Next Plc · LSE:NXT
Next — FY2010 Earnings Presentation
54 slides from Next's earnings presentation, 2010
Slide 1: Introduction
Introduction
Slide 2: Income Statement
Income Statement £m 2010 2009 Revenue 3,406 3,272 +4% Operating profit 530 478 +11% Interest (25) (49) Profit before tax 505 429 Taxation (141) (127) Profit after tax 364 302 EPS 188.5p 156.0p
Slide 3: Income Statement
Income Statement £m 2010 2009 Revenue 3,406 3,272 +4% Operating profit 530 478 +11% Interest (25) (49) Onetax Profit before Offs 505 429 Taxation Increase to profit (141) (127) Decrease to profit Extra (53rd) week £7m London Olympics £5m Profit after tax 364 302 NSL provision £2m Int‘l goodwill £2m
Slide 4: Income Statement
Income Statement £m 2010 2009 Revenue 3,406 3,272 Operating profit 530 478 Interest (25) (49) Profit before tax 505 429 TaxationDebt Balance (141) £750m (127) Average Profit after tax 364 302 £500m EPS 188.5p 156.0p Rate Rate 5.0% 6.3% 2010 2009
Slide 5: Income Statement
Income Statement £m 2010 2009 Revenue 3,406 3,272 +4% Operating profit 530 478 +11% Interest (25) (49) Profit before tax 505 429 +18% Taxation (141) (127) 28.0% 29.5% Profit after tax 364 302 EPS 188.5p 156.0p +21%
Slide 6: Income Statement
Income Statement The Times, 20th April 2009 £m 2010 2009 Revenue 3,406 3,272 Operating profit 530 478 Interest (25) (49) Profit before tax 505 429 +18% TaxationDebt Balance (141) £750m (127) Average 28.0% 29.5% Profit after tax 364 302 £500m EPS 188.5p 156.0p +21% Rate Rate 5.0% 6.3% 2010 2009
Slide 7: Balance Sheet
Balance Sheet £m 2010 2009 Fixed assets 582 617 Goodwill 47 55 Stocks 309 319 - 3% Debtors 617 623 - 1% Creditors (886) (842) Derivatives 4 66 Pension fund deficit (50) (69) Buyback commitments (90) - Net debt (400) (629) Net assets 133 140
Slide 8: Balance Sheet
Balance Sheet £m 2010 2009 Fixed assets 582 617 Goodwill 47 55 Stocks 309 319 Debtors 617 623 - 1% Directory Debtors January 2010 January 2009 + 5.0% £484m £461m Sales increase + 7.0%
Slide 9: Balance Sheet
Balance Sheet £m 2010 2009 Fixed assets 582 617 Goodwill 47 55 Stocks 309 319 Debtors 617 623 Creditors (886) (842) + 5% Derivatives 4 66 Pension fund deficit (50) (69) Buyback commitments (90) - Net debt (400) (629) Net assets 133 140
Slide 10: Cash Flow
Cash Flow £m 2010 2009 Profit before tax 505 429 Depreciation / impairment 136 123 Capital expenditure (99) (121) Acquisitions - (14) Working capital / other 13 (18) Dividends paid (109) (107) Tax paid (115) (126) Share buybacks (102) (55) Net cash flow 229 111
Slide 11: Cash Flow
Cash Flow £m 2010 2009 Profit before tax 505 429 Depreciation / impairment 136 123 Capital expenditure (99) (121) £121m £99m £19m Warehouse / other £20m £102m Stores £79m NEW EXT REFITS NEW REFITS £46m £7m £26m £60m £42m Jan 10 Jan 09
Slide 12: Cash Flow
Cash Flow £m 2010 2009 Profit before tax 505 429 Depreciation / impairment 136 123 Capital expenditure (99) (121) £121m £34m £99m Warehouse / other £20m £87m Stores £79m NEW EXT REFITS NEW EXT REFITS £46m £17m £24m £46m £7m £26m Jan 11(e) Jan 10
