Good morning, everybody, and welcome to the Next results. In the presentation this morning, Simon will talk about surpassing a profitability milestone. In fact, if you read the press this morning, it was the headlines and the first two things that I saw. What that really should mean for Next and its 40,000 employees. In general, the most widely held view is that when companies become bigger, they change, and generally the change is for the worse as they discard some of the behaviors that brought them success to date. Some of the well-known comments: companies become more bureaucratic, are more control-focused, less entrepreneurial, resist change, more risk-averse, et cetera. The list of negative behaviors can go on. With respect to Next, we have been evolving as a company for a long period of time, and we will continue to evolve as a company, and we continue to change. We will do that best by continuing the behaviors which have brought us success to date. Those practices, you've probably read this, it was both in the public domain and certainly is inside of Next, the six rules for running a successful business. They've been laid out very clearly by our management team, our leadership team, and these six rules are: take decisions and make things happen, change is everyone's job, create value and make a profit, keep it simple and speak in simple English, be open, honest, and considerate in your dealings with others, and finally, be demanding but never nasty. These rules don't guarantee success, but in my opinion, surely make it a lot more likely. Simon, over to you. Good morning, everybody. Welcome. First of all, Chairman, thank you for that impromptu start. It just shows what an innovative place Next is because the Chairman did not say he was going to say any of that. I agree with every word of it, genuinely. A good year, group sales up 8.2%. That number is obviously flattered by the acquisition of an increased stake in Reiss and the acquisition of FatFace. Just to remind you, in all of the profit and loss numbers that we will be talking about, we will allocate our sales and profit in proportion to the percentage of the subsidiary businesses that we own. If we own 70% of Reiss, we will report 70% of their turnover, 70% of their profit. We think that is the best way of reflecting the value that we own in their business and the success of the group. It is those percentages that have pushed that 8.2% up from 5.7% total sales growth, 5.8% on a full-price basis. In terms of how that breaks down in the U.K., retail down 1.1%, online up 5.4%. We are still continuing to see drift from retail into online, but nothing like the pace that we expected this year. We expected minus two, and we think that has reached a sort of a level now. Not that it will continue, but we do not expect that to go back to the minus sixes and minus tens that we were experiencing in the first half of the structural shift. In terms of international, international up 24.6%. The vast majority of the change in our performance, we think, was driven by marketing. Just in terms of how we performed versus our expectations, you can see there retail did do better, but not much better than we were expecting. Online in the U.K., better, largely driven by non-Next brands, and we'll come on to that later. Online international was where we really saw a big step forward in growth, driven by marketing, which we'll talk about a bit more later on. Total profits before tax up 10.1%. Slight nudge forward in the margin, and I'll be going through the margins business by business when we go through the detail. Just in terms of quality of earnings, and this is just focusing on the non-cash, non-recurring items that are within the P&L. I just want to kind of reassure you that they kind of balance out. We have got bad debt provision, release of GBP 10 million, foreign exchange gain of GBP 2 million, offset by the impairment of our investment in Jojo Maman Bébé, which I have been practicing saying and still gotten slightly the wrong order. That business did not make a profit this year, so we chose to write off our investment. Now, we are hopeful that it will get back into a profit, but that is a hope rather than a certainty. In terms of profit after tax, up 8.5%, and the erosion in profits caused by increase of tax made up for on a post-tax basis through buybacks enhancing earnings per share back up to near the 10% level. Ordinary dividend up 12.6%. The reason that is risen faster than earnings per share is all about the timing of buybacks. The actual sterling amount we paid out in dividend is still on a ratio of 2.8 to profits. In terms of cash flow, and unlike the P&L, I'm going to talk about the cash flow and balance sheet on a consolidated basis. If we own more than 51% of a business, we will show all of its cash flows and all of its assets in these two sections. The reason we've done that is because actually disentangling it is extremely difficult and it doesn't provide any particular insight. We will do this on a consolidated basis. Profit for tax up GBP 93 million. Depreciation and amortization up GBP 20 million. The lion's share of that, you can see, is the new mechanization in [audio distortion] three, but a good amount of IT amortization beginning to hit the balance sheet now as we begin to pay for the increase in CapEx on our modernization program. In terms of CapEx in the year, down GBP 16 million. To put that in context, we've seen a big sort of fall off in CapEx over the last three years. The GBP 151 million was a little bit less than we were expecting. We were expecting to spend GBP 161 million at the beginning of the year. That is for two reasons. One good reason, one timing. In terms of CapEx on systems, that reduced by GBP 8 million, and that's all to do with the fact that we are getting better value now for the systems work that we're doing. Some of our modernization programs have not cost as much as we thought they might. The GBP 6 million in warehousing really is about the timing of the replacement of our fleet. That really is a timing issue, and that will come into next year's—I saw a van fleet, I should say—that will come into next year's CapEx numbers. Looking forward to next year, you can see we have got an increase of GBP 28 million. Pretty much all of that increase comes in stores. The increase there is not because we're spending more maintaining our shops. Our maintenance CapEx is about the same as last year. It's all about increasing space where we have, I think there are two things that are happening here. First of all, we haven't really been looking for new space for the last seven years. There are some towns and locations where previously we've not thought we could have a Next, and we now think we can, partly supported by the evidence of what we're taking online in those regions, and partly as a result of opportunities to move and improve the size of stores that we've got. We have 12 new locations, six re-sites. In terms of the portfolio that we plan to open in the year ahead, we've still set our target of 24-month payback on CapEx invested in stores and our hurdle rate of 19% net branch contribution. The appraisals for these stores are 23-month payback and 19% net branch contribution. It is the first time in earnest we've opened a lot of new space. If you want to look at a sort of downside risk number in this presentation, I would say that is the one that I'm most nervous about. It's a long time since we've opened this much new space. The number there neatly is a bit of a cheat because it excludes one store, which is Thurrock. Just to explain, in Thurrock, we're spending GBP 19 million. A lot of that cost is a new shop fit concept. We haven't refreshed our shop fit concept for over 10 years. There are a lot of one-off and design costs in this store that weren't there, that won't be there going forward. The return on that store is the payback is so embarrassing that I put it as an IRR of 14%, which is not a disaster, but not anything like what we would expect from stores going forward. It is mitigated by the fact that the lease structure in Thurrock is turnover related. So the risk on that 14% is much lower than we would take in a normal upward-only rent review situation. In terms of working capital, working capital increase of GBP 92 million. Part of that is payments for the previous year's staff incentives, but a big part of it is GBP 50 million of stock, GBP 50 million more cash flowing into stock. And I'm going to talk about stock a little bit more when we get to the balance sheet. Surplus cash down GBP 15 million. Ordinary dividends at 2.8x cover, which we intend to maintain going forward. Big increase in buybacks driven by the fact that we haven't made any significant investments during the year. Net cash flow of GBP 40 million, inflow and GBP 97 million last year. That retention of that surplus cash needs to be taken in the context of the group's debt, which I'll cover as we go through the balance sheet. Investments on the balance sheet down GBP 27 million. This is all about amortization. Stock up GBP 100 million. That represents an increase of 13% and 2.3 weeks cover. Two things happening here. First is at this point last year, the effect of Suez hadn't fully flown through into our buying. This reflects the sort of annualization of the extra two weeks it's taking us to get stock around the continent of Africa. Partly also, we have increased our lead times in Bangladesh as a result of the political disruption, some floods that we had there. We thought it was towards October last year, we'd started to increase our lead times in Bangladesh. We have got more stock in the business. That increase is coming down. As we stand today, it's around 11%. I would expect it to work its way through the business and be more in line with sales as we approach the end of the year. Customer receivables, pretty much up in line with credit sales. Data days, this is interesting. We call them receivable days now. Data days have negative connotations, so you're not allowed to do that. Receivable days, customers are still continuing to pay down their balances slightly faster, which is a positive thing for sort of consumer confidence. To sort of reinforce that, if