhancement to be 4.5% for the full year. At the end of July net borrowings were £64m, a gearing ratio of 14% to net assets. Excluding the cost of the shares purchased, the cash inflow during the period was £5m and we expect a further inflow for the second half of the year. Our stock levels were higher at the end of July this year as they included more Spring/Summer merchandise. This was a consequence of the later start to the Sale, which successfully cleared this stock in August. The majority of our £20m capital expenditure related to Retail stores and this will continue to be the case in Autumn/Winter, the projected full year expenditure remains less than £60m. Dividend The Directors are pleased to declare an interim dividend of 8p, an increase of 14% (last year 7p). This will be paid on 2 January 2001 to shareholders on the register at 8 December 2000. The shares will trade ex-dividend from 4 December 2000. Current Trading In the first six weeks of the Autumn/Winter season, sales in NEXT Retail are 28% ahead of the previous year. Sales in NEXT Directory are 9% ahead of last year. However, this comparison is distorted by the later start to the end of season Sale. This resulted in significantly higher sales in the first two weeks of August this year. A fairer comparison of current trading is therefore the last four weeks, which show NEXT Retail up 14% on the previous year. Like- for-like sales in the 286 stores which have been trading continuously for at least one year are 7% ahead. Sales in NEXT Directory for the last four weeks are 5% ahead. David Jones Chief Executive 12 September 2000 NEXT PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended July Unaudited Unaudited Six months Six months Year to to July 2000to July 1999 Jan 2000 £m £m £m Turnover 685.1 632.6 1,425.4 ________ ________ ________ Operating profit 77.4 64.5 180.3 Profit on disposal of business - - 2.4 Profit on disposal of fixed assets - - 4.1 ________ ________ ________ Profit before interest 77.4 64.5 186.8 Net interest receivable 3.3 3.9 7.9 ________ ________ ________ Profit on ordinary activities before taxation 80.7 68.4 194.7 Taxation on profit on ordinary activities (23.4) (19.1) (54.5) ________ ________ ________ Profit on ordinary activities after taxation 57.3 49.3 140.2 Dividends (20.8) (25.6) (76.4) ________ ________ ________ Profit for the year transferred to reserves 36.5 23.7 63.8 ________ ________ ________ Earnings per share 16.7p 13.5p 38.4p Diluted earnings per share 16.6p 13.3p 37.9p Dividend per share 8.0p 7.0p 21.0p CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the six months ended July Six months Six months Year to to July 2000to July 1999 Jan 2000 £m £m £m Profit attributable to members of parent company 57.3 49.3 140.2 Exchange difference on translation of net assets of subsidiary undertakings 1.8 0.2 0.1 ________ ________ ________ Total recognised gains and losses relating to the period 59.1 49.5 140.3 ________ ________ ________ NEXT PLC CONSOLIDATED BALANCE SHEET Unaudited Unaudited July 2000 July 1999 Jan 2000 £m £m £m Fixed assets Tangible assets 281.3 298.2 288.6 Investments 2.7 2.7 2.4 Investment in own shares 45.2 38.4 48.8 ________ ________ ________ 329.2 339.3 339.8 ________ ________ ________ Current assets Property development stocks 9.1 9.3 9.1 Stocks 183.5 142.0 137.5 Debtors- Amounts falling due within one year 263.5 276.7 270.7 - Amounts falling due after more than one year 41.9 52.7 65.3 Cash at bank and in hand 60.9 56.6 124.7 ________ ________ ________ 558.9 537.3 607.3 Current liabilities Creditors: amounts falling due within one year 410.8 288.4 318.4 ________ ________ ________ 148.1 248.9 288.9 ________ ________ ________ Total assets less current liabilities 477.3 588.2 628.7 Creditors: amounts falling due after more than one year 16.9 12.6 15.0 Provision for liabilities and charges 7.2 8.9 7.0 ________ ________ ________ Net assets 453.2 566.7 606.7 ________ ________ ________ Capital and reserves Called up share capital 33.7 37.4 37.4 Share premium account 3.8 3.7 3.7 Revaluation reserve 15.9 17.9 16.4 Other reserves 4.1 0.4 0.4 Profit and loss account 395.7 507.3 548.8 ________ ________ ________ Shareholders' funds 453.2 566.7 606.7 ________ ________ ________ NEXT PLC CONSOLIDATED CASH FLOW STATEMENT For the six months ended July Unaudited Unaudited Six months Six months Year to to July 2000to July 1999 Jan 2000 £m £m £m Net cash inflow from operating activities 76.7 81.1 260.8 ________ ________ ________ Dividends from associates - - 1.0 ________ ________ ________ Returns on investments