Slide 13: Cash Flow
Cash Flow £m 2010 2009 Profit before tax 505 429 Depreciation / disposals 136 123 Capital expenditure (99) (121) Acquisitions - (14) Working capital / other 13 (18) Dividends paid (109) (107) Tax paid (115) (126) Share buybacks (102) (55) Net cash flow 229 111 Operational cash flow 331 166
Slide 14: Cash Flow
Cash Flow £m 2010 2011(e) Profit before tax 505 Depreciation / disposals 136 Capital expenditure (99) (121) Acquisitions - Working capital / other 13 (70) Dividends paid (109) (132) Tax paid (115) (150) Share buybacks (102) Net cash flow 229
Slide 15: Debt and Facilities
Debt and Facilities Net debt 2010 £295m £800m 2013 Bank Sept 2010 peak(e) £600m January 2011(e) £255m 2013 Bond Inc. completed buybacks £320m £250m 2016 Bond Net debt Facilities
Slide 16: Cash Generation and Buybacks
Cash Generation and Buybacks Shares purchased since 4th Jan 2010 Cash used £190m Share Price Earnings Dividend £20 enhancement saving(e) £190m of Buybacks 5.0% 9.5m shares £6.8m
Slide 17: Dividends
Dividends Jan 2011(e) Jan 2010 Jan 2009 +20% 66p 55p At least 10% COVER COVER increase 2.8x 2.8x Retail average 2.4x FTSE 100 average 1.8x
Slide 18: Retail
Retail
Slide 19: Retail
Retail £m 2010 2009 Revenue 2,274 2,198 + 3.5% Operating profit 324 289 + 12.2% % to revenue 14.2% 13.1%
Slide 20: Retail
Retail £m 2010 2009 52 v 52 Revenue 2,274 2,198 ++2.0% 3.5% Operating profit 324 289 + 12.2% % to revenue 14.2% 13.1%
Slide 21: Retail: Sales Analysis
Retail : Sales Analysis £m 2010 2009 52 v 52 Revenue 2,274 2,198 ++2.0% 3.5% Operating profit 324 289 + 12.2% % to revenue 14.2% 13.1% Sales Analysis Inc. Directory 52 week full price LFL + 0.5% + 1.7% Net sales from new space + 3.2% 52 week full price sales + 3.7% Impact of extra week + 1.5% Markdo
Slide 22: Retail: Profit Analysis
Retail : Profit Analysis £m 2010 2009 Revenue 2,274 2,198 + 3.5% Operating profit 324 289 + 12.2% % to revenue 14.2% 13.1% Margin Movement FX impact - 5.0% Better sourcing + 3.7% VAT reduction + 0.5% Lower freight + 0.4% Bought in gross margin - 0.4%
Slide 23: Retail: Profit Analysis
Retail : Profit Analysis Index £m 2010 2009 89 100 Revenue 79 2,274 2,198 + 3.5% Operating profit 324 289 + 12.2% Brand surplus stock % to revenue 14.2% 13.1% 2010 2009 2008 Margin Movement Bought in gross margin - 0.4% Markdowns + 1.4% Achieved gross margin + 1.0%
Slide 24: Retail: Profit Analysis
Retail : Profit Analysis £m 2010 2009 Revenue 2,274 2,198 + 3.5% Operating profit 324 289 + 12.2% % to revenue 14.2% 13.1% Margin Movement Achieved gross margin + 1.0% Rent 0.0% Rates - 0.1% Depreciation - 0.1% Utilities & other + 0.5% Occupancy + 0.3%
Slide 25: Retail: Profit Analysis
Retail : Profit Analysis £m 2010 2009 Revenue 2,274 2,198 + 3.5% Operating profit 324 289 + 12.2% % to revenue 14.2% 13.1% Margin Movement Achieved gross margin + 1.0% Occupancy + 0.3% Branch payroll 0.0% Warehouse & distribution + 0.5% Overheads / other - 0.7%
Slide 26: Retail: Space Expansion