you look at the observed default rate that we're now experiencing in our data book, it's at 2.6%. That is the lowest level of default rate that we've ever had as a business going back 30, 40 years. In terms of consumer debt, the book is in good shape, partly because it's not growing very much. Because it's in such good shape, we have released GBP 10 million of our bad debt provision, but we're still very comfortably, some might argue, too comfortably provided at 7.8%. We think we've achieved a happy balance. Say that for the benefit of the auditors in the room. The creditors up GBP 28 million. Partly, as we buy more stock, we owe more to suppliers. Label creditors, this is the stock that we sell on commission. We take the sales and then pass the sales to the brands, less our commission, and there's a gap in timing between when we receive the sales and when we pass it over. That's the label creditors and then staff incentives there as well. Pension surplus down. This is not a real number. This is a reflection of the buy-in process that we're going through, and we would expect that pension surplus figure to reduce to zero over the next couple of years as we work our way through the process of the buy-in and take that liability off our balance sheet. Liability and asset. Net debt down GBP 40 million, which leaves net debt at GBP 660 million at the beginning of this year. In terms of the year ahead, operational cash flow of GBP 884 million is what we're expecting. CapEx of GBP 179 million. Ordinary dividends in line with our forecast at 2.8x GBP 279 million. That would leave surplus cash of GBP 426 million. I'm going to do a little bit of a reverse Grand Old Duke of York here and talk the number down and then build it back up again. In our plans and the forecasts that we've given you, we have assumed that we will distribute GBP 316 million of cash, not the full surplus cash. The reason for that is that we want to be able to be in a position where we do not need to finance the GBP 250 million bond that becomes due in August. That will leave us in a position where at peak borrowing requirement, we still had headroom within our cash resources of GBP 200 million, which we think is comfortable. It's only for about two or three weeks as well that squeeze. We think that's a comfortable position for the business to be in. However, we may well choose to either refinance the bond, extend our RCF, do a private placement, and increase the cash resources in one of those three ways. At this point, particularly with the volatility and pricing in the bond market, we don't want to commit ourselves to any of those things, not least because the market will see us coming and we don't think we'll get as good a price as we can. If we are able to add to our cash resources, then we will return to distributing our full surplus cash at around GBP 425 million. Net assets up GBP 116 million. Pretty much all of that is stock. In terms of the divisional analysis, starting with retail, retail was down 0.9% total sales. Full price sales down a little bit more than that. Like for like down 1.2%. Profit down 3.2%. Margin erosion of 0.3%. Whilst retail is still delivering a good profit and this year we expect to expand space, it is still a business that is treading water at best. We did have a slight decline last year. Bought-in gross margin up 0.4%. This is across the whole Next brand. This, in essence, is the reflection of price rises needed to pay for the 10% increase in national living wage last year. Markdown and adverse move into 0.8%. That is all about the fact that last year we had unusually low levels of stock for our end of season sales overall, and this year it has returned to more normal levels. Warehouse and distribution flat. That is two competing things that happen in there. First of all, our costs are going up with wage inflation, but we managed to save quite a few. We managed to find quite a lot of efficiency savings, particularly in our retail distribution network, which offset those. Payroll and adverse movement at 1%. That is all about national living wage going up by 10%. Store occupancy costs, positive movement here, not being driven by rent reductions actually, but being driven by lower energy costs and release of historical rates refunds. In terms of lease renewals, and we're talking here about sort of obviously cash cost of rents rather than the lease interest costs. We renegotiated 74 stores, average reduction of 16% in rent. This is much lower than the sort of 30% we've been talking about for the last three or four years. Interestingly, if you separate those portfolios into the 28 stores that had not been renegotiated since 2019, with those renegotiated afterwards, you can see two very different stories. What appears to be happening is that broadly, post 2019, rents have rebased to levels that are sustainable. There were plenty of rents within that portfolio that went down, and some where we got particularly good deals during COVID where they went up. Sort of stable rents post 2019 and still getting big savings on any legacy rents that had not been negotiated since 2019. If we look forward to the year ahead, we're expecting around a 9% reduction in occupancy costs at around GBP 2 million. Actually, one other point there is the average lease term we're taking on new stores in the year ahead will be around four years. We're still not extending our liability terms. Total margin down 0.3. Looking forward to next year, we expect negative like for likes of 2%, total sales down 0.3%, and margins to rise by a further 1.3%. In terms of the driver of that margin erosion, the lion's share of it is coming from wage inflation and national insurance. Obviously, the reduction in like for likes pushed occupancy costs up as a percentage of sales, slightly offset by the margin gains from price increases of 1%. In terms of online, now online in the past, we have talked of as one business. In terms of that one business, our online business sales are up 9.8%, total profit up 13.3%. This is going to be very exciting for you as analysts, and I hope you appreciate this, that actually reporting the whole of the online business is a bit misleading because there are two very different businesses sort of under the bonnet. A U.K. business, which sells a lot of third-party brands, and an overseas business, which is much more dominated by Next, which is growing much faster. We are going to share with you both separate businesses in terms of margin walk forward and treat them separately. That is the good and exciting news. The bad news is we are going to drop the finance section, which you can take as read, which is in detail described in our CEO report, but you will not have the pleasure of listening to it being described in its minutiae here today. Starting with the U.K., total full price sales in the U.K. are up 5.4%. In terms of the participation of sales, what is really noteworthy here is just how much of the business now on our U.K. platform is not Next branded. You can see that 42% is non-Next branded. Of the non-Next branded stock, of the 42% that's non-Next branded, 8% is wholly owned. This is where we're making full margin, either because we're licensing somebody else's brand or because we own or have started or have bought a brand. Of the 34%, 4% of that, 4% of the total is represented by subsidiary companies in which we have an interest. It's not quite, although the third-party brands are not Next brands, they're not quite as alien from the group as it first appears when you look at the 42%. In terms of growth, what you can see here is that the non-Next branded part of the business is growing faster than the Next branded part of the business. That's what you would expect. That's where the newness is. In terms of that growth, wholly owned brands are growing slightly faster than Next, but the real star performer this year was the third-party brands. We have been on a bit of a journey on third-party brands over the last sort of two years. Two years ago, we weeded out a lot of the unprofitable items on our website and unprofitable brands. These were items basically that were high returns rates and low selling price, and therefore on an item-by-item basis were not making a profit. It took us a while, being honest, to work that out. We weeded out all of those, which meant that sales last year in label were suppressed. This year, we focused on improving the mix and stock availability of the brands that we sell well. The lion's share of that 9.8% comes from that improvement. In addition to that, 3.7% of the 9.8%, 3.7% of that growth came from brands that we had moved onto Total Platform. To give you a sense of that, the brands like FatFace, Reiss, Joules, the brands that we moved onto Total Platform experienced a 41% increase in sales on our website as a result of consolidating the stock that they were using to service their website with the stock that they were using to service our website. That bigger stock pool meant that both businesses ended up with better stock availability, and they benefited enormously from much better trade on our website as a result of the stock being in our warehouse. Profit up 8%. Margins moving forward online. Just to sort of go through that, the margin on Next- branded stock is up only 0.1%. So really no change in the Next branded stock margin. The increase has all come through label. I'm going to sort of break that down further. What you can see here is that the third-party brands did increase their margin by 1.4%. That's really the tail end of the process of weeding out the least profitable brands and items. The big increase came in our wholly owned brands and licenses, which was mainly about margin, bought in gross margin. What I'm now going to do is it's going to involve a little bit of mental gymnastics. Watch the screen carefully as I'm going to change the columns and rows and walk the margins of both parts of the business forward line by line. You see this is the journey from Next brand from 19.9% to 20% and label from 12.8% to 14.1%. The big difference is the bought in gross margin. The Next product like retail grew by 0.4%. The label business grew by 1.1%, mainly driven by what is unfortunately referred to as