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Share Name Share Symbol Market Type Share ISIN Share Description
Next Plc LSE:NXT London Ordinary Share GB0032089863 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  72.00 0.9% 8,092.00 8,082.00 8,088.00 8,204.00 8,040.00 8,086.00 238,886 16:35:28
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Retailers 3,997.5 748.5 472.4 17.1 10,758

Next PLC Annual Financial Report

20/04/2021 11:24am

UK Regulatory (RNS & others)


TIDMNXT

RNS Number : 0428W

Next PLC

20 April 2021

 
 Contacts:      Alistair Mackinnon-Musson 
                Rowbell PR 
                Email: next@rowbellpr.com                Tel: 020 7717 5239 
 
 
 Photographs:   Photographs available at: 
                 http://press.next.co.uk/media/company-images/campaignimages.aspx 
 

Next plc (the "Company")

Annual Financial Report for period ended January 2021

including the Notice of Annual General Meeting ("AGM") - convened for

20 May 2021

The Company announces that the Annual Financial Report for the period ended January 2021 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 2021 Annual General Meeting has been uploaded to the National Storage Mechanism and will be available for viewing shortly at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

AGM

The ongoing Government restrictions on mass gatherings, non-essential travel and social contact in relation to COVID are likely to impact the ability of shareholders to attend the AGM. Based on current restrictions, the Board has concluded that it is appropriate to strongly urge shareholders not to attend the AGM in person this year. Shareholders are instead requested to make use of the electronic facilities to participate and vote remotely.

Shareholders can access the AGM by visiting https://web.lumiagm.com . Further information on how to join the AGM electronically, including a step by step user guide, can be found in the Notice of AGM.

We strongly encourage shareholders who will not be participating in the meeting electronically to submit a proxy vote in advance of the meeting.

S L Anderson

Company Secretary

Next plc

The Appendix to this announcement is a supplement to our preliminary statement of financial results made on 1 April 2021 (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.

APPIX

The Chief Executive's Review in the preliminary statement of the Financial Results Announcement issued on 1 April 2021 includes a commentary on the primary uncertainties affecting the Group's businesses for 2021/22.

Further details of other key risks and uncertainties relating to the Group are set out on pages 72 to 76 of the 2021 Annual Report. The directors' responsibilities statement can be found on page 100 of the 2021 Annual Report. The following is extracted in full unedited text from the 2021 Annual Report. Accordingly, page references in the text below refer to page numbers in the 2021 Annual Report.

Risk trend: Increasing Unchanged Decreasing

 
  Principal risk and description 
   Business strategy development and                           How we manage or mitigate the risk 
    implementation                                               *    The Board reviews business strategy on a regular 
    If the Board adopts the wrong business                            basis to determine how sales and profit can be 
    strategy or does not implement its                                maximised, and business operations made more 
    strategies effectively, our business                              efficient. 
    may suffer. The Board therefore 
    needs to understand and properly 
    manage strategic risk, taking into                           *    The Chief Executive provides regular updates at Board 
    account specific retail sector risk                               meetings regarding key opportunities and progress of 
    factors, in order to deliver long                                 major initiatives. 
    term growth for the benefit of NEXT's 
    stakeholders. 
                                                                 *    Our International Online business and our third-party 
                                                                      LABEL business provide geographic and product 
                                                                      diversity. 
 
 
                                                                 *    Our disciplined approach to sales, budgeting, 
                                                                      investment returns and cost control ensures the 
                                                                      Company continues to generate strong profits and cash 
                                                                      flows. 
 
 
                                                                 *    The Board and senior management consider strategic 
                                                                      risk factors, wider economic and industry specific 
                                                                      trends that affect the Group's businesses, the 
                                                                      competitive position of its product and the financial 
                                                                      structure of the Group. 
 
 
                                                                 *    A detailed plan to manage the business going forward 
                                                                      and its longer term direction of travel exists and is 
                                                                      clearly articulated to our stakeholders in our annual 
                                                                      and half yearly reports. 
 