Retail : Space Expansion Stores Sq Ft (k) January 2009 510 5,506 New Mainline 11 83 New Home 9 104 Re-sites (11) 0 89 Extensions (10) 0 26 Closed (13) (45) January 2010 517 5,763 + 4.7% New Store Performance Mainline Home Total Performance vs target + 15% + 43% + 20% Payback (months) 12 14 13 Net br
Slide 27: Retail: Space Expansion
Retail : Space Expansion Stores Sq Ft (k) New Mainline 8 70 New Home 12 150 Re-sites (11) (1) 70 Extensions (12) 0 50 January 2011(e) 536 6,103 + 5.9% January 2010 517 5,763
Slide 28: Directory
Directory
Slide 29: Directory: Sales Analysis
Directory : Sales Analysis £m 2010 2009 Revenue 873 816 + 7.0% Operating profit 184 158 + 16.4% % to revenue 21.0% 19.3% Sales Drivers 2010 2009 Active customers 2.28m 2.20m + 3.6% Printed pages 3,968 3,960 + 0.2%
Slide 30: Directory: Sales Analysis
Directory : Sales Analysis £m 2010 2009 52 v 52 Revenue 873 816 ++5.0% 7.0% Operating profit 184 158 + 16.4% % to revenue 21.0% 19.3% Sales Drivers 2010 2009 Active customers 2.28m 2.20m + 3.6% Printed pages 3,968 3,960 + 0.2%
Slide 31: Directory: Profit Analysis
Directory : Profit Analysis £m 2010 2009 Revenue 873 816 + 7.0% Operating profit 184 158 + 16.4% % to revenue 21.0% 19.3% Margin Movement Bought in gross margin - 0.4% Markdowns + 0.9% Achieved gross margin + 0.5%
Slide 32: Directory: Profit Analysis
Directory : Profit Analysis £m 2010 2009 Revenue 873 816 + 7.0% Operating profit 184 158 + 16.4% % to revenue 21.0% 19.3% Margin Movement Achieved gross margin + 0.5% Bad debt reduction + 0.7% Service charge - 0.3% Book creation / marketing + 0.7% Warehouse & distribution + 1.0% Other - 0.9%
Slide 33: International (NextDirect.com)
International (NextDirect.com) 1. Direct trading in 36 countries 2. Delivery operations robust 3. Advantages over Retail • Low start up costs • Low fixed overheads • Central stock location • Scalability Turnover Turnover(e) 2009/10 2010/11 £2.5m £7.0m
Slide 34: International
International £m 2010 2009 Revenue 64.2 68.6 - 6.4% Operating profit 1.2 9.0 - 87.4% % to revenue 1.8% 13.2% Trading Operating Profit profit One offs profit 2010 International 6.1 -4.9 1.2 Franchise partners LFL sales - 7% Central Europe LFL sales - 14% Poor start for Scandinavian stores
Slide 35: International
International £m 2010 2009 Revenue 64.2 68.6 - 6.4% Operating profit 1.2 9.0 - 87.4% % to revenue 1.8% 13.2% Trading Operating Profit profit One offs profit 2010 International 6.1 - 4.9 1.2 NextDirect.com* 0.8 - 1.3 - 0.5 Total 6.9 - 6.2 0.7 * Within Directory
Slide 36: International
International £m 2010 2009 Revenue 64.2 68.6 - 6.4% Operating profit 1.2 9.0 - 87.4% % to revenue 1.8% 13.2% Operating Operating Profit profit 2010 profit 2011(e) International 1.2 6.0 NextDirect.com* - 0.5 1.4 Total 0.7 7.4 * Within Directory
Slide 37: Sourcing
Sourcing £m 2010 2009 USD Intra-group sales 534.0 600.7 - 11.1% - 23.4% Operating profit 35.7 32.0 + 11.5% Increased competition Lower commission income Includes £2m profit share release 2010/11(e) profits circa £30m