Wobble, which is the wholly owned brands and licenses, where particularly with the wholly owned brands, as those businesses begin to gain scale, they're getting much better prices for the product that they're buying from suppliers. And as importantly, beginning to get leverage over the fixed costs of the product departments that build the ranges. Markdown, we didn't experience the same erosion in label than we did in the Next brand. And that's all to do with the year-on-year stock comparisons being more favorable in label than they were in Next. Warehouse and distribution, pretty much a no score draw in the U.K. for the Next brand. This is where increased efficiencies are paying for higher operating costs or inflation operating costs. In label, the move forward again was weeding out those low-returning, low ticket price, high-returning items where you have very high distribution costs associated with sending out and bringing back cheap items. We've reinvested. I said respent is a better word. Sorry. We have spent the gains that we've made in bought in gross margin and warehousing. We spent on marketing, and we got a benefit from lower staff incentives in the reported year to the one in the year before. Looking at next year's forecast, assuming full price sales in the U.K. online are at 4.3%, we're expecting margins to edge forward by 0.2%. In terms of international, total sales up 25% on a full price basis. In terms of participation, third-party aggregators now accounting for 30% of our overseas trade and growing faster than the Next websites. The really important point for us here is that in the countries where we're doing well on aggregators, we can see no evidence of a slowdown in the growth on our own website. The two appear to be growing side by side. I think that's because we've got such a small market share in pretty much every territory that we trade in that the two businesses at the moment are not bumping into each other. In terms of participation by region, still, Middle East and Europe dominate our business overseas, and we haven't got a lot of traction in the very large markets that are further afield, whether that be Japan, China, India, America. The good news on that front is we are beginning to get growth there. You can see growth in Europe was 30%. The rest of the world wasn't far behind. That 27% growth in the rest of the world needs to be taken in the context of the previous four years where the business actually in those countries declined by 12%. We have begun to get a small amount of traction, but that is still, if you said to me, "What is the area I'm least happy with?" it is our ability to grow outside of the Middle East and Europe. We are looking at a number of partnerships and collaborations to improve that as the year goes forward, some of which we've talked about in the past, such as the collaboration with Myntra in India. In terms of the Middle East number, the Middle East number appears to stick out. That actually is really about the first half. First half, there was a degree of friction when we moved over to our new hub, which we think held back sales in the first half. You can see that sales in the second half in the Middle East were more in line with the other territories. In terms of profit, 36% increase in profit, 0.9% improvement in margin, the net margins of the business. More than all of that comes from bought in gross margins. There are a number of things going on. First of all, the 0.4 that we get across the Next brand. Secondly, duty savings, 1.9%. A lot of those savings are about being smarter about the way in which we import stock into territories, particularly in the Middle East, where the move to a new hub and the setting up of a domiciled country through which we sell to people in the Middle East meant that we were much more efficient in terms of the way that we pay duty. We are still paying duty, but we are doing it in a more efficient way. Price increases of 1% added 1% to margin. We did that in order to fund the marketing that drove growth. The mix of aggregators versus Next brand eroded margin by 0.3%. Markdown, we are beginning a lot of our websites, we do not actually put Markdown through the sites. We always hypothesize an obsolescence cost to the overseas sales, even if they do not have a sale, because if you are buying stock to do full price sales overseas, you have got to then clear that stock in the U.K., really want to allocate the cost of that clearance to the overseas businesses, which we do by giving them the cost of the obsolescence that they generate within the group. We are beginning, particularly through our hubs, to sell Markdown overseas in a way we have not done before. That boosts the top line, but it also erodes the margin. It does not actually affect the pound's profit much because we are gaining in sales pretty much what we are losing in margin. Warehousing and distribution, wage inflation eroded by 0.3%. Middle East and hub was more expensive, although we did get duty savings to offset those operational costs. We have got some efficiencies which have added 0.3%. Marketing, this is the big change overseas, that sort of 80-odd% increase in marketing expenditure, which I will talk about later when we go through the detail of the areas of growth. That accounts for the margin growth overseas. In terms of what we're expecting next year, we are still expecting some growth in margin next year, largely as a result of improved. As the volumes of these businesses grow, they get more leverage over their fixed overheads. That assumes that full price sales are 18% up. In terms of customer analysis, and here we're looking at all of our customers, international and U.K., but obviously excluding aggregators. The traditional mail order way of looking at customers, we have 8.6 million active customers at the moment. That's up 10% on last year. You can see that broken down by territory. That number, I think, is the best reflection of the people who you can honestly say are customers. Once people have traded nine months, 12 months ago, actually, technically, they're customers within the year, but you can't say that they're active because the chances of them trading again are much smaller once they haven't traded for six months. However, if you don't look at the total number that traded in the year, you end up with very misleading figures about sales per customer. If we just look at the numbers of individuals that traded with us in the year across all territories, 13.7 million, up 13%. You can see a big increase. The big increase there is overseas. In terms of sales per customer, pretty much flat, nudging up a little bit in the U.K., both in cash and credit. International, down 9%. That is what you would expect if you're going to grow your customer base by such a large amount. If you get a 34% increase in customers, the new customers always spend less than the established customers, which is what is driving down those sales per customers. We're not concerned about that. The other slightly misleading number here is you shouldn't look at that and go, "Oh my gosh, overseas, they take more on their cash overseas customers than they do on their cash U.K. customers." The cash U.K. customers are artificially depressed because the best ones convert to have a credit account, even if they don't use the credit. They use the try before you buy. The average figure in the U.K. is more like GBP 265 million. We have a long way to go overseas in terms of spend per customer if you compare it to spend per customer in the U.K. Moving on to Total Platform. This is sort of good news, bad news. Very good year that we have just had is the good news. Total profit up 79%. Equity profit up 97%. Two things going on there. Obviously, there is the additional profit that we have brought through buying the extra share in Reiss and FatFace. Then there is the underlying profit. The underlying profit, and this 30%, is the amount our profit from Total profit from equity would have made had we not bought those stakes in FatFace and Reiss. They would have been up 30%. That number, 30%, is hugely overstated because of the recovery of Joules. Joules, in its first year of operation, we had to do a lot of painful surgery there. That reversed out last year. If you take Joules out of the equation, underlying business profit were up around 10%, which we're happy with. If we look at the profit on the services that we charge through Total Platform to those clients, it was up 24%. In terms of how that profit comes about, the sales on the client's website, on which we charge commission, was up 31%. Income up 28%, so slightly lower margins, but still very respectable margins, 19.4% margin on what we charge the client and 6% margin on their sales. In terms of return on capital employed, and this is looking at the total return on all capital employed. That's the capital that we've used to buy the businesses, the capital that we have lent to the businesses, and a hypothesized figure for the capital required to build the infrastructure that Total Platform uses within our warehouses and systems. It is sort of as real a number as we can get. We think very healthy return on capital. That is all the good news. Fantastic last year. Next year, we are only forecasting a very slight increase in profits, about GBP 1.5 million. I have to tell you that if you're looking for caution in our numbers, that is a very cautious number. If I was to add up all the hopelessly optimistic, and some of them are in the room, all the encouragingly optimistic forecasts of the teams that run these businesses, it would have come to significantly more than GBP 78 million, or not significantly more than GBP 78 million. We have been very cautious about their estimates. It is partly as a result. There is a sort of thing where I think that businesses that have come out of private equity feel the need to put in much more aggressive budgets than necessary. They think that it is an instinct that is hard to fight, I have observed. Anyway, that assumes no new acquisitions. We may well make acquisitions. We may not. It is binary. What we have not done is bank on making those acquisitions. I realize that is kind of frustrating for investors because they