 
                                                                 *    Longer term financial scenarios for our Retail 
                                                                      business have been prepared and stress tested. This 
                                                                      process provides a mechanism for ensuring that 
                                                                      business profitability is maximised through efficient 
                                                                      allocation of resources and management of costs. 
                                                             ----------------------------------------------------------------------- 
   Product design and selection                                How we manage or mitigate the risk 
                                                                 *    Executive directors and senior management continually 
    Our success depends on designing                                  review the design, selection and performance of NEXT 
    and selecting products that customers                             product ranges and those of other brands sold by 
    want to buy, at appropriate price                                 NEXT. 
    points and stocked in the right 
    quantities. 
                                                                 *    LABEL brands (along with our new Beauty business) 
    In the short term, a failure to                                   have served to increase the breadth of our website 
    manage this risk may result in surplus                            offer far beyond NEXT's natural design, fashion and 
    stocks that cannot be sold and may                                price boundaries. Just as important, but much less 
    have to be disposed of at a loss.                                 obvious, has been the numerous ways in which our own 
                                                                      NEXT product ranges have been extended and 
    Over the longer term a failure to                                 diversified. 
    meet the design, quality and value 
    expectations of our customers will 
    adversely affect the reputation                              *    Executive directors and senior management regularly 
    of the NEXT Brand.                                                review product range trends to assess and correct any 
                                                                      key selection or product issues. Corrections to 
                                                                      significant missed trends or poorer performing ranges 
                                                                      are targeted for amendment, with alternative products 
                                                                      being sourced within six months where necessary. 
 
 
                                                                 *    Senior product management approves quality standards, 
                                                                      with in-house quality control and testing teams in 
                                                                      place across all product areas. 
 
 
                                                                 *    Senior management regularly reviews product recalls 
                                                                      and product safety related issues. 
                                                             ----------------------------------------------------------------------- 
   Key suppliers and supply chain                              How we manage or mitigate the risk 
    management                                                   *    Stock availability is reviewed on an ongoing basis 
                                                                      and appropriate action taken where service or 
    Reliance on our supplier base to                                  delivery to customers may be negatively impacted. 
    deliver products on time and to 
    quality standards is essential. 
    Failure to do so may result in an                            *    Management continually seeks ways to develop our 
    inability to service customer demand                              supplier base to reduce over-reliance on individual 
    or adversely affect NEXT's reputation.                            suppliers and to maintain the quality and 
                                                                      competitiveness of our offer. The Group's supplier 
    Changes in global manufacturing                                   risk assessment procedures establish contingency 
    capacity and costs may impact on                                  plans in the event of key supplier failure. 
    profit margins. 
 
    Non-compliance by suppliers with                             *    Existing and new sources of product supply are 
    the NEXT Code of Practice may increase                            developed in conjunction with NEXT Sourcing, external 
    reputational risk or undermine our                                agents and/or direct suppliers. 
    reputation as a responsible retailer. 
 
                                                                 *    Our in-house global Code of Practice team carry out 
                                                                      regular audits of our product-related suppliers' 
                                                                      operations to ensure compliance with the standards 
                                                                      set out in our Code. These standards cover supplier 
                                                                      production methods, employee working conditions, 
                                                                      quality control and inspection processes. Further 
                                                                      details are set out on page 81. 
 
 
                                                                 *    We train relevant employees and communicate with 
                                                                      suppliers regarding our expectations in relation to 
                                                                      responsible sourcing, anti-bribery, human rights and 
                                                                      modern slavery. 
 
 
                                                                 *    The Audit Committee receives Code of Practice and 
                                                                      modern slavery updates from senior management during 
                                                                      the year. 
 
 
                                                                 *    The Audit Committee receives modern slavery and 
                                                                      anti-bribery training progress updates together with 
                                                                      whistleblowing reports at each meeting. Significant 
                                                                      matters are reported to the Board. 
                                                             ----------------------------------------------------------------------- 
     Warehousing and distribution                               How we manage or mitigate the risk 
                                                                  *    Planning processes are in place to ensure there is 
      Our warehousing and distribution                                 sufficient warehouse handling capacity for expected 
      operations provide fundamental support                           future business volumes over the short and longer 
      to the running of the business.                                  terms. 
      Risks include business interruption 
      due to physical damage, access restrictions, 
      breakdowns, capacity and resourcing                         *    Service levels, warehouse handling, inbound logistics 
      shortages, IT systems failure, inefficient                       and delivery costs are continually monitored to 
      and slow processes and third-party                               ensure goods are delivered to our warehouses, Retail 
      failures.                                                        stores and Online customers in a timely and 
                                                                       cost-efficient manner. 
      Increasing choice in the products 
      NEXT sells has been central to the 
      development of our Online Platform                          *    Our Warehouse Leadership Team meets regularly to 
      but the proliferation of unique                                  assess the opportunities and risks in our warehouse 
      items, along with an accelerated                                 and logistics network. 
      shift from Retail to Online sales 
      resulting from COVID lockdowns has 
      presented our warehouse operation                           *    Business continuity plans and insurance are in place 
      with significant challenges.                                     to mitigate the impact of business interruption. 
 
