Marks and Spencer Group plc 2013 Annual Report Announced

Posted on 24, June 2013 by | This entry was posted in Apparel, Fashion & Beauty, Business, Financial, Management, Retail, United Kingdom and tagged , , , , , , . Bookmark the permalink.

24-6-2013 — /europawire.eu/ — In compliance with Listing Rule 9.6.1, the Company has today submitted a copy of the following documents to the UK Listing Authority, which will shortly be available for inspection via the National Storage Mechanism which can be viewed at morningstar.co.uk/uk/NSM:

– Annual report and financial statements 2013;

– Annual review and summary financial statements 2013; and

– The Notice of Annual General Meeting of the Company which will be held at Wembley Stadium, Wembley, London HA9 0WS at 11am on Tuesday 9 July 2013.

In accordance with DTR 6.3.5(3) the Annual report and financial statements 2013, Annual review and summary financial statements 2013 and the Notice of Meeting will be available to view on the Company website: marksandspencer.com/annualreport2013.

A condensed set of Marks and Spencer Group plc financial statements and information on important events that have occurred during the year and their impact on the financial statements were included in the Company’s preliminary announcement on 21 May 2013. That information together with the information set out below which is extracted from the Annual report and financial statements constitute the requirements of DTR 6.3.5 which is to be communicated via an RIS in unedited full text. This announcement is not a substitute for reading the full Annual report and financial statements. Page and note references in the text below refer to page numbers in the Annual report and financial statements 2013. To view the preliminary announcement, visit the Company website: marksandspencer.com/thecompany.

Principal risks and uncertainties

As with any business, we face risk and uncertainties on a daily basis. It is the effective management of these that places us in a better position to be able to achieve our strategic objectives and to embrace opportunities as they arise. Below are details of our principal risks and the mitigating activities in place to address them. It is recognised that the Group is exposed to a number of risks, wider than those listed. However, a conscious effort has been made to disclose those of greatest importance to the business at this moment in time and those that have been the subject of debate at recent Board or Audit Committee meetings.

 

Description Mitigating activities
Finance: We continue to focus on maintaining a strong financial position that supports improvements to our business
Economic outlookEconomic conditions worsen or do not improve, impacting our ability to deliver the plan

As consumers’ disposable incomes come under pressure from price inflation and government austerity measures, trading conditions continue to remain a challenge for our business.

 – Proactive management of costs
– Regular review of customer feedback and marketplace positioning
– Continued focus on value proposition in the context of a balanced product offer, including market leading innovation
– Ongoing monitoring of pricing and promotional strategies
– Regular commercial review of product performance
Brand and reputation: Our founding principles of Quality, Value, Service, Innovation and Trust continue to influence how we do business and our reputation for being one of the UK’s most trusted brands
GM productContinued loss of engagement with our core customer
As we seek to enhance the M&S brand, it is important that we address our core customers’ specific needs in an increasingly competitive market where economic uncertainty continues to be an influencing factor.		 – New senior management team appointed with clear focus on quality and style
– Prioritisation of core customer in both General Merchandise and Marketing objectives
– Regular review of customer reaction to product and in store experience through focus groups and in-house Customer Insight Unit presentations
– Ongoing product and store improvements addressing specific customer feedback
– Targeted marketing and promotional activity using customer loyalty data
Food safety and integrityA food safety or integrity related incident occurs or is not effectively managed

As a leading retailer of fine quality fresh food, it is of paramount importance that we manage the safety and integrity of our products and supply chain, especially in light of the business’ greater operational complexity and the heightened risk of fraudulent behaviour in the supply chain.

 – Dedicated team responsible for ensuring that all products are safe for consumption through rigorous controls and processes
– Continuous focus on quality
– Proactive horizon scanning including focus on fraud and adulteration
– Established supplier and depot auditing programme
People and change: Our people are fundamental to the long term success and growth of this business
Our peopleOur organisational culture and structure limit our ability to adapt to market changes with pace

As the business strives to become a leading international, multi-channel retailer, it is essential that our organisational set-up allows us to respond to market changes with pace.

 – External hires recruited into a number of senior roles bringing an alternative perspective
– Robust employee engagement process for effective communication
– Alignment of development programmes with business strategy
Programme and workstream managementBenefits from our major business programmes
and workstreams are not realised

We continue to undertake a number of major strategic programmes to underpin the achievement of our plan; the delivery of forecasted benefits is critical to this.

 – Strategic Programme Office centrally governs the Group’s initiatives providing regular status and benefits realisation updates to the Executive Board
– Proactive management of programme portfolio and associated benefits in the context of current market conditions and the Group’s three year plan
– Programme governance structures in place for all major programmes, supported by robust project management discipline
– Proactive identification and management of major cross programme interdependencies
Distribution centre restructureWe fail to effectively deliver our new national e-commerce distribution centre

Our new national distribution centre will also service all customer orders placed through Shop Your Way. The implementation of this distribution centre relies on the opening of a new facility and new business processes and systems.