would like a nice state. They would like to be able to say, "Well, every year, they're going to take on two deals, and it's going to add this much to profit." If we did that, we would end up buying businesses that we shouldn't. We are very clear. We are only going to buy businesses that are great brands where we can add value, where the price of those businesses is right and where they have great management teams, or we know of great management teams who can run it. If they do not fulfill those criteria, then we will not buy them. One slight sort of tweak to our Total Platform services is that for a long time, a lot of the people who have said they did not want to go the whole hog, they were not prepared to commit to the website call centers, basically surrendering all their operations to Next, were interested in just online warehousing and distribution. N ow we have extra capacity in our warehouse, we are looking at providing that as a service, partly because I think it can make a good return on the capital employed, although relatively small numbers, but also because we have seen through our work with Zalando and ZEOS, which I will come on to later, we have seen the huge benefit we can give clients through consolidating the stock that they have to service the label business with the stock that they have to service their own business. We think that that is a real selling point for this potentially new business. Do not expect any fireworks. We expect to have one very small client this year to get the system up and running to check we can do it. It will be next year before we have any meaningful clients through that business stream. In terms of guidance for the year ahead, slight upgrade here. Total full price sales, this is what we said, 3.5% for the year. We are assuming 3.5% first half and second half. We now think after the first eight weeks, which have been very encouraging, the first half is more likely to be up 6.5%, which is what we are budgeting, which takes the full year to 5%. We have not increased our second half forecasts. There will be those amongst you who are going, "Aha, that's Next up to their old tricks again." Be very wary of putting any optimism into the second half. We certainly are for two reasons. First of all, the comps get much stiffer. If we look at our guidance versus two years ago, you can see that pretty much first and second half are identical. Secondly, we think that as the year progresses, the impact of national insurance increases, a further squeeze on the U.K. employment market will begin to affect the consumer economy in a way that it isn't at the moment. That is the reason that we're being cautious in the second half, which at the moment, I think, is the right approach. That takes us on to 5% total growth, GBP 66 million from that 5%, GBP 1 million from Total Platform and equity investments, sourcing GBP 3 million. Cost increases, and this is the sort of ugly number, not dissimilar from last year's number, actually. Of those cost increases, if you strip out normal wage inflation, in essence, around GBP 50 million of it is driven by government action, whether that be national living wage, national insurance, or packaging taxes. To compensate for that, we've got GBP 71 million of savings that we think we can achieve in the group, GBP 23 million from operating efficiencies, GBP 13 million that we've taken back for margin by putting our prices up by 1%, and some electricity savings that we're still expecting to get in the current year as they continue to come down for business users. One of the questions that we have been asked is, "Well, why don't you put your prices up by more?" 1% is still well below inflation, well below wage inflation. I think the answer to that is we want to maintain our margins, but we want to give our customers as good a value as we can and be as competitive as we can be. Because our forecasts for the full year show sales and profits roughly rising in line with each other, we didn't feel the need to move the group's profit forward at the expense of our competitiveness. That takes us to GBP 1.066 billion, pure coincidence there, but easy to remember. Forecast up 5.4%, 8.8% earnings per share increase after accounting for the buybacks we expect to make and the effect of buybacks at the end of last year. Post-tax, 8.5%, so broadly in line. One of the things I do need to talk about is because there's been a lot of sort of chatter about it, and it's this whole thing about reaching a milestone, which the Chairman alluded to. I think it is important for me to talk about this because it is profoundly unimportant that we have hit this arbitrary number. I think that obviously, you being incredibly bright analysts know that, but I want you to know that we as a company know that as well and that we are, and that there is also, I think, a real risk in people's attitudes towards Next changing, both inside and outside the business, if we put too much store in this number or any store in it, really. I have heard firsthand someone in the business say, "Surely, now we're making GBP 1 billion, Next can afford to buy me a new laptop." I know that that was said because I said it. It just shows how infectious this illusion is and how dangerous it is. I'm sort of making a slight joke of it, but there is a genuine sense. I have heard lots of mutterings about, "Surely, now we're making GBP 1 billion, we can afford X, Y, or Z." The point is, it may well be a good investment for the company to be able to buy me a laptop whose battery life is longer than 15 minutes. That may be a good thing for the company, but it's nothing to do with the amount of money we're making. It'd be a good investment if we were making GBP 100 million or GBP 10 million. It's nothing to do with the billion. It's not just because, as the Chairman rightly alluded to, it's not just because we have to be as competitive, as nimble, as careful with our money as our smallest and brightest and newest competitors. It's not just because of that. There is a much more profound and important reason why we have to treat this milestone carefully. That is because, contrary to sort of pretty much all pervasive illusion, Next is not a person that has a billion pounds. If Next were owned by one person, they were, "Oh, I've got GBP 1 billion and GBP 66 million of profit coming in." You could argue, "What do they care?" The reality is, of course, Next is not a person. It's a public company, and our average shareholder on the register has 150 shares. Those 150 shares generate a dividend income of around GBP 350 a year. That's GBP 30 a month. That is how you have to think of a public corporation. You have to look at it as being the hard-won savings of people who have not got a lot of money necessarily. That number, that 150 shares, is hugely understated because, of course, some of our biggest shareholders that are in the room represent themselves hundreds of thousands of people who've entrusted them with their pensions. The day a company begins to talk about its profits as if they were a rich person that can afford to look after that money no less carefully than they would if they were thinking of it as GBP 30 a month income for the average shareholder is a company that is set to decline. We are determined not to do that. Earlier on, also, I sort of said companies that are, we have to be competitive with companies that are smaller, more careful, and nimbler than we are. I think there is a big question mark over scale for a company. How do you remain nimble, agile, innovative, and big? The answer, we think, and funny enough, I do remember my dad and David Jones like 35 years ago saying, "Oh, Next is a big company, but it's run like a small company." That is what you should really aspire to. That is still what we aspire to. We aspire to doing that. One of the ways to doing that is by keeping things very, very simple and making it very clear to people what they have to do to be successful. In essence, what we do is simple. We're admittedly two businesses rather than one. You can think of Next as being two types of businesses. There's a product business. That product business, if we were an entertainment platform, that would be called content creation. This is a creative activity that is all about producing beautiful, original, innovative products at prices that our customers consider to be great value. There is another side of the business that is operations. That is all about how we sell the product. Everything from how we market it, the digital marketing, presentation of it, photography, all the way through, or not photography, actually, more product. The warehousing, the stores, all of the things that we have got to do to get that stock into our customers' hands in a way that excites them and inspires them and is cost-effective. When you think about the business in those terms, actually what individuals have to do, whichever part of the business they are in, is very, very clear and simple. I think one of the exciting things for us as a business and that has given the company a little bit of a sort of spring in its step, if you like, in terms of growth, is that these two halves of the business are becoming less hindered by the constraints of the other. Our product business is no longer constrained by the four walls of Next shops and the size of our customer base in the U.K. or even overseas. It is instructive that 30% of the Next brand's sales outside the U.K. are not coming from our own platform. Actually, even if you look at our own platform overseas, the Next website, really the only infrastructure that we have paid for in that network is the website. All of the infrastructure, the distribution networks, even the hubs that we operate solely for us are other people's capital. We're doing that on a third-party basis. The product is breaking free from the platform. At the same time, the platform has broken free from the constraints of the Next brand within the U.K. to the extent that 42% of its product is not Next-branded. Obviously, I can almost feel the zing of excitement in the merchant bankers as they look at this and go, "Surely, there's a great deal of fees to be made out of splitting this business into two, where some of the