Chairman's Statement
The year to January 2012 finished well for NEXT. Underlying earnings per share before exceptional profits grew by 15% to 255.4p. An excellent result in a year when the UK economy, our largest market, has struggled for growth.
During the year we continued the rapid growth of our online business both in the UK and overseas through NEXT Directory, which now accounts for 32% of group sales and 44% of operating profits. We believe that part of this success is due to our NEXT Retail store network and the ability of the two businesses to work together and support each other. Accordingly, during the year we continued to invest in our stores, upgrading and expanding where opportunities presented themselves. In particular, we now have 43 Home standalone stores and will continue to grow the Home business, which will give us a more significant share of this market as the UK economy recovers.
Cash generation remains strong. We continued our programme of share buybacks, buying 12.5 million shares at an average cost of 2321p. During the year we returned £425 million to shareholders in share buybacks and dividends.
We are proposing to increase the full year dividend by 15% to 90p, in line with the increase in earnings per share. This means a higher increase in the final dividend. However, we propose to pay the final dividend one month later to coincide with the peak in our Summer trading cash flows.
We have renewed our medium term bank facilities, issued a new 10 year £325m bond and bought in £158 million of the existing bonds. This leaves the group well financed for the future.
The key ingredient of our success is the stability and effectiveness of our management teams across the group. They have had a successful year and I would like to thank them for their contribution towards this performance.
During 2011 our share price and dividend performance ranked Next as the second best performing FTSE100 Company of the year. It is worth noting that over the last three years our earnings per share have grown at an annual compound rate of 18%.
Next year will bring its own challenges, particularly as growth in the UK will remain sluggish. We continue to believe that we will deliver growth by investing in the Brand, improving our products and managing the business well.
John Barton
Chairman
