New.com Forecast and P&L Lines Discussion

The discussion begins with a request for detailed information on how forecasts and P&L lines are prepared for New.com, including data sources and methodologies. The main file used for this is the 'new.com CapEx forecast', which, despite its name, includes both CapEx and OpEx. The 'cache view' tab in this file categorizes all CapEx and OpEx sections, with actuals pulled from SAP based on invoices assigned to each CapEx.

The actuals data is sourced from a file provided by Dominica (or currently Patrick), which contains all WBSS (Work Breakdown Structure Elements) for the entire commercial department. The current forecasting file specifically filters for new.com related WBSS under the 286 code. New.com's initiatives are divided into four main areas: Phase One (new website and app), Data and Customer (focused on common customer data), OOM Phase Two (Offer and Order Management, improving underlying website infrastructure), and Contingency.

Phase One, focusing on the website and app (customer-facing elements), is nearing completion, with the app launch imminent and the contract with primary delivery partner, Globant, ending in June. Globant is paid a standard £4.16 million per month, plus a quarterly 'withholding fee' (or 'fees at risk') based on achieving specific outcomes, up to £3.1 million. Forecasts are developed by consulting with relevant personnel, including Will Rivers (Programme Director for Nexus) and Michael Robichaux (Head of new.com).

Most CapEx in Phase One is attributed to Globant, alongside non-Globant business cases. A Q4 non-Globant business case was £2.2 million, spread over three months with a typical one-month payment lag. CapEx can be complex due to phasing, leading to potential monthly variances that are often attributed to timing rather than actual over/under spend. Savings, mainly from not paying the full Globant withholding fee, are expected to be reallocated to new.com BAU as Globant's contract transitions to Dara's area post-June.

The 'Data and Customer' phase is largely complete, with minimal remaining activity. OOM Phase Two, focused on infrastructure, has a Q2 CapEx case of £327,000, spread over three months. A similar rate is forecasted for the second half of the year, pending approval of a new business case. Contingency, amounting to £85 million across CapEx and OpEx, is an agreed amount in the original business case, requiring IAG board approval for release, a process currently underway as Phase One concludes.

OpEx is mainly concentrated in OOM Phase Two. OP15 covers Amadeus stage gate fees, part of a 12-year IT services agreement totaling €10 million. This amount is spread flat annually, but actual payments align with the completion of stage gates and business outcomes. OP20 reflects the OpEx portion of the Q226 business case for OOM Phase Two, totaling £290,000, spread evenly over three months for external contractors. Separate 'unfunded business case 1' (Q2) and 'unfunded business case 2' (H2) also exist for OpEx.

Older P&L lines (e.g., branch face, tooling one-off) are no longer used due to the Nexus project nearing completion and a lack of associated costs. A balance sheet write-off of £430,000 is also noted. A reversal of 166,000 in OP19 for Q1 (related to 'branch space' supplier) moved from OpEx to CapEx, as their work was determined to be capitalizable integration work. The New.com Nexus project is expected to officially close around the end of June, upon app release and Globant contract end. However, CapEx and OpEx will likely remain open in SAP for longer to process pending payments and accruals. Future OOM costs and stage gate fees will transition to a new, separate business case, likely funded by unlocking contingency.

For BP (forecast for 2027-2029), the numbers for CapEx and OpEx will be provided from a draft new.com CapEx forecast BP file. OpEx can be filtered from the cash view. The forecast for unfunded items often relies on estimations, leading to flat accruals. The speaker agrees to add detailed comments and contact persons to the forecast file before their departure.