parts may not be worth more than the total, but a great big fat fee will be generated in proving that." I just want to reassure you that we're not looking at splitting the business. It would be very expensive, would not create very much value. I think there is an enormous benefit in the two businesses being part of the same group. The platform gives the Next brand and all the new brands we are starting sort of 8.5 million customers to talk to the moment they are conceived. Equally, the platform benefits from the fact that its biggest client by a long, long way, its biggest client brand, is the client that owns it. It provides the platform with security and the product with an enormous market at its fingertips. We would not look at splitting the business. There is a question of what holds the business together. The answer to that is very simple values. Both businesses are about profitably serving more customers. The key there is that whatever activity you're undertaking, whether it be you're redesigning a new piece of mechanization in the warehouse, or you're opening a new shop in Ripon, or you're developing a new website piece of functionality or new dress, whatever you're doing in one way or another has got to fulfill four criteria to pass the test of whether it is an activity that we want to take. First of all, are we creating value? I know that value has become one of these sort of slightly trite words that people use. The word shareholder value, as far as I can see, is often used as a proxy for ramping the share price. What we're talking about here is creating real value for customers, where the product or service you're providing those customers with, our products, hand on heart, you can say, is better than anything they can get for the same price to do the same job. That is critical. Secondly, are we playing to our strengths? We're not going to go, because we've got a big customer base and a big warehouse, we're not going to suddenly go into the vitamins market. We don't know anything about vitamins. Don't want to poison anyone. Margins commensurate with risk. Everything we do has to make a margin pretty much day one. We might give a new business, new brand a period of grace in its first year, but if something isn't making a profit in year two, the chances are it never will. We have to make a margin commensurate with risks and healthy return on capital. If we do all of those things, then actually managing the business becomes very simple because everyone knows what they've got to do and they kind of know the rules of the game. Kind of those are the general principles. If we move on to the sort of detail, there are four areas that I'd like to talk about. First of all, products. Now, I've talked about this six months ago and 12 months ago, and I'm conscious that when chief executives talk about product, it always sounds faintly ridiculous, but I hope you've got a sense of what we're trying to achieve, which is newness, more newness, really backing new trends with conviction and taking risks on newness, improving our quality, and increasing the breadth of our offer so that Next brand is really hitting all the trends and looks that our customer base would want. One of the other things we're doing as a group is developing brands and licenses beyond the boundaries of where the Next brand can reach. That business is now becoming a not insignificant and important business to us. I think it is important, as we grow as an organization, that we give ourselves a little bit of sort of resilience and opportunity outside of the natural boundaries of the Next brand. That business, you can see, is now a GBP 325 million business. You've seen the margins that it makes, makes healthy margins. Just to remind you, there are two things going on here. There are the brands that we either have bought, like Cath Kidston, or started from scratch, like Love & Roses. Then there are those brands where we have taken the designs of a brand partner, like Ted Baker, and we have bought and sourced and done all the quality control and stock risk on the children's wear part of their range. We're doing licenses where we think we have particular product expertise, marrying the design inspiration of other brands with our product sourcing in specific areas like swimwear and kidswear. One of the important things that we're doing here, we think it's important, is moving this exercise into home as well. You can see we've got a number of home brands now. Very small money, only GBP 35 million expected this year, but growing very dramatically from pretty much nothing three years ago. This is important for two reasons. One is because it's an important profit stream in its own right, doing a great job for its customers. The other is because we want to establish Next as a real home destination. I think that these brands reinforce the credibility of our online home offer. That's product. In terms of international, international marketing is what has really driven the growth more than anything else. We're spending GBP 24 million in 2023. In 2024, last year, we increased by 85%. This year, we'll increase by 25%. That estimate of 25% was 18% at the beginning of the year. There are plenty of investors and advertising agencies in particular saying, "Why on earth are you limiting yourself to 25%? Just spend more money, get the growth, and everything else will take care of itself." The answer is that we are being very disciplined about the way that we're spending marketing money. I think Next is quite different from a lot of other organizations in this respect in that marketing is not the budget that the marketing team have to fulfill the sales ambitions of the company. Marketing is an investment in its own right. If it does not stack up, we do not do it. If it does stack up, we do more of it. Our criteria on digital marketing are that we have to get GBP 1.50 of profit for every pound we spend, so a net profit of GBP 0.50 on a pound investment. We have to get that within 18 months. You could look at that number and say, "That is ridiculously high." You would be right. If I trusted the metrics we use to get the returns, then I would say, "Absolutely, we should lower that. We do not need to be making 50% margin in effect or 33% margin on total sales from marketing." The key here is the word incremental because it is very easy to kid yourself that money that appears to come from an advert online is genuinely being caused by that advert. The problem is we use this terrible word called incrementality, which I have checked is a real word, but still sounds hideous. The issue of measuring incrementality gets harder and harder as you get better at digital marketing because the best digital marketing is the one that most accurately finds the person who most wants to buy a pair of Palm Tree Next Swim Shorts. You can show them an advert and go, "Gosh, that is brilliant. Look how we managed to find that person." Of course, that is the very person who would have bought it anyway. Measuring that incrementality will be a key exercise. If we can get better at that, and we are working with all of our providers, Google and Meta, to improve our metrics, we will lower that, and that will allow us to spend more money. Of course, if we continue to get very strong returns from the investment we make in marketing, we will increase that budget anyway. Moving on to logistics. In terms of warehousing overseas, 34% of our business comes direct from our U.K. warehouse to the customer via third-party networks. The balance comes from hubs. We have three big hubs at the moment. They are solely operated for Next, but they are operated by third parties, so we have not put capital into them. They work through being replenished in bulk. When the customer orders, if the items are available in the hub, they are fulfilled from the hub. That means that the service is quicker, and the cost to get it to the consumer is cheaper than coming from the U.K. However, in the event that we do not have stock available in the hubs, we are able to fulfill on a slightly longer lead time and at slightly higher cost. It adds about a day to delivery to deliver it direct from the U.K. We have still got the fallback of the U.K. stock, even if the stock is not available in the hubs. Availability in the hubs is a critical issue. We also have now quite a big business with Zalando, and that works in pretty much exactly the same way, bulk replenishment, direct service. We are not able to service Zalando orders from our U.K. hub because the economics do not stack up. What we are doing this year, and we hope to have this process completed by the end of September, is we are merging into one warehouse through ZEOS, Zalando's third-party warehousing logistics provider. We are merging those two operations to give us one big stock holding that will be replenished in bulk from the U.K. and serve customers on the Zalando website and customers on our website. It's important to stress that the customers on our website will still get stock packaged in Next packaging. It's not going to all go in Zalando packaging. We will still be able to service our own website sales from the U.K. in the event the hub doesn't have all the items the customer wants. The advantages of that are we get better stock availability on Zalando, which we think will drive sales. We get better service on our own stock because we think more of the items will be available and therefore available on a faster lead time at lower cost. The overall cost of serving our own website is cheaper through the third party than it was through the old hub. In terms of website functionality, you do not have to take in all of this. It is all in the pack. Just to explain, this is the list of all the functionality that we think should be present on any overseas website. We then give the list of countries that it is available in, the% of our business represented by those countries, and the% of the world's clothing market that is represented by those countries in which we provide that service. For example, appropriate local sizing. For example, in France, we use EU sizing, but actually, France has their own sizing convention, which is slightly different from EU sizing. In our world, very