Introduction

NEXT PLC is a retail chain that provides clothes, accessories, and shoes for men,
women, and children. Founded in 1988, the company today has successfully expanded its stores
in more than 40 countries world wide. In this report, the performance of NEXT PLC during the
year 2014 and 2015 is analyzed and evaluated. In addition, this report also brings into a
discussion on the information disclosed by the company, both through the 2015 annual report
and its website, and on how well the information is communicated to the audiences. There are
three main parts in this report. The first part (part A) discusses about the information disclosed by
the company both in its annual report and on its website. The second part (part B) looks at the
companys performance in 2014 and 2015, and evaluates how well the company performed
during those past two years. The third part (part C) provides a judgment on how effective and
valuable the corporate government section the companys annual report in disclosing
information to its users.

Part A - Financial and non-financial information disclosure

NEXT PLC is very effective in disclosing financial and non-financial information

through both of its annual report and website. From the annual report, investors can obtain
detailed information regarding business reports, governance, consolidated account, parent
company accounts, and other additional information. To be more specific, looking through the
business report, users can find the highlights during the year, business model, key performance
indicator, risks and uncertainties, corporate social responsibility regarding its employees, social,
community and environmental matters. Next, in the governance section, information regarding
the composition, responsibility, performance evaluation of the board of directors is clearly
declared. Other matters regarding the transparency of the company, in terms of conflicts of
interest, personal uses of companys assets, shareholders interests are also made clear in this
section. In the section of consolidated accounts and parent company accounts, financial
information is delivered through the three types of financial statements, namely the balance
sheet, income statement, and cash flow statement. Lastly, additional information regarding sector
analysis, five year history, and other meeting notice is presented.

From the companys website, there are four main sections for the ease of use of readers:
about the company, investors, corporate responsibility, media, and contact the company. The
section about the company provides brief information about the history of the company, its
strategies, objectives, and corporate governance. Investor can easily find financial information in
the investor sector. Corporate responsibility section demonstrates the responsibility with the
company with the society, community, and environment. The media section provides latest
advertisements of the company. Finally, the contact us section provide the contact information of
NEXT PLC.

Part B Financial Performance

 First at all, from the income statement, it shows that both revenue and cost of revenue of
NEXT PLC increased in 2015 compared to the previous year. However, the companys revenue
rose with a higher rate than the cost of revenue, leading to an increase in the gross profit of
NEXT PLC from m 1,240.1 to m 1,343.4. During this period, distribution costs, administrative
expenses, and finance costs of the company also rose, accompanying with the increase in its
revenue. At the same time, the company also gained from unrealized foreign exchange and
operating, share of results of associates, finance income, and exceptional gains. After deducting
all the costs and expenses, NEXT PLC obtained a higher profit, which is m 634.9 in 2015,
compared to m 553.2 in 2014. From the consolidated statement of comprehensive income, it
also shows that the total comprehensive income attributable to equity holders of the parent
company in 2015 was m 660.2, compared to m 525.6 of 2014. In general, the business of
NEXT PLC was more efficient and profitable in 2015 compared to that of 2014.

Second, from the balance sheet, it can be observed that the total assets, as well as total
liabilities and equity increased during the period, from m 2,144.6 to m 2,282.3. Although there
is a fall in the amount of non-current assets, it was offset by a larger rise in the amount of current
assets. From 2014 to 2015, the companys fixed assets, intangible assets, interest in associates
and other investment, and deferred tax assets showed slight decreases. Meanwhile, the amount of
current assets increased mostly because of its higher inventories and receivables. This is,
actually, not a bad indicator, as larger sales would be accompanied with more inventories and
receivables. From the liabilities and equity side, both current and non-current liabilities rose. The
company used more trade payables, other financial liability, and corporate bonds to finance the
operation. At the same time, equity showed an increased from m 286.2 to m 321.9 during the
period, mostly because of the higher profit and fewer share buybacks. In short, from the balance
sheet, it can be seen that the assets of NEXT PLC was growing during the analyzed period.

