Income Statement Brand Estimate Full Price at Jan 2019 m July - PowerPoint PPT Presentation

Income Statement Brand Estimate Full Price at Jan 2019 £m July 2019 July 2018 + 4.3% + 1.7% Total sales 2,059 1,986 + 3.7% Operating profit 341 330 + 3.1% Interest (21) (19) Profit before tax 320 311 + 2.7% Taxation (59) (57) Profit after tax 261 254 EPS (underlying) 199.5p 185.6p + 7.5% 57.5p 55.0p Ordinary dividends per share + 4.5% The financial information presented excludes IFRS 16

Cash Flow Change £m July 2019 July 2018 in cash Profit before tax 320 311 Depreciation / disposals 61 62 Capital expenditure (65) (58) Working capital / other (28) (75) + 47 Tax paid (70) (69) ESOT (35) (31) Cash flow before distribution 183 140 + 43 The financial information presented excludes IFRS 16

Cash Flow £m July 2019 July 2018 Capital expenditure (65) (58) Jan 2020 (e) Jan 2019 Full year view £140m £129m Warehouse Head Office and Systems £85m £52m £Xm Stores £8m £69m £141/sq. ft. £15m Space £57m £40m Cosmetic refits £138/sq. ft. £12m Space £25m Cosmetic refits £15m

Cash Flow £m July 2019 July 2018 Profit before tax 320 311 Depreciation / disposals 61 62 Capital expenditure (65) (58) Working capital / other (28) (75) Tax paid (70) (69) Average ESOT (35) (31) Price Buybacks (280) (275) £55.59 Net cash flow (97) (135)

Balance Sheet £m July 2019 July 2018 + 3% Eid timing Fixed assets and investments 575 561 + 1% Fabled stock Goodwill and intangibles 45 43 + 4% Underlying Stock 584 543 + 7.6% Debtors / receivables 1,309 1,282 Creditors / derivatives (914) (901) Dividends payable (140) (142) Pension surplus 142 163 Net debt (1,193) (1,137) 408 412 Net assets The financial information presented excludes IFRS 16

Balance Sheet £m July 2019 July 2018 Fixed assets and investments 575 561 Goodwill and intangibles 45 43 Stock 584 543 Debtors / receivables 1,309 1,282 + £27m Creditors / derivatives (914) (901) July 2019 July 2018 Dividends payable Online (140) (142) + £44m + 4% £1,186m £1,142m receivables Pension surplus 142 163 Net debt (1,193) (1,137) Credit sales + 4% July 2019 July 2018 408 412 Net assets The financial information presented excludes IFRS 16

Balance Sheet £m July 2019 July 2018 Fixed assets and investments 575 561 Goodwill and intangibles 45 43 Stock 584 543 Debtors / receivables 1,309 1,282 Creditors / derivatives (914) (901) Dividends payable (140) (142) Pension surplus 142 163 Net debt (1,193) (1,137) 408 412 Net assets

Funding Requirements 1600 2020 1.4bn Bank facility 1400 525m Peak (e) 2021 1200 1000 2021 Jan 2020 (e) 1.14bn 800 £250m issued 2025 in April 2019 600 3% coupon Bonds 2026 400 1.125bn 200 2028 £m

Reported Net Debt 1400 + £290m Reported net debt 1200 1.14bn 1000 800 600 400 200 £m Jan Jan Jan Jan Jan 2016 2017 2018 2019 2020 (e)

Reported Net Debt & nextpay Receivables 1400 + £290m + £325m Reported net debt nextpay receivables 1200 1000 800 600 400 200 £m Jan Jan Jan Jan Jan 2016 2017 2018 2019 2020 (e)

Reported Net Debt & EBITDA Investment grade 2.0 Net debt to EBITDA ratio 1.5 1.3 1.2 1.1 NET DEBT 0.9 0.9 1.0 EBITDA 0.5 0.0 Jan Jan Jan Jan Jan 2016 2017 2018 2019 2020 (e)

Reported Net Debt, Lease Debt & EBITDAR Ratio Investment grade Declining lease commitment 3,000 2,000 - 26% 1,000 £m Jan Jan Jan Jan Jan 2016 2017 2018 2019 2020 (e) Reported net debt Lease commitments

Reported Net Debt, Lease Debt & EBITDAR Ratio Investment grade Declining lease commitment 3,000 3.0 2.55 2.49 2.46 2,000 2.38 2.5 2.36 TOTAL ‘DEBT’ EBITDAR 1,000 2.0 £m 1.5 Jan Jan Jan Jan Jan 2016 2017 2018 2019 2020 (e) Reported net debt Lease commitments Total ‘Debt’ to EBITDAR ratio (Net debt plus lease commitments)

Debt to Equity Yield Ratio (FTSE 100) Investment grade Declining lease commitment Cheaper debt 1.5 1.0 0.5 Corporate Bond Yield FTSE Dividend Yield 0.0 Jan Jan Jan Jan Jan 2016 2017 2018 2019 2020 (e) Source: Refinitiv datastream – FTSE Dividend Yield (FTSE 100 Dividend Yield), Corporate Bond Yield (iBoxx BBB 5-10 year Corporate Bond Yield)