shortly, we will have proper French sizing on our website. At the moment, it's not in those 33 countries. We do cover 81% of our business, so we're providing the functionality to the majority of our customers. You can see in the countries where we've traditionally had less traction, we haven't got appropriate sizing. The risk is we get to a kind of chicken and egg situation where you don't take very much in Japan, so you don't invest in all the work to have local sizing. I should stress, by the way, it's just changing the size to the Japanese equivalent, not actually changing the size of the garment. If you don't invest in the local sizing, you'll never have a substantial business. Throughout the year, we're going to go through in priority order, putting all of these services into all of these territories. Moving on to warehousing. Now, for those of you who came, and I think most of you did looking around the room, to our warehouse today, this might be a little bit boring, but you can look at it as a happy memory. Like when you're looking through snaps of your old holidays and they come up on your phone, this will be just like a happy memory for you, so bear with us. I'll go through this very quickly. That's the new warehouse, has a capacity of 700,000 units a day. The old two warehouses, between them, had that same capacity of 700,000 units. We're not mechanizing all of the space in the new warehouse, only half of it to start with. That gives us a 50% increase in capacity. Just to run through the really important part of the presentation that we gave those who came to the warehouse day, what this explains is how our costs are expected to change as we grow. This was the situation before we had any of the overhead of Elmsall 3, any rent rates, depreciation, or mechanization. That was in 2023. You can see we have the operational half there, where we are today. The costs indexed to labor at 100 in 2023 was 167. Now we have opened the new mechanization. We will fill that to maximum capacity. That lowers our labor cost CPU by around 25%. Obviously, the total cost has gone up since 2023 because of all the new mechanization, depreciation, rents, and rates on the new warehouse. Still be down against last year, but not down against 2023. We will then reverse back into the old mechanization. That will push labor costs up but bring total costs down as we get leverage over fixed overheads. When we fit out the new mechanization in the other half of the Elmsall 3 complex, and this is the important point, actually, is that we think there the labor saving will be greater than the cost of the depreciation on the new mechanization. We will not see a step change in costs at that point. When it fills back up, this takes us all the way to double our current capacity. You get to a figure that is significantly lower on a cost per unit basis than where we are today. We think we've got a flight path of lower costs per unit in our warehousing from where we are today to double our capacity. Now, that is in today's money. That does not account for inflation. The elements that I am most concerned about in terms of inflation are the labor costs. They, as you can see, shrink as time goes on as essentially the total costs. Inflation could sort of mess up this nice smooth descent. Of course, we could mess it up ourselves by not operating the warehouses as well as they should be operated. Just in terms of that, I just wanted to share with you some of the under-the-bonnet friction that we suffered. I should say, I say this without any, this is in no way in detriment to the teams that implemented this. It was very, very difficult to implement a brand new warehouse in the run-up to Christmas. If we had not done it, we would not have been able to service the sales. There was a cost. This is a measure of the total items that are not delivered, parcels that are not delivered in time in full. Now, the vast majority of failures in this are where we have an order for five items, and one of them does not make it into the parcel and gets there the next day. It is not a disaster, but it is not the service we would like to offer. The normal run rate is around 6% and has been for many years. As we ramped up the new mechanization, it got to 12%. In November, you can see, and we have colored it like a pimple on the beautiful face of the Next warehousing landscape, we had a big peak. Since then, we have made huge progress. Each week that we are this number, we are now back at 7.4%. Each week that goes on, we're bringing that number down. Our ambition is to get it to well below 6% by this time next year because actually, the new warehouse should be more accurate, not less accurate than previous mechanization. Interestingly, you can see how this genuinely filters straight through into customer perceptions. This is our Trustpilot scores. You can see after that peak, we dropped to 4.1. As we've begun to rectify things, our trust built back up. Finally, on technology, nearly there. Technology costs have almost doubled in the last five years. We think we've needed to do that for three reasons. Most importantly, we had to rewrite all of our software. Just to remind you, Next, pretty much all of the software we run, all of the operating systems we run, is pretty much proprietary. We do not see ourselves as just a retail company. We see ourselves as a retail software company. It's part of our job. The fact that we've written so much software over the last 30 years meant that a lot of it was out of date. We've had to modernize it. Pretty much all of our major systems, we've had to rewrite, put into the cloud. That has been a huge exercise. We've implemented Total Platform, and we've delivered the new systems for Elmsall 3. Looking forward, the modernization program was 44% complete this time last year. We think it's now at 70% with only one major system to go, which is our finance system. I should say that is a very high-risk project, and we're taking it very slowly. I would not want to make light of that, but we have now done the majority of modernization that we want to do of our systems. We think that means going forward, we should be able to reduce our technology costs going forward and, more importantly, improve the amount of output because modernized systems are easier and better to develop. That is the whole point of modernizing them. When I showed this to our technical teams and warehouses, when we discussed in the presentation, they almost had a heart attack. "You cannot show technology costs coming down," they said. Maybe they are right. Maybe we will not do that. Also, when we ran it past our brokers, they were a bit nervous about making promises we could not keep. Who knows what technology will bring. What we are very determined to do is bring technology down as a percentage of costs at the very least. We should be able to do that because we've modernized so much of our software. We've got much more experience in the group than we had three years ago. This is the percentage of people with more than 12 months' service in the group. You see, at worst, that was 33% didn't have 12 months' experience in the group. That's dropped to 10%. I hate to mention it because it's the flavor of the month, but AI is beginning to make a difference to our software development process. Software development can be thought of as specify, build and test, and deploy and maintain. A lot of people think it's just the dark- blue function. It isn't. The others are equally, if not more, important. In terms of our use of AI, we've used what I consider to be slightly unfortunately branded GitHub Copilot from Microsoft to start. Our software programmers are beginning to use that. We think we're about 25% along the journey for that. Where we've deployed it, we're seeing between 10% and 30% improvement in productivity. On specifications, we're just starting this journey. We're only at 5%. We're using NotebookLM to help document and accelerate the process of specification. That, again, has been amazing in terms of the benefits it's given us. Not so much in terms of cost, just in terms of the speed of writing specifications. We're really not far down that journey. We haven't yet found the software that we want to use on deployment and maintenance of software. We think, again, there's huge opportunities there for AI to spot problems before a human being can spot them in software, before it glitches and help correct it. Those are the sort of four focus areas. That sort of neatly brings me to the end of the presentation. I thought it was almost reasonable time. Just to sort of in summary, Next is increasingly becoming two related but quite different businesses: a product creation business and a platform business. Our ambitions in both businesses are we're very clear about our ambitions. You have got to be very careful of anyone making grand visions. They normally turn out to be nonsense. You can foresee a situation where, as the world's fashion markets converge, there will be fewer bigger fashion brands that are truly global brands. We can all think of the names that will almost certainly be in that small group. There's Zaras as well, the Uniqlos. Our objective is to make sure that Next is one of those brands. We kind of think global brand is the future for our product side of the business. Platform is really about geography. It's about feet on the ground. It's about having infrastructure, customer-based warehouses, stores, call centers, systems that serve one geography really well. It is about geography. We think the platform business is a local business where the future is modest growth in what it can sell through Next, but also increasing our product offer, improving our services. Our ambition there, again, is very clear. We want to be the U.K.'s first choice clothing and homeware retailer for our customers. That is our ambition. Two caveats to that, really important caveats. I am telling you this because this is what we will be and have been telling our own people, the ambition to become a global brand and a first choice local platform are not ambitions in themselves. Once you start to see these things as ambitions in themselves, you begin to make terrible mistakes. People go, "Oh, if you want to be