 – Robust programme governance in place with clear identification of interdependencies with other Group initiatives
– Phased approach to implementation
– Ongoing review of trajectory for achievement of agreed operational and financial objectives
– Ongoing review of contingency requirement during facility transition
– Engagement with external experts (as appropriate) to ensure successful delivery of the in-house operation
Selling channels: We have ambitious plans for our UK, International and Multi-channel businesses as part of our commitment to becoming an international, multi-channel retailer
Multi-channelA new multi-channel platform with flexibility to
support future growth is not delivered by the time our contract with Amazon expires

To achieve our target to become a leading multi-channel retailer and to make our brand more accessible, we are investing in a new online platform that will provide both an enhanced shopping experience and help to accelerate growth.

 – Robust programme governance in place with clear identification of interdependencies with other Group initiatives
– Phased approach to implementation
– Agreed quality assurance plan for programme delivery
– Close working with Amazon to ensure the quality of the existing online offer is maintained during new platform delivery
InternationalOur plan to grow our international business is limited by performance in legacy markets, the start up profitability of new markets or substandard infrastructure

To increase our international presence and build a leadership position in priority markets it is crucial that we maximise our performance in both legacy and new markets, supported by robust systems and supply chain capability.

 – Frequent monitoring of performance, including individual country reviews
– Particular focus on like for like performance and poor performing stores
– Property Board approval of new store openings and monitoring of returns on investment, plus creation of key roles to facilitate delivery of property pipeline
– Representation of International in key Group initiatives
Day-to-day operation: We are a customer-centric business and strive to deliver an efficient and effective operation
GM stock managementIneffective stock management control impacts either gross margin delivery or product availability

Effective stock management is integral to ensuring that we provide good availability to our customers, whilst minimising the impact of markdowns on profitability.

 – Stock, Sales & Intake tool used consistently across GM to plan and manage stock levels
– Regular commercial reviews to monitor stock levels and improve overall stock control
– Tight control of promotional activity
– UK stock ledger now live and the implementation of supporting Business Insight reporting underway
– Established inventory control team to ensure stock data integrity
IT changeUnforeseen impact of IT changes to new and existing systems disrupts business operations

As we undertake a number of significant change programmes, the rate and scale of IT change is increasing, with potential to significantly impact our complex and interdependent systems.

 – Established Change Approval Board process
– Clear decision making process for system changes, including the adoption of change freezes during critical trading periods
– Proactive management of cross programme dependencies including ‘release management’ to group system changes together
– Robust Disaster Recovery plans in place for critical business applications
Business continuity NEWWe fail to adequately manage or respond to a Group-wide disaster

The business faces a heightened level of risk as a result of the Summer 2012 events taking place in the UK.

 Group continuity plans, incident reporting and management procedures are well established. We monitor these through an annual crisis management exercise and quarterly committee meetings. We have a number of policies and procedures in place to manage the safety of our employees when abroad, and have links with the Home Office and government agencies to receive information on known threats.
The Group Risk Profile reflects the most important risks facing the business at this point in time; these risks receive specific attention by the Board to ensure that sufficient mitigating activity is in place to reduce net risk to an acceptable level. The Group Risk Profile will evolve as these mitigating activities succeed in reducing the residual risk over time, or new risks emerge. As such, we have removed a number of risks from our Group Risk Profile since the prior year:– Last year we included Business continuity on the Group Risk Profile in response to the heightened level of risk driven by the UK’s summer 2012 events. With the risk now returning to a normal level it has been removed, recognising the strength of our controls in this area
– Financial position, Corporate reputation, New store format, Key supplier failure and IT security have also been removed in recognition of the actions taken to reduce the net risk position

The above risks remain important and they continue to be monitored as part of ‘business as usual’ activities; however, we consider that they do not represent key risks to our business at this time and they have therefore been removed from the Group Risk Profile.

 

The risks listed do not comprise all those associated with Marks & Spencer and are not set out in any order of priority. Additional risks and uncertainties not presently known to management, or currently deemed to be less material, may also have an adverse effect on the business.

Further information on the financial risks we face and how they are managed is provided on pages 101 to 106 of the Annual report.

Directors’ Responsibility Statement

The 2013 Annual Report contains the following statements regarding responsibility for the financial statements in compliance with DTR 4.1.12. Responsibility is for the full Annual report and financial statements 2013 and not the condensed statements required to be set out in the Annual Financial Report announcement.

###

EDITOR'S PICK:

Comments are closed.