TIDMNXT
RNS Number : 6109C
Next PLC
18 April 2017
Contacts: Alistair Mackinnon-Musson
Rowbell PR
Email: next@rowbellpr.com Tel: 020 7717 5239
Lord Wolfson, Chief
Executive
Amanda James, Group Tel: 0333 777 8888
Finance Director
NEXT PLC
Photographs: Photographs available at:
http://press.next.co.uk/media/company-images/campaignimages.aspx
Next plc
Annual Report and Accounts for year ended January 2017
including the Notice of Annual General Meeting ("AGM") -
convened for
18 May 2017
The Company announces that the Annual Report and Accounts for
the year ended January 2017 is today being posted or otherwise made
available to shareholders and published on its website,
www.nextplc.co.uk.
In accordance with Listing Rule 9.6.1 a copy of this Report
together with a Form of Proxy for the 2017 AGM has been uploaded to
the National Storage Mechanism and will be available for viewing
shortly at www.hemscott.com/nsm.do.
The Company's 2017 AGM will be held at the Leicester Marriott
Hotel, Smith Way, Grove Park, Leicester on Thursday 18 May 2017,
commencing 9.30 am.
S L Anderson
Company Secretary
Next plc
The Appendix to this announcement is a supplement to our
preliminary statement of financial results made on 23 March 2017
(the "Final Results Announcement"). It contains the information
required pursuant to DTR 6.3.5 that is in addition to the
information communicated in the Final Results Announcement, and
should be read together with the Final Results Announcement.
Appendix
The Chief Executive's Review in the preliminary statement of the
Financial Results Announcement issued on 23 March 2017 includes a
commentary on the primary uncertainties affecting the Group's
businesses for 2017/18.
Further details of other key risks and uncertainties relating to
the NEXT group are set out on pages 30 to 34 of the 2017 Report and
Accounts. The following is extracted in full unedited text from the
2017 Annual Report and Accounts. Accordingly, page references in
the text below refer to page numbers in the Annual Report and
Accounts.
Description of principal How the risk or uncertainty
risk or uncertainty is managed or mitigated
Business strategy
development and implementation
If the Board adopts The Board reviews business
the wrong business strategy on a regular basis
strategy or does not to determine how sales and
implement its strategies profit budgets can be achieved
effectively, the business or bettered, and business
may suffer. The Board operations made more efficient.
therefore needs to Seasonal and annual budgets
understand and properly together with longer term
manage strategic risk, financial objectives and
taking into account cash flow forecasts are produced.
specific retail sector
risk, in order to The Board and senior management
deliver long term consider strategic risk factors,
growth for the benefit wider economic and industry
of NEXT's stakeholders. specific trends that affect
the Group's businesses, the
competitive position of its
product offer and the financial
structure of the Group.
The Audit Committee monitors
strategic and operational
risk regularly and any significant
matters are reported to the
Board.
Management team
The success of NEXT The Remuneration and Nomination
relies on the continued Committees identify senior
service of its senior personnel, review remuneration
management and technical at least annually and formulate
personnel, and on packages to retain and motivate
its ability to continue these employees, including
to attract, motivate long term incentive schemes.
and retain highly
qualified employees. The Board considers the development
The retail sector of senior managers to ensure
is very competitive adequate career development
and NEXT's staff may opportunities for key personnel,
be targeted by other with orderly succession and
companies. promotion to important management
positions.
Product design and
selection Executive directors and senior
NEXT's success depends management continually review
on designing and selecting the design, selection and
products that customers performance of NEXT's product
want to buy, at appropriate ranges. To some extent, product
price points and in risk is also mitigated by
the right quantities. the diversity of NEXT's ranges.
In the short term,
a failure to properly
manage this area may
mean that NEXT is
faced with surplus
stocks that cannot
be sold at full price
and may have to be
disposed of at a loss.
In the longer term,
the reputation of
the NEXT Brand may
suffer. Product design
and selection is therefore
at the heart of the
business.