a global brand, you've got to have stores in Ulaanbaatar. What global brand of any respectable Next wouldn't have stores in X, Y, or Z location?" You have to go and judge Tokyo Fashion Week or whatever it is that they think you have to do to be a global brand. We are very clear. We will only do the things that are involved in becoming a global brand if they profitably serve our customers, profitably serve new customers. The ambition of becoming a global brand is not to be a global brand, but to profitably serve more customers with the emphasis on customer and profit. Equally, if it aims to be a first choice local platform, that has to be governed by exactly the same financial discipline that these activities are not activities to achieve some sort of glorious ambition. They are there. They're shorthand for serving more customers profitably. I think the second caveat, which is even more important, is there is nothing that we have as a business. We may have a head start in some of these things. We may be behind in some of them. There is nothing that we possess that is a moat, a USP that cannot be in one way or another copied or developed or bought by other people. Our success in delivering these ambitions and profitably serving more customers will be driven entirely by our ability to execute well, to produce beautiful product ranges, and provide excellent cost-effective service in the U.K. If we can do all those things, we will be successful. If we cannot, then we will not be. It is important that you know that that is the message that we are giving our people, that there is no time to relax. Whatever milestones we may have crossed or not, there is no time to relax. If we want to be successful, we have to keep delivering excellence. On that bombshell, we will go to questions. Exactly 10:00 A.M., one hour and 15 minutes. We had a sweepstake earlier on, and I was engineering it so that I would win. Sorry. Richard. Go ahead. Richard? Do not worry. You can just speak. There are microphones in the ceilings, apparently. Oh, okay. All right. I'll try and speak clearly. I guess one for me then to kick off, sorry if that's all right. You touched on the enhanced partnership with Zalando that's getting going in the second half. What have you built in in terms of H2 guidance, in terms of sort of sales uplift from the single inventory view or better service options for customers? I suppose following on from that, where do you see the biggest geographic and sort of convenience opportunities coming from that partnership? Is it possibly broadening scale in Eastern Europe, or is it, I think you called out parcel shops, lockers, those sort of convenience options? Are there sort of some things that Zalando does very well that Next could benefit from in time? The last question is yes. Obviously, they have parcel shops pretty much everywhere, and they have parcel shops in lots of locations that we do not have them. There are other services and customer bases that they effectively talk to, particularly as a result of their recent acquisition as well in Eastern Europe. We are excited about that. Have we built it into our forecasts? No. Nor should we, by the way, because no. It would be a big mistake, by the way, because this is a conversation I have had many times with our operations teams. I cannot think of a single warehouse transition. You look at Elmsall 3, you look at the Middle East. We just talked about those where the transition itself has not caused some degree of sales disruption. I think we haven't built any disruption into our sales numbers for the period of the transition, which is sort of July, August, September. Also, we haven't built in any uplift from the possible benefits. I think that is the right place to be at the moment on that. Yeah. I'd love to ask a question on AI, but it's a bit more mundane or on stores. You talked about a new store format in Stratford. Thurrock. Thurrock. With the new stores that you're opening, are they all going to be in this new format going forwards? Do you have to refit many of your existing estate over maybe a 10-year period for that new format? With that, the buzzword you didn't get in is RFID today. Is there any hope that you could use RFID in terms of your increasing the efficiency in those stores with higher cost of personnel to get the RFID in the garment so that you can do your returns to store, you can recycle things much more effectively? Is that things that you're thinking about in terms of the new store format? Yes. Two good questions. I'll start with the first one, which is the new format. First of all, the new format is not a new religion. You don't have to go around forcing conversion on everyone. That doesn't work either for religion or in short shop fit time. We will absolutely not go back and be refitting our old stores with the new format. We will be using it going forward in any new openings that we have. In terms of RFID, we already use RFID in our stores. We do not put it on the garments. We put it on the security tag, and then we associate that garment with the security tag when it goes into the store. That gives us, we think, 95% of the benefit of RFID without the cost of having to put RFID tags into all of our clothes, the vast majority of which, because they are online, would not use it. In terms of cost-effectiveness, at the moment, we think it is much more effective to use security tags as RFID gives us quick stock counts, shop floor availability, all sorts of exciting things. We are not looking at RFID for company-wide at the moment unless it drops in costs dramatically. Good. Yeah. Hi. Geoff Lowery, Redburn. Just fascinated by your disclosure and conversation around new customer growth. Pre-COVID, you put up a slide talking about maturity curve of customers from sort of year zero up to year five. I wondered if that had changed very much over the years and whether you were seeing anything very different internationally to the U.K. in terms of that build after year one of acquisition. Yeah. I think it's too early to say is the honest answer. If you look at the rate at which we're growing our business overseas, there are so many new customers that trying to use the customers we had four years ago to predict what the customers we're recruiting today, many of whom are in different countries from the ones we recruited four years ago, I could give you numbers, but they would be completely meaningless. Is there a curve at all? There is definitely a curve. There always is. It does depend very much what product group they come in to buy. It's a very different maturity curve if someone comes to buy children's wear than if they come in to buy women's wear. We have no meaningful information on that. Yeah. It's Will Woods from Bernstein. When you look at the 25% increase in the marketing spend internationally, I think on the map you highlighted new countries that you were going to spend money in. What's the rough split between investing in the countries you're already spending in versus the new ones? I suppose to link to the previous question, are you seeing good repeat purchasing behavior from those that you've acquired? I suppose does that, if you thought about their lifetime value or something like that, are you seeing a good return on that, not just on the ad spend? Yeah. I think in answer to the first question, the vast majority of the increase in spend, of the spend, full stop, will come in existing territories where we've already got most territories. The biggest percentage increases in spend will come in the newer territories, but it'll still be relative to the because the sales are so much smaller, it will be a smaller number and therefore a smaller amount of that 25% increase. In terms of sort of long-term value of customers, I think there are two points I make. One is kind of similar to Geoff answer. We don't yet know. I suppose the other answer is not that we don't care. It's that the important thing is that we get the return on the sales that we can see within the 18 months. As long as we're getting our 50% return on the investment, it would be a lovely thing if those customers then went on to deliver far greater return than that beyond it. Actually, that's not the point, is that we're not banking on that. Our hope is that it will, but we don't yet know. Oh, hi. Monique Pollard from Citi. I just had a question on the use of the third-party aggregators. When you look internationally, as you mentioned, the growth from the third-party aggregators is actually higher than what you're driving on your own website. Just wondering what learnings you've taken from yourselves being on the third-party aggregators that you can use with your third-party brands on your website to drive that faster sales growth. No. It's a good question. I think stock, it comes down to things that are really not rocket science. Ultimately, stock availability. Selecting the right stock to put on the aggregator site and then making sure you're properly stocked of it. Because unlike our own websites, we don't have the fail-safe of being able to deliver the stock from the U.K. Getting stock levels right is super important. That kind of leads into what I was alluding to about the provision of third-party services on warehousing logistics. If the trial is successful this year and if we're able to genuinely add value and cost savings and improve service for clients through the warehousing logistics business, we think there is a further benefit for them and ultimately us as well through consolidating their stock in one place because that will improve availability on our website. Could that theoretically then your pathway to increasing the utilization of your new warehousing, could that be far quicker if, for instance, these trials work and you end up with a lot of utilization? Theoretically is the key word in your question. The answer is yes, theoretically. There is a huge amount of hard work and reality between the theory and practice. I do not think we will have any news on that, meaningful news for 18 months to two years because I think it will take us that long to get a trial up and running, establish the systems, get the controls that need to be in place, to look after other people's stock for