Debt to Equity Yield Ratio (FTSE 100) Investment grade Declining lease commitment Cheaper debt 2.5 2.0 1.5 1.0 Corporate Bond Yield 0.5 FTSE Dividend Yield 0.0 Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Refinitiv datastream – FTSE Dividend Yield (FTSE 100 Dividend Yield), Corporate Bond Yield (iBoxx BBB 5-10 year Corporate Bond Yield)

Going forward… How should we fund consumer receivables? £1 85p debt growth in funded 15p equity by consumer receivables Subject to profit performance

Online Retail Finance

Online

Online : Sales Analysis £m July 2019 July 2018 Full Price Total sales 1,005 892 + 12.6% + 11.9% Operating profit 177 163 Full price sales analysis Increase on last year NEXT Brand UK + £17m + 4% LABEL * + £41m + 26% UK total + £58m + 9% * Now includes longstanding third-party brands sold in our Home division, historically reported within NEXT

Online : Sales Analysis £m July 2019 July 2018 Full Price Total sales 1,005 892 + 12.6% + 11.9% Operating profit 177 163 Full price sales analysis Increase on last year UK total + £58m + 9% Overseas + £36m + 21% Total + £94m + 12%

Online : Sales Analysis £m July 2019 July 2018 Full Price Total sales 1,005 892 + 12.6% + 11.9% Operating profit 177 163 Customer growth Full price Average sales customers + 11% UK total + 9% Overseas + 21% + 25% Total + 12% + 14%

Online : Sales Analysis £m £m July 2019 July 2018 Full Price Total sales 1,005 892 + 12.6% + 11.9% Operating profit 177 163 Customer growth Full price Average sales customers + 2% + 5% UK credit UK cash + 30% + 25% UK total + 9% + 11%

Online : Profit Analysis £m July 2019 July 2018 Full Price Total sales 1,005 892 + 12.6% + 11.9% Operating profit 177 163 + 8.4% 17.6% 18.3% % to sales Margin movement Bought-in gross margin - 0.1% Markdown - 0.1% Achieved gross margin - 0.2%

Online : Profit Analysis £m July 2019 July 2018 Full Price Total sales 1,005 892 + 12.6% + 11.9% Operating profit 177 163 + 8.4% 17.6% 18.3% % to sales Achieved gross margin - 0.2% Warehouse & distribution Warehouse & distribution - 0.9% - 0.4% International Catalogues & photography + 1.2% - 0.3% Capacity & ASP* Cost of living - 0.2% Marketing & systems - 1.0% Central costs + 0.2% Margin movement - 0.7% * ASP – average selling price

Retail Gloucester Quays

: Profit Analysis Retail £m July 2019 July 2018 Full Price Total sales 874 925 - 5.5% - 3.9% Operating profit 56 73 - 23.5% 6.4% 7.9% % to sales Margin movement Bought-in gross margin + 0.2% Markdown 0.0% Stock loss - 0.1% Achieved gross margin + 0.1%

: Profit Analysis Retail £m July 2019 July 2018 Full Price Total sales 874 925 - 5.5% - 3.9% Operating profit 56 73 - 23.5% 6.4% 7.9% % to sales Achieved gross margin + 0.1% Store payroll 0.0% Store occupancy - 1.2% Warehousing & distribution - 0.4% Margin movement - 1.5%

Retail : Space July 2019 July 2018 + 1.0% Full price sales from new space £m Full Price Changes in store sq. ft. as at Jan 2020 (e) Total sales 874 925 - 3.9% No. of stores Sq. ft. 56 73 - 23.5% Operating profit 10 + 260k Mainline relocations Observed transfer of trade 25% (140k) (6) Mainline closures (2) (20k) Clearance stores + 100k

Retail : Space 2020 rent negotiations Full year estimate 37 Stores - 28% Average rent reduction* 4.2 years Term 26% Average profit * Includes amortisation of unspent capital contributions or rent free periods over the lease length

Retail : Space Sheffield relocation The Moor Fargate 18,700 sq. ft. 4,200 sq. ft. Rent 100 60 (after concessions) Rent 100 (indexed)

NEXT Finance

NEXT Finance : Sales & Profit Analysis £m July 2019 July 2018 Interest income 134 122 + 9.9% Avg. receivables + 5.2% Bad debt (19) (26) balance 1% APR + 4.7% Overheads (21) (18) increase Cost of funding (18) (17) Profit 76 61

NEXT Finance : Sales & Profit Analysis £m July 2019 July 2018 Interest income 134 122 + 9.9% Bad debt (19) (26) - 25.9% Overheads Overheads (21) (18) (£3m) Prior year provision growth Cost of funding Cost of funding (18) (17) (£4m) Improved recovery of defaulted debt Profit Profit 76 61 Decrease in bad debt charge (£7m)

NEXT Finance : Sales & Profit Analysis nsights £m July 2019 July 2018 Interest income 134 122 + 9.9% Bad debt (19) (26) - 25.9% Overheads (21) (18) Cost of funding (18) (17) Profit 76 61 + 24.6% 15.3% 14.2% Annual return on capital employed* * Figures exclude cost of funding and are for the year to Jan 2020 (e) and Jan 2019

Insights NEXT Finance Customer maturity Risk profile Customer growth