Key suppliers and
supply chain management NEXT continually seeks ways
NEXT relies on its to develop its supplier base
supplier base to deliver so as to reduce over-reliance
products on time and on individual suppliers of
to the quality standards products and services, and
it specifies. Failure maintain the quality and
to do so may result competitiveness of its offer.
in an inability to The Group's risk assessment
service customer demand procedures for key suppliers
or adversely affect identify alternatives and
NEXT's reputation. develop contingency plans
in the event of key supplier
Changes in global failure.
manufacturing capacity
and costs may impact Existing and new sources
on profit margins. of supply are developed in
conjunction with NEXT Sourcing,
Non-compliance by external agents and/or direct
suppliers with the suppliers.
NEXT Code of Practice
principles may increase NEXT carries out regular
reputational risk. inspections of its suppliers'
operations to ensure compliance
with the standards set out
in this code; covering production
methods, employee working
conditions, quality control
and inspection processes.
Further details can be found
on page 37.
NEXT monitors and reviews
the financial, political
and geographical aspects
of its supplier base to identify
any factors that may affect
the continuity or quality
of supply of its products.
NEXT also monitors and reviews
stock availability on an
ongoing basis to ensure that
issues are identified and
appropriate action is taken
where any issues are impacting
service delivery to customers.
Warehousing and distribution
NEXT regularly reviews Planning processes are in
the warehousing and place to ensure there is
distribution operations sufficient warehouse handling
that support the business. capacity for expected future
Risks include business business volumes over the
interruption due to short and longer terms.
physical damage, access
restrictions, breakdowns, Service levels, warehouse
capacity shortages, handling, inbound logistics
IT systems failure and delivery costs are monitored
(see next page), inefficient continuously to ensure goods
processes and third-party are delivered to our warehouses,
failures. Retail stores and Directory
customers in a timely and
cost-efficient manner.
Business continuity plans
and insurance are in place
to mitigate the impact of
business interruption.
Customer experience
NEXT's performance Market research is used to
depends on the recruitment assess customer opinions
and retention of customers, and satisfaction levels,
and on its ability and regular customer experience
to drive and service visits to our stores help
customer demand. This to ensure that staff remain
includes having an focussed on delivering excellent
attractive, functional customer service.
and reliable website
and effective call The Group continuously monitors
centres, operating website and call centre operations
successful marketing that support the business
strategies, and providing to ensure that there is sufficient
both Retail and Directory capacity to handle volumes.
customers with service
levels that meet or Call centre employees receive
exceed their expectations. comprehensive and relevant
training on an ongoing basis,
targeting our service to
be at its highest possible
levels.
Retail store network
NEXT Retail's performance The predominantly leased
depends on profitably store portfolio is actively
developing the trading managed by senior management,
space of the store with openings, refits and
network. The successful closures based on store profitability
development of new and cash payback criteria.
stores depends on
a number of factors Regular reviews of lease
including the identification expiry and break clauses
of suitable properties, are undertaken to identify
obtaining planning opportunities for exit or
permissions and the renegotiation of commitments.
negotiation of acceptable Profiling of the Group's
lease terms. Prime lease commitments is also
retail sites will regularly reviewed by the
generally remain in Board.
demand, and increased
competition for these NEXT will continue to invest
can result in higher in new space where its financial
future rents. criteria are met, and will
renew and refurbish its existing
portfolio when appropriate.
Information security,
business continuity
and cyber risk Systems' vulnerability and
NEXT is dependent penetration testing are carried
upon the continued out regularly to ensure that
availability and integrity data is protected from corruption
of its IT systems, or unauthorised access or
which must record use.
and process substantial
volumes of data and Critical systems are reviewed
conduct inventory and tested periodically to
management accurately ensure they have back up
and quickly. The Group's facilities and business continuity
systems require continuous plans in place; these are
enhancement and investment updated on an ongoing basis
to prevent obsolescence to reflect business risk.
and maintain responsiveness.