them, integrate, cost, make sure we are making money out of it, and then roll it out. Theoretically, it is true, but it will take time. Thank you. Hi. It is Georgina Johanan from J.P. Morgan. Just a question on AI stage. In terms of how you're using it within your tech in particular and with the conversations that you're having with the providers of that AI, do you think that you are ahead of peers in terms of using it or just at a comparative level? Also, in terms of the cost of that AI, and excuse my ignorance here, but is it prohibitive for a smaller player or not so? Going forward over time, do you expect this to be able to sort of widen your differential being a scale player already? Or actually, will that differential narrow because AI can be used as kind of incremental support from smaller and growing? Yeah. Honest answer to that is I don't know because one of our kind of one of the ways that we run Next is we stay in our lane and we focus on where we're going. We don't spend too much time looking over our shoulders at what other people are doing unless there's something to learn from it. I've got no idea how far we are down the journey compared to major competitors. All I'm interested in is what can it do for us and can we make the best use of it rather than getting too hung up on whether it provides a moat or a USP or an advantage. Even if it does provide those things, they won't last. The important thing is what we are doing for our customers and our business, not whether we're ahead or behind the pack. I'd be very disappointed if we were behind the pack, but it's possible. Yeah. John Stevenson, Peel Hunt. Quick question on the consumer. You've talked a peak about people sort of choosing to spend more on products and sort of buy less. Is that still continuing? To what extent is that sort of informing how consumers are feeling at the moment? Yeah. I mean, first of all, I think the buying fewer, better garments is nothing to do with economics. I think it would be a huge mistake to regard that as being something to do with levels of affluence because ultimately, we're not saying that customers are spending any more money. In fact, you can see there on average, they're spending 1% more in the U.K. It's about what they're choosing to spend their money on. I think there's been a slight reversion from buying lots of throwaway type stuff to buying fewer, more considered investment garments. That has nothing to do with how the consumer's feeling. It's all to do with sort of macro fashion trends rather than any economic trends. Does that feed through into sort of how you think about sort of good, better, best and the sort of structure of the range going forward? Yes. I mean, we don't think about it in a global sense because we have literally tens of thousands of garments on our ranges. It's not my job to think about the balance between better and best because it's the job of the dress buyer and the socks buyer and the baby grow buyer. It's their job to work out what is the best balance between their mid-entry and exit price points and whether they should push those price points further or lower. All I'm really doing is taking the credit for their hard work and not directing it. Yeah. I'm Critchlow from Berenberg. Could you talk a bit about the trend through the current trading period? Because I imagine March was probably stronger than February and whether March informed your upgrade and guidance. Secondly, if you could talk in broad terms about the performance of home relative to clothing. I know you don't normally comment. Sorry, a third one as well, if that's all right. Again, you're not going to get an answer to the first two, so let's go for one. I can ask. If you could comment a bit on the London office space you're taking, what that's for and where it's going. Yeah. Okay. I’ll start with a question I can answer or am prepared to answer. London office space is mainly for the wholly owned brands and licenses. The vast majority of that is to accommodate the growth of those new and developing businesses. We don't ever discuss the relative performance of our different product areas other than at a very high level, like between wholly owned brands and Next, we'll talk about it. Otherwise, we don't discuss home versus other areas. I think the only thing that might be useful to say is I think in general, if you look at the home market generally, it has been through, had a fantastic 18 months in COVID, has had a sort of two and a half year, two-year hangover. It appears to be out of that hangover now, so we're more encouraged by what we've seen on home sales. Will we give a week-by-week, blow-by-blow detail of what we took in February and March? No. Sorry. Hi. Can I ask on the third-party platforms where you sell? Third-party. The third-party aggregators where you sell in the Next brand. Do the ranges that you're selling on them, are they any different to what you're selling on the Next direct websites? The same in reverse on the third-party brands that are sold on the Next platform. How much are those exclusive to Next? Are you actively working with these brands to develop exclusive ranges? In terms of difference in performance, we do see significant difference in performance, not necessarily on a garment-by-garment basis. It's not that kind of the red dress sells well in Denmark and the blue one sells well in Spain. It's more that the product mix by territory is very different. Some countries are dominated by kids' wear sales. Others aren't dominated in the same way by kids. It's those sort of mixed changes that we see both on our own websites and with aggregators. In terms of third-party brands, the vast majority of our third-party branded business on aggregators are the brands that we own because obviously the ones that we don't own tend to be trading already on their own accounts on those aggregators. If you're Nike, you go straight to Zalando or About You, you don't come to Next to put that on. The third-party business is much smaller on overseas business and the growth is focused on the [Wobble] brands. Yeah. Thank you. Thank you Simon. Sreedhar Mahamkali from UBS. Three questions if I may. Two questions. We're not having any inflation here. There's a war against inflation in this country. Overseas margins, nearly 200 basis points last couple of years. Can you talk through on the midterm potential here? Because this year you're talking about operating leverage, driving margins, leveraging the fixed overheads. Is there a sort of philosophical point where you say you don't want these margins to be going up further into high teens and so on and so forth? Secondly, I think on surplus cash flow, given you've accumulated what you need to with a GBP 250 million bond, then potentially no need to retain any of the surplus cash going forward. Should we be assuming all of it to be returned to shareholders steadily or subject to an NF cost? Is there anything else we should be thinking about? Yeah. It's a really good question. As are all the questions today, obviously. First of all, on margins, don't assume that margins will go much higher than where we intend to get them to this year. We want to get the right balance in having a healthy business that can fund its marketing and being over-profiting. I wouldn't expect margins on our overseas businesses to increase faster than to go above where they get to this year. That certainly wouldn't be the plan. If anything, they're more likely to come down solely because of the mix between aggregators where we make less margin and our own sites where we make more. Because aggregators are going faster than our own, I would actually expect the net effect of those two things to push down the margin. In terms of the margins of the aggregation business and the Next business, I think we've got both of those to where we're comfortable with at the moment. In terms of surplus cash, I think I don't want to talk too much about sort of beyond this year. I think this year we said if we can get extra cash resources, we will return full amount of surplus cash. I think there is then an argument to say that in order to maintain our investment grade, we don't need to have we could take on more debt. I think if we do that, we will do it slowly and gradually over a four or five-year period rather than go out and borrow a great big slug of money and return all to shareholders. Because if we do the latter, the chances are we'll get the timing horribly wrong. I think the most important thing, because there is an underlying reality to it, is that we're not prepared to put in jeopardy our investment-grade credit rates. That is a sort of red line for us. Yeah. One more. The [parabolic sand]. Simon, is there any level of critical mass in overseas markets where you'd consider opening physical stores to build the brand more broadly? Yeah. It's a good question. It's not about critical mass. It's about does that store in that country make a profit? I think our experience has been the experience, you know, like those flies you see flying into a window pane. It doesn't matter how many times they do it. They just keep trying to do it again. Our experience of opening stores overseas has been like that. The only time the window has been open is where somebody else has done it on our behalf through a franchise. Currently, we are looking with our partner Myntra. They are looking at opening stores on our behalf in India. I think to try and do that, I think to try and open your own stores in territories where you do not understand pitch, you do not have a relationship with the landlords, you are unlikely to take the same GBP per sq ft as local competitors whose brands are 100% locally appropriate, I think is slim for a brand at Next's position in the market. Reiss makes a profit trading some stores overseas, but it has been tough there as well. They do make a profit. It is not a I would not say never, but we certainly have no plans to do it at the moment. I would much rather do it through a licensee, even if it means taking a smaller percentage of the profit. I would much rather do it through a franchise or license than directly. I think on that note, we have exhausted all the questions. Thank you very much. That is it.