Annual Financial Report

RNS Number : 7809M

Home Retail Group Plc

01 June 2010

 



Home Retail Group plc

(the "Company")

Annual Report and Financial Statements 2010

Notice of Annual General Meeting 2010

Proxy Form

The Company has today published the following documents on its website, www.homeretailgroup.com:

·      Annual Report and Financial Statements 2010

·      Notice of Annual General Meeting 2010

·      Proxy Form

The Company has also submitted copies of the above documents to the UK Listing Authority. The documents will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London, E14 5HS.

The Company will hold its 2010 Annual General Meeting at the Jurys Inn Milton Keynes, Midsummer Boulevard, Milton Keynes, MK9 2HP on 30 June 2010 at 11.00 am.

Attached to this announcement is the additional information required under Rule 6.3.5 of the Disclosure and Transparency Rules of the Financial Services Authority, including a description of the principal risk factors for the Company, as set out in the Annual Report and Financial Statements 2010, and a statement of directors' responsibilities.

ADDITIONAL INFORMATION

Principal risks and uncertainties

The principal risks and uncertainties that could impact the Group's performance and our mitigating activities are discussed below.  For further information on how the Group manages risk, see the business review and pages 40 and 41 of the corporate governance statement within the Annual Report and Financial Statements 2010.

Area of principal risk and uncertainty	Description and examples of mitigating activity
Economic and market risks Impact on sales, costs, profit and cash of: Ø Economic conditions Ø Cost of raw material products/services/utilities Ø Consumer preferences Ø Competitor activity Ø Seasonality/weather  Ø UK-centric store network Ø Expansion/development of store network Ø Changing demographics	The economic outlook for 2010 remains uncertain.  Key issues specific to the UK and Eire centre around the political landscape and plans to address the fiscal deficit (eg public spending cuts, tax changes) with their resultant impact on the consumer.  This economic environment, including the response of other retailers to it, has the potential to impact on the success of the Group in terms of its performance in respect of sales, costs, profit and cash generation. Significant cost savings have been made over the last three years in terms of operational effectiveness and supply chain benefits from the combined leverage of Argos and Homebase.  The ongoing efficiency programmes will enable the Group to continue its investment in competitive pricing and the development of the infrastructure.  The Group's operational and financial strength will continue to sustain our commercial advantage in the market place. The Group is committed to supporting cost-conscious customers and those looking for value across all spectrums of the range architecture.  Continued investment will further extend choice within the Argos and Homebase Value ranges and maintain our leadership in long term growth markets.  Other mitigating activities include: ·      Empowering customer choice by strengthening range architecture ·      Store format, multi-channel and customer service developments ·      Price tracking and dynamic pricing to ensure competitiveness
Currency Ø Purchase of products whose cost base of manufacture is in currencies other than sterling, principally the US dollar and the euro Ø Sale of products in currencies other than sterling, principally the euro in the Republic of Ireland	The volatility of the global economy continues to create a risk of exposure to fluctuations in currency rates related to overseas product purchasing.  We attempt to mitigate these risks through: ·      Appropriate hedging policies ·      Adjustments to customer pricing ·      Seeking opportunities for further sourcing efficiencies
Regulatory environment Ø Changes in UK and overseas legislation and regulation, eg consumer protection, environmental regulation Ø Changes in UK fiscal/employment policy, eg minimum wage	Good governance practices remain important to the Group.  In addition to ensuring compliance with existing requirements, we are active in monitoring potential future developments.  We also lobby, often with other retailers, to support and develop the industry and the interests of consumers.  Key developments impacting the Group are the Carbon Reduction Commitment, Payment Card Industry Data Security Standards and potential government changes to how customers can apply for store cards. Other mitigating activities include: ·      Membership of industry representative groups ·      Direct engagement with government and regulators ·      Dedicated working parties to manage operational change
Operations Failure to ensure appropriate processes are in place to manage the complexity of retail operations, including sourcing of products and customer service	The sourcing of products from outside the UK introduces complex supply chain risks that the Group mitigates through effective management processes to ensure that stock is in the right place at the right time to meet customer needs. Our distribution infrastructure is continuously reviewed to drive further stock efficiency. Enhancement of our award-winning multi-channel capability will ensure that customers are empowered to choose convenience; from shopping online for home delivery to using Check & Reserve to benefit from immediate collection from store.  The use of technology to get closer to our customers through social networking and online reviews enables customer issues to be identified and resolved quickly.  The new partnership between Homebase and Nectar, the UK's leading coalition loyalty programme, provides a platform for leveraging customer data to maximise sales and customer satisfaction. Other mitigating activities include: ·      Continuously improving the efficiency of catalogue production processes ·      Enhancement of the Homebase website, with 10,000 product lines now transactional ·      Improving the accuracy of stock forecasts ·      Extending installation services for kitchens, bathrooms and bedroom furniture ·      Dedicated working parties to manage operational change