The threat of unauthorised IT risks are also managed
or malicious attack through the application of
is an ongoing risk, internal policies and change
the nature of which management procedures, contractual
is constantly evolving service level agreements
and becoming increasingly with third-party suppliers,
sophisticated. and IT capacity management.
The Audit Committee received
updates and agreed appropriate
actions relating to cyber
risk and business continuity
during the year (see page
56).
As the nature of cyber attack
risk is constantly changing
and becoming ever more sophisticated,
NEXT continually works towards
improving mitigating controls
in this critical area (see
page 56 regarding the independent
cyber risk review undertaken
during the year).
Financial, treasury,
liquidity and credit NEXT operates a centralised
risks treasury function which is
The main financial responsible for managing
risks are the availability its liquidity, interest and
of funds to meet business foreign currency risks. The
needs, default by Group's treasury function
counterparties to operates under a Board approved
financial transactions, policy. This includes approved
and the effect of counterparty and other limits
fluctuations in foreign which are designed to mitigate
exchange rates and NEXT's exposure to financial
interest rates, and risk. Further details of
compliance with regulation. the Group's treasury operations
are given in Note 24 of the
financial statements.
Compliance teams are responsible
for regulatory compliance
in specific areas. NEXT continually
strives to maintain and develop
the systems and processes
that underpin these areas
(see page 30). The Audit
Committee received regular
NEXT has a longstanding briefings on regulatory compliance
policy of returning during the year, for example
surplus cash to shareholders in relation to requirements
through share buybacks for the Payment Card Industry
and special dividends, Data Security Standards (PCI
whilst maintaining DSS), and the FCA regulated
an appropriate level credit business.
of debt. Adequate
financing facilities NEXT has adequate medium
are therefore required and long term financing in
to support the operational place to support its business
needs of the business. operations, and the Group's
cash position and forecasts
NEXT is also exposed are regularly monitored and
to credit risk, particularly reported to the Board.
in respect of its
Directory customer
receivables, which
at GBP1bn represents
the largest item on Rigorous procedures are in
the Group balance place with regard to the
sheet. Group's Directory account
customers, including the
use of external credit reference
agencies and applying set
risk criteria before acceptance.
These procedures are regularly
reviewed and updated.
The Audit Committee received
a formal update regarding
the customer credit business
during the year.
Directors' Responsibilities Statement
Directors' Responsibilities
The directors are responsible for preparing the Strategic
Report, Directors' Report and the financial statements in
accordance with applicable law and regulations.
As a listed company within the European Union, the directors are
required to prepare the Group financial statements in accordance
with International Financial Reporting Standards (IFRSs) as adopted
by the EU. The directors have elected to prepare the parent company
financial statements in accordance with the Companies Act 2006 and
UK Accounting Standard FRS 101 "Reduced Disclosure Framework".
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the Company and of
the profit or loss of the Group for that period. In preparing the
financial statements, the directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- in respect of the Group financial statements, provide
additional disclosures when compliance with the specific
requirements of IFRS is insufficient to enable users to understand
the impact of particular transactions, other events and conditions
on the Group's financial position and performance;
-- state that the Group has complied with IFRS, subject to any
material departures disclosed and explained in the financial
statements;
-- in respect of the parent company financial statements, state
whether applicable UK accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements; and
-- prepare the financial statements on a going concern basis,
unless they consider that to be inappropriate.
The directors confirm that the financial statements comply with
the above requirements.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and the Group and enable them to
ensure that the financial statements comply with the Companies Act
2006 and, as regards the Group financial statements, Article 4 of
the IAS Regulation. They are also responsible for safeguarding the
assets of the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Responsibilities statement
We confirm that to the best of our knowledge:
a) the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and results of
the Group;
b) the Strategic Report contained in this annual report includes
a fair review of the development and performance of the business
and the position of the Company and the Group, together with a
description of the principal risks and uncertainties that they
face; and
c) the annual report and accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Company's performance, business
model and strategy.
On behalf of the Board
Lord Wolfson of Aspley Guise Amanda James
Chief Executive Group Finance Director
23 March 2017
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