Chairman's Statement

The year to January 2015 was a good year for NEXT. Underlying Earnings Per Share (EPS) grew by 15% to 420p and we propose to increase our total full year ordinary dividend by 16% to 150p. This is the sixth consecutive year that our EPS and ordinary dividend have grown by 15% or more.

Sales for NEXT Directory, our online and catalogue business, increased by 12% and NEXT Retail by 5%. Total Group sales rose 7% and reached £4 billion for the first time.

Our share price rose by 14% during the year, from £62.80 to £71.50. As a result of the increase we did not buy back as many of our own shares as in previous years. Instead we returned surplus cash to shareholders through special dividends. Cash flow remained strong and we returned £572 million to shareholders through a combination of dividends (£434 million) and buybacks (£138 million). We paid another special dividend of 50 pence per share in February and have since announced a further special dividend of 60 pence, to be paid in May. We will continue to undertake buybacks but only when it would give an effective return on the cash expended of at least 8%.

Returning cash to shareholders has not been at the expense of investment in the business nor has it increased our net debt, which ended the year at the same level as last year. NEXT Retail continues to invest in new, often larger, stores. NEXT Directory continues to increase its active customer base, it now delivers to 71 countries and has a growing business in the sale of third party branded products through the LABEL. We are also increasing our warehouse capacity and improving our distribution capabilities.

We have had a number of changes to the Board. Christos Angelides left the Company in September after 28 years' service. Christos was a very able and effective Director and we wish him well in his new endeavours in the United States. David Keens, who has been with NEXT for 29 years and our Finance Director for 24 years, retires from the Board in April. David has seen many changes over that time and has been an outstanding guardian of our finances. Our financial position today is testament to his diligence and hard work. I am delighted that Amanda James, our Brand Finance Director, will succeed him on the Board.

Jonathan Dawson, our Senior Independent Director, is leaving the Board in May. Jonathan has made a major contribution as a non-executive. I would like to thank him for the wise counsel which he has given both me and the Board over the last ten years. Francis Salway will replace Jonathan as the Senior Independent and Caroline Goodall will become Chairman of the Remuneration Committee.

Finally, I am pleased that Dame Dianne Thompson has joined us as a non-executive Director. She has had a long and distinguished career with Camelot and is a good addition to our Board.

The continued success of NEXT is built on the hard work and dedication of our management team and all the people who work for NEXT. I would like to thank them all for their contribution during the year.

2015 will bring new challenges and opportunities. Our strategy will remain the same, focussed on our products, our profitability and returning cash to our shareholders.

John Barton signature

John Barton

Chairman