Infrastructure development/ projects Delay or failure to manage and implement major business and infrastructure projects effectively	The Group is committed to investing for growth, extending multi-channel leadership and maintaining a robust infrastructure.  Strategic projects to replace or enhance key systems and infrastructure carry a degree of risk; however, we have dedicated project teams in place with strong governance frameworks to manage them. Other mitigating activities include: ·      Detailed approval and planning process prior to project commencement ·      Board review of status/progress of major change programmes ·      Post project implementation reviews ·      Management expertise in significant infrastructure/change programmes
Product safety Failure to manage supplier relationships and/or ensure appropriate quality checks are in place	The safety and quality of our products is of critical importance to the Group.  Suppliers are required to sign up to the Group's Supply Chain Principles and to specific policies regarding products and their environmental impact.  Wherever possible, Argos and Homebase teams work in conjunction with suppliers to ensure improvement opportunities are explored. Other mitigating activities include: ·      Rigorous quality/safety assessment programme for new products ·      Ongoing monitoring of quality/safety of goods on sale ·      Supplier relationship protocols ·      Ongoing rotation of supplier audits ·      Standardisation of terms and conditions for all suppliers
People Ø Reliance on key personnel Ø Pension obligations	The Group values its colleagues and their contribution to the success of the organisation.  Internal training schemes and the graduate recruitment programme maintain the succession pool and actively encourage promotion from within.   The Group has rolled out a new leadership model to support the development of current and future leaders.  We are committed to open communications with colleagues at all times and monitor employee satisfaction through an annual Group-wide staff survey. Other mitigating activities include: ·      Competitive remuneration packages ·      Succession planning ·      Management development and training programmes ·      Regular review of pension trustee activities and plans to mitigate the fund deficit
Business interruption Ø Acts of terrorism Ø Failure or unavailability of operational and/or IT infrastructure Ø Delay or interruption in service provided by third-party suppliers	A major incident could impact the ability of the Group to continue trading.  We maintain and routinely test our business continuity plans in order to reduce the potential impact of such events.  Security measures are in place where appropriate to protect colleagues, customers and assets.  We remain vigilant to the vulnerability of suppliers and continue to work towards a sustainable outcome for all parties.  The ongoing transfer of our data systems to a purpose built unit to enhance our continuity arrangements represents a major risk during the year which is reduced by the robust change management controls in place. Other mitigating activities include: ·      Business continuity and recovery planning ·      IT recovery plans ·      Third-party supplier management

Statement of directors' responsibilities

The directors are responsible for preparing the annual report, the directors' remuneration report and

the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that

law the directors have prepared the Group and Parent Company financial statements in accordance

with International Financial Reporting Standards (IFRSs) as adopted by the European Union.  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 these financial statements, the directors are required

to:

•           select suitable accounting policies and then apply them consistently;

•           make judgements and accounting estimates that are reasonable and prudent;

•           state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements;

•           prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

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 and

the Directors' remuneration report 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 Company and the Group and hence for taking reasonable steps for the prevention and

detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the Company's website. Legislation

in the United Kingdom governing the preparation and dissemination of financial statements may differ

from legislation in other jurisdictions. 

Each of the directors, whose names and functions are listed on page 34 of the Annual Report and

Financial Statements 2010 confirm that, to the best of their knowledge:

•           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 profit of the Group; and

•           the directors' report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

Gordon Bentley

Secretary

1 June 2010

 

END

 

 

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