and servicing of finance Interest received 4.0 4.3 7.7 ________ ________ ________ Taxation UK corporation tax paid (15.6) (5.5) (61.9) Overseas tax paid (1.4) (0.7) (1.4) ________ ________ ________ (17.0) (6.2) (63.3) ________ ________ ________ Capital expenditure and financial investment Purchase of tangible fixed assets (20.0) (43.0) (67.3) Proceeds from disposal of fixed assets 4.2 2.6 11.1 Purchase of own shares by ESOP - (7.2) (22.9) Receipts on disposal of shares by ESOP 2.8 5.4 6.4 ________ ________ ________ (13.0) (42.2) (72.7) ________ ________ ________ Acquisitions and disposals Disposal of subsidiary and associated undertakings - - 1.0 ________ ________ ________ Equity dividends paid (45.8) (46.2) (71.5) ________ ________ ________ Net cash inflow/(outflow) before management of liquid resources and financing 4.9 (9.2) 63.0 Management of liquid resources 190.0 3.3 (56.7) Financing Purchase of own shares (191.8) - - Repayments of capital element of finance leases (0.2) (0.2) (0.5) ________ ________ ________ (192.0) (0.2) (0.5) ________ ________ ________ Increase/(decrease) in cash in the period 2.9 (6.1) 5.8 ________ ________ ________ Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash in the year 2.9 (6.1) 5.8 Cash (realised from)/deposited in liquid resources (190.0) (3.3) 56.7 Repayments of capital elements of finance leases 0.2 0.2 0.5 ________ ________ ________ Changes in net funds resulting from cash flows (186.9) (9.2) 63.0 Net funds at January 2000 122.6 59.6 59.6 ________ ________ ________ Net (borrowings)/funds at July 2000 (64.3) 50.4 122.6 ________ ________ _______ NEXT PLC BASIS OF PREPARATION The report was approved by the Board of Directors on 12 September 2000. The accounts for the year to January 2000 are not full accounts within the meaning of Section 240 of the Companies Act 1985. Full accounts for that period incorporating an unqualified audit report have been delivered to the Registrar of Companies. Accounting policies adopted are consistent with those set out in the accounts for the year ended January 2000. Registered in England 35161. Registered Office, Desford Road, Enderby, Leicester LE9 5AT. EARNINGS PER SHARE The calculation of earnings per share is based on £57.3m (1999: £49.3m) being the profit for the six months after taxation and 343.7m ordinary shares of 10p each (1999: 365.8m), being the weighted average number of shares ranking for dividend less the weighted average number of shares held by the ESOP during the year. Diluted earnings per share is based on £57.3m (1999: £49.3m) being the profit for the six months after taxation and 345.2m ordinary shares of 10p each (1999: 370.6m) being the weighted average number of shares used for the calculation of earnings per share above increased by the dilutive effect of potential ordinary shares from employee share option schemes of 1.5m shares (1999: 5.5m shares). RECONCILIATION OF SHAREHOLDERS' FUNDS Six months Six months Year to to July 2000to July 1999 Jan 2000 £m £m £m Total recognised gains and losses 59.1 49.5 140.3 Dividends (20.8) (25.6) (76.4) Purchase of own shares for cancellation (191.8) - - ________ ________ ________ Total movement during the period (153.5) 23.9 63.9 Shareholders' funds at January 2000 606.7 542.8 542.8 ________ ________ ________ Shareholders' funds at July 2000 453.2 566.7 606.7 ________ ________ ________ NEXT PLC CASH FLOW: RECONCILIATION OF OPERATING PROFIT TO NET CASH FLOW Six months Six months Year to to July 2000to July 1999 Jan 2000 £m £m £m Operating profit before interest 77.4 64.5 180.3 Depreciation 19.3 16.8 36.1 Impairment of fixed assets - - 5.2 Loss on disposal of fixed assets 6.5 1.0 5.9 Anticipated deficit in ESOP 0.9 - 4.3 Income from interest in associated undertakings (0.4) (0.6) (2.0) (Increase)/decrease in stock (46.1) (0.2) 4.5 Decrease/(increase) in debtors 30.2 (5.5) (10.7) (Decrease)/increase in creditors (12.8) 5.0 37.3 Decrease in provision for liabilities and charges (0.1) (0.1) (0.2) Exchange movement 1.8 0.2 0.1 ________ ________ ________ Net cash inflow from operating activities 76.7 81.1 260.8 ________ ________ ________ CASH FLOW: ANALYSIS OF NET (BORROWINGS)/FUNDS Jan Cash July 2000 Flow 2000 £m £m £m Cash in hand 19.6 31.3 50.9 Overnight deposits/(loans) 5.1 (20.1) (15.0) Overdrafts (1.6) (8.3) (9.9) ________ ________ ________ 23.1 2.9 26.0 Short term deposits/(loans) 100.0 (190.0) (90.0) Finance leases (0.5) 0.2 (0.3) ________ ________ ________ Total 122.6 (186.9) (64.3) ________ ________ ________

Companies

Next (NXT)
UK 100

Latest directors dealings