 
                                                                  *    The Board has approved and keeps under regular review 
                                                                       a 
 
 
                                                                 warehouse investment proposal to accommodate 
                                                                 further Online growth and transfer 
                                                                 in customer demand from Retail to 
                                                                 Online (see page 26 for further details). 
                                                             ----------------------------------------------------------------------- 
   Business critical systems                                             How we manage or mitigate the risk 
                                                                          *    Continued investment in technology which supports the 
    NEXT's performance depends on the                                          various component parts of the NEXT Online Platform. 
    engagement, recruitment and retention 
    of customers, and on its ability 
    to drive and service customer demand.                                 *    Continual development and monitoring of performance 
    There is a risk that the business                                          of NEXT's UK and overseas websites, with a particular 
    fails to adopt and/or maintain efficient                                   focus on improving the online customer experience. 
    use of suitable software, hardware 
    and mechanization to provide both 
    Retail and Online customers with                                      *    A range of key trade and operational meetings keep 
    service levels that meet or exceed                                         under review the performance, evolution, risks and 
    their expectations. These systems,                                         opportunities of the NEXT customer-facing systems. 
    software and platforms are ever                                            Executive directors are in attendance at each of 
    changing, as technology continues                                          these key meetings. 
    to evolve. Keeping customers and 
    users up to date and managing the 
    implementation and changes that                                       *    Market research and customer feedback is used to 
    come with the evolution of these                                           assess customer opinions and satisfaction levels to 
    platforms, in addition to maintenance                                      help to ensure that we remain focused on delivering 
    of existing systems, can be challenging.                                   excellent customer service. 
 
    As detailed in the Strategic Report, 
    our business has an increased reliance                                *    Ongoing monitoring of KPIs and feedback from website 
    on technology and the development                                          and call centre support operations. 
    of new business ideas within the 
    Group (such as Total Platform) increases 
    that reliance further. 
                                                             ----------------------------------------------------------------------- 
  Management of long term liabilities                          How we manage or mitigate the risk 
   and capital expenditure                                       *    Our predominantly leased store portfolio is actively 
                                                                      managed by senior management, with openings, refits 
   Poor management of NEXT's longer                                   and closures based on strict store profitability and 
   term liabilities and capital expenditure                           cash payback criteria. 
   could jeopardise the long term sustainability 
   of the business. It is important 
   to ensure that the business continues                         *    We undertake regular reviews of lease expiry and 
   to be responsive and flexible to                                   break clauses to identify opportunities for exit or 
   meet the challenges of a rapidly                                   renegotiation of commitments. Leases will not be 
   changing Retail sector.                                            automatically renewed if acceptable terms are not 
                                                                      agreed. 
 
 
                                                                 *    The Board regularly reviews our lease commitments, 
                                                                      new store openings and potential store closures. 
 
 
                                                                 *    We ensure that we make healthy returns on capital 
                                                                      employed, commensurate with the risks involved in our 
                                                                      sector (in practical terms this means a return of no 
                                                                      less than 15% on capital invested). 
 
 
                                                                 *    Appropriate amortisation accounting policies reduce 
                                                                      the risk of unexpected significant write-off. 
                                                             ----------------------------------------------------------------------- 
  Information security, business continuity                    How we manage or mitigate the risk 
   and cyber risk                                                *    We operate an Information Security and Data 
                                                                      Protection Steering Committee. Its main activities 
   The continued availability and integrity                           include agreement and monitoring of related key risks, 
   of our IT systems is critical to                                   activities and incidents. The Committee comprises two 
   successful trading. Our systems                                    executive directors and relevant senior management. 
   must record and process substantial 
   volumes of data and conduct inventory 
   management accurately and quickly.                            *    Significant investment in systems' development and 
   Continuous enhancement and investment                              security programmes has continued during the year, 
   is required to prevent obsolescence                                complemented by in- house dedicated information and 
   and maintain responsiveness.                                       physical security resources. 
 