Slide 38: Ventura
Ventura £m 2010 2009 Revenue 145.6 161.9 - 10.1% Operating profit 6.0 5.1 + 19.1% % to revenue 4.1% 3.1% Profits up and ahead of expectations Contracts renewed and new business won Expect some sales and profit growth in 2010/11
Slide 39: Other
Other £m 2010 2009 Lipsy 0.1 (1.4) Property 0.3 0.8 Associates 0.9 0.9 Group / other (22.0) (14.5) Total (20.7) (14.2)
Slide 40: Lipsy
Lipsy £m 2010 2009 Part year Sales 27.8 8.3 Profit 0.1 (1.4) Profit includes £400k of integration costs
Slide 41: Lipsy
Lipsy £m 2010 2009 Part year Sales 27.8 8.3 Profit 0.1 (1.4) Profit includes £400k of integration costs 13 stores open
Slide 42: Lipsy
Lipsy £m 2010 2009 Part year Sales 27.8 8.3 Profit 0.1 (1.4) New Store Performance Performance v target + 6% Payback (months) 21 Net branch contribution 15%
Slide 43: Lipsy
Lipsy £m 2010 2009 Part year Sales 27.8 8.3 Profit 0.1 (1.4) 11 stores planned for 2010/11 2010/11(e) profits circa £2m
Slide 44: Other
Other £m 2010 2009 Lipsy 0.1 (1.4) Property 0.3 0.8 Associates 0.9 0.9 Group / other (22.0) (14.5) Total (20.7) (14.2)
Slide 45: Outlook
NeXt "OUTLOOK r YEAR END STATEMENT JANUARY 2010
Slide 46: Better Than Expected...
Better Than Expected... Jan’08 Jan’10 NO. OF EMPLOYED 2.5m 29.4m DOWN 500K +51% -1.8% NO. OF UNEMPLOYED UP 900K 28.9m BENEFITS UP MORTGAGE COSTS DOWN Source: HM Treasury 1.6m
Slide 47: BUT... Interest Rates Annualise
BUT... Interest Rates Annualise Average Mortgage Interest Rate 8% 6% 4% 2% 0% JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL SEP NOV JAN 2008 2009 10 Source: Bank of England
Slide 48: THE CHALLENGE... Gov't Debt
THE CHALLENGE... Gov’t Debt Tax Spending Job increases? cuts? losses?
Slide 49: Quarterly Retail Full Price LFLs
Quarterly Retail Full Price LFLs* Tougher comparisons going forward + 4.0% Q1 Q2 Q3 Q4 -0.2% -0.3% -2.4% * Excluding VAT
Slide 50: Next Sales Outlook for 1st Half
Next Sales Outlook for 1st Half LFL Retail (VAT inc)* - 1.5% to + 1.5% Total Retail (VAT inc) + 1.5% to + 4.5% Directory (VAT inc) + 2.0% to + 5.0% * Like for like sales excluding Direct sales
Slide 51: Next Sales Outlook for 1st Half
Next Sales Outlook for 1st Half LFL Retail (VAT ex)* - 2.5% 1.5% to + 0.5% 1.5% Total Retail (VAT ex) ++0.5% 1.5% to to ++ 3.5% 4.5% Directory (VAT ex) + 1.0% 2.0% to + 4.0% 5.0% * Like for like sales excluding Direct sales
Slide 52: Annual Sales and Profit Scenario
Annual Sales and Profit Scenario (NOT forecast!) IF..... Annual LFL Retail (VAT ex) - 2% Annual Total Retail (VAT ex) Flat (52 vs 53) Annual Directory (VAT ex) Flat (52 vs 53) THEN… Group profit +7% circa ~ £540m + 1%
Slide 53: Year End Statement
Year End Statement Better design Growth opportunities Good cost control Strong cash generation • New product development • Profitable new space • Increase UK Directory sales • NextDirect.com • 5% EPS growth (buybacks) • 10%+ dividend increase
Slide 54: Year End – In Summary
Year End – In Summary In summary Continued progress expected in an uncertain environment