   The threat of unauthorised or malicious 
   attack is an ongoing risk, the nature                         *    Systems vulnerability and penetration testing is 
   of which is constantly evolving                                    carried out regularly by both internal and external 
   and becoming increasingly sophisticated.                           resources to ensure that data is protected from 
   Our brand reputation could be negatively                           corruption or unauthorised access or use. 
   impacted by cyber security breaches. 
 
                                                                 *    Critical systems backup facilities and business 
                                                                      continuity plans are reviewed and updated regularly. 
 
 
                                                                 *    Major incident simulations and business continuity 
                                                                      tests are carried out periodically. 
 
 
                                                                 *    IT risks are managed through the application of 
                                                                      internal policies and change management procedures, 
                                                                      imposing contractual security requirements and 
                                                                      service level agreements on third-party suppliers, 
                                                                      and IT capacity management. 
 
 
                                                                 *    All staff and contractors are required to read, 
                                                                      accept and comply with the Group's data protection 
                                                                      and information security policies, which are kept 
                                                                      under regular review and supported by training. 
 
 
                                                                 *    Information security and data protection risk 
                                                                      exposure are reviewed during the year by both the 
                                                                      Audit Committee and the Board; this informs an 
                                                                      executive-sponsored programme of continuous 
                                                                      improvement. 
                                                             ----------------------------------------------------------------------- 
  Financial, treasury, liquidity and                           How we manage or mitigate the risk 
   credit risks                                                  *    NEXT operates a centralised treasury function which 
                                                                      is responsible for managing liquidity, interest and 
   NEXT's ability to meet its financial                               foreign currency risks. It operates under a Board 
   obligations and to support the operations                          approved Treasury policy. Approved counterparty and 
   of the business is dependent on                                    other limits are in place to mitigate NEXT's exposure 
   having sufficient funding over the                                 to counterparty failure. Further details of the 
   short, medium and long term.                                       Group's treasury operations are given in Note 28 to 
                                                                      the financial statements. 
   NEXT is reliant on the availability 
   of adequate financing from banks 
   and capital markets to meet its                               *    The Group's debt position, available liquidity and 
   liquidity needs.                                                   cash flow projections are regularly monitored and 
                                                                      reported to the Board. The Board will agree funding 
   NEXT is exposed to foreign exchange                                for the Group in advance of its requirement to 
   risk and profits may be adversely                                  mitigate exposure to illiquid market conditions. 
   affected by unforeseen moves in 
   foreign exchange rates. 
                                                                 *    The events of 2020 led to very significant focus on 
   NEXT might suffer financial loss                                   the Group's liquidity position. The Board continues 
   if a counterparty with which it                                    to keep under review the cash generation levers 
   has transacted fails and is unable                                 available to it, including the potential quantum and 
   to fulfil its contract.                                            timescales of initiatives to reduce debt and realise 
                                                                      cash. Net debt has been significantly reduced in the 
   NEXT is also exposed to credit risk,                               year and actions taken have further strengthened the 
   particularly in respect of our Online                              liquidity of the business. 
   customer receivables, which at GBP1bn 
   represents the largest item on the 
   Group Balance Sheet.                                          *    NEXT has a Treasury Committee which includes the 
                                                                      Group Finance Director. The Treasury Committee 
                                                                      usually meets weekly to review the Group's treasury 
                                                                      and liquidity risks including foreign exchange 
                                                                      exposures. 
 
 
                                                                 *    Rigorous procedures are in place with regards to our 
                                                                      credit account customers, including the use of 
                                                                      external credit reference agencies and applying set 
                                                                      risk criteria before acceptance. These procedures are 
                                                                      regularly reviewed and updated. 
 
 
                                                                 *    Continual monitoring of our credit customers' payment 
                                                                      behaviours and credit take up levels is in place. 
 
 
                                                                 *    The Board and Audit Committee receives regular 
                                                                      updates throughout the year regarding the customer 
                                                                      credit business. 
                                                             ----------------------------------------------------------------------- 
  Legal, regulatory and ethical standards                                How we manage or mitigate the risk 
  compliance                                                              *    Policies and training are in place for those 
                                                                               employees and contractors working in the business 
  Failure to continuously adapt to                                             areas that are subject to financial regulation. These 
  the increasingly broad, stringent                                            are kept under review and updated. 
  and fast-evolving regulatory framework 
  applicable to the operation of the 
  Group's customer credit business                                        *    A dedicated financial regulatory compliance and 
  could result in significant financial                                        quality assurance team monitors compliance and any 
  penalties and remediation costs,                                             changing requirements, working with external advisers 
  reputational damage and/ or restrictions                                     as required. 
  on our ability to operate. 
 
  With growing reliance on our digital                                    *    NEXT has identified a set of Conduct and Compliance 
  online and marketing activities,                                             risks, documented in an operational risk register, 
  the Group could inadvertently process                                        with owners and associated controls. 
  customer or employee data in a manner 
  deemed unethical or unlawful, resulting 
  in significant financial penalties,                                     *    Key risk and control performance indicators are 
  remediation costs, reputational                                              managed through a series of operational meetings and 
  damage and/or restrictions on our                                            reported quarterly to the Retail Credit Board. 
  ability to operate. This is against 
  a backdrop of: 
                                                                          *    We operate an Information Security and Data Privacy 
   *    The changing attitude of UK consumers toward their                     Steering Committee. Its main activities include 
        data and how it is used.                                               agreement and monitoring of related key risk 
                                                                               activities and incidents. The Committee comprises two 
                                                                               executive directors and relevant senior management. 
   *    Increasingly complex and fast-evolving data 
        protection law and regulation. 
                                                                          *    With regard to climate risk, the transitional 
                                                                               (including regulatory requirements) and physical 
   *    Rapid technological advances delivering an enhanced                    risks and opportunities presented by rising 
        ability to gather, draw insight from and monetise                      temperatures, climate-related policy, and emerging 
        personal data.                                                         technologies will be kept under review using the TCFD 
                                                                               framework. Climate risk, regulatory changes and 
                                                                               stakeholder expectations are considered on an ongoing 
                                                                               basis by our ESG Steering Group and Audit Committee. 
  With regard to climate risk, stakeholder 
  expectations and regulatory attention 
  could develop at pace, impacting 
  the rate at which the business may 
  need to cut carbon emissions. 
                                                             ----------------------------------------------------------------------- 
 

Directors' Responsibilities statement

Directors' Responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Group financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. Additionally the Financial Conduct Authority's Disclosure Guidance and Transparency Rules require the directors to prepare the group financial statements in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and parent company financial statements in accordance with United Kingdom General Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 1010 "Reduced Disclosure Framework", and applicable law).

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 Parent Company and of the profit or loss of the Group and Parent Company for that period. In preparing the financial statements, the directors are required to:

-- Select suitable accounting policies and then apply them consistently

-- State whether, for the Group and Parent Company, international accounting standards in conformity with the requirements of the Companies Act 2006 and, for the Group, international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union have been followed for the Group financial statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the Parent Company financial statements, subject to any material departures disclosed and explained in the financial statements

-- Make judgements and accounting estimates that are reasonable and prudent

-- Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business

The directors are also responsible for safeguarding the assets of the Group and Parent Company and hence for taking reasonable steps for

the prevention and detection of fraud and other irregularities.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Parent Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

The directors are responsible for the maintenance and integrity of the Parent Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' confirmations

The directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the

information necessary for shareholders to assess the Group and Parent Company's position and performance, business model and strategy.

Each of the directors, whose names and functions are listed on pages 98 and 99, confirm that to the best of their knowledge:

-- the Group financial statements, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and, additionally for the Group, international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group;

-- the Parent Company financial statements, which have been prepared in accordance with United Kingdom Accounting Standards comprising FRS 101, give a true and fair view of the assets, liabilities, financial position and profit of the Parent Company and

-- the Strategic Report includes a fair review of the development and performance of the business and the position of the Group and Parent Company, together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board

 
 Lord Wolfson of Aspley   Amanda James 
  Guise                    Group Finance Director 
  Chief Executive 
 

1 April 2021

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