Third, from the cash flow statement, the first observation to be made is that there was no
significant change in the total cash flow of NEXT PLC. However, closely looking into each
component of the cash flow statement reveals significant changes in net cash from operating
activities, net cash from investing activities and net cash from financing activities. Net cash from
operating activities increased rom m 614.8 to m 743.2 mostly because of higher operating
profit achieved in the later year. Net cash from investing activities showed a slight decrease,
from (m 102.6) to (m 106) because more money was used to invest in property, plant and
equipment, and, at the same time, more proceeds were received from sale of investment.
Meanwhile, net cash from financing activities showed a huge decrease from (m 372.8) to (m
636.1), even though less money was spent on share repurchasing in 2015, compared to that in
2014. The reason for this fall in net cash was mostly attributed by more dividends paid and
interest paid. The amount of dividends paid during the period increased nearly 3 times, from (m
164.8) to (m 434.4). However, those changes offset each other, leading to an insignificant
change in the total cash flow during the period.
 In general, the financial statements have provided data to show that the company was
quite successful during the observed period. From the perspective of investors, investors got
higher returns during that period, both from dividends and capital gain. The company bought
back shares to reduce the number of shares outstanding, making the ratio of earning per shares
increase. Share buy back is actually a committed obligation of the company in order to return
surplus cash to shareholders regularly. In addition, the company paid more dividends to
shareholders in the later year. Both of these two factors would lead to an increase in the share
price, which was also proved by data showed on the company website (from GBP 6,250 in
January 2014 to GBP 7,235 in January 2015). From all of the analyzed information, it can be
concluded that NEXT PLC performed well in the period of January 2014 January 2015, and the
company did a good job in returning surplus cash to its shareholders. However, a huge amount of
dividends paid means that the company did not have any good-enough project to invest in at that
time. From the perspective of investors, NEXT PLC s business is profitable and prospective. As
a result, that view was incorporated in to the increase in the companys share price as discussed
earlier.

Part C- Value and effectiveness of corporate governance section

Corporate governance is critical to an organizations long term success. At the point when
executed adequately, coronate governance can forestall corporate outrages, and extortion of the
organization. It additionally improves an organization's brand name in the eyes of public as a
self-policing organization that is valuable and responsible to its shareholders and debt holders.
Effective corporate governance demonstrates the shared practices and culture of the organization
and its representatives. Corporate government helps organization stay out of trouble and maintain
its transparency. As a result, corporate governance is a very important section in the annual
report.

First, the corporate governance section demonstrates the composition of the board.
Currently, there are five independent and non-executive directors and one Chairman in the board.
The role of the boards chair man is to ensure the board to operate effectively. At regular
intervals, the Board usually recruits new non-executive directors for rotation. In addition, the
section declares that it the company complied with the requirement of UK Corporate Governance
Code, which requires half of the Board to be comprised of non-executive directors. This piece of
information provides the independence of the board in making decision, ensuring the agency
problem is minimized. As a result, it is very necessary to shareholders.

Second, this section demonstrates responsibilities of the board. It clearly states that the
responsibilities of the board include making major policy decisions, managing internal control of
the Groups system, and delegating other matters to its committees. Regular meetings are held
for the Board to approve major decisions, such as investment, dividend policy, capital
expenditure, etc. The information of which members attended or did not attend fully the ten
formal meetings during the year is also provided in the report. Besides, the information of the
composition of audit committee, remuneration committee, and nomination committee is given as
well. Targets for the chief executive are set clearly annually and to be monitored closely by the
Board. This part provides the transparency for the composition, and responsibilities of the
corporate governance.

Third, there is a formal system for situations regarding conflicts of interest to be declared.
When conflicts of interest happen, the situations will be considered under the Companies Act
2006. All those situations will be recorded in the Board minutes and to be reviewed annually by
the Board. In addition, the process of performance evaluation is also declared in this section.
The Chairmans performance is evaluated by senior independent non-executive director. The
performance of the Chief Executive is evaluated by all the directors and the Chairman. The
performance of executive director is evaluated by Chief Executive and the Chairman.

Fourth, important matters such as risk management, personal use of company assets,
relations with shareholders and going concern are declared in this section. The Board ensures
that the process of risk management and internal control is carried out continuously and regularly
throughout the year. The Board also ensures that there is no improper personal use of the assets
of the company by directors by placing policies and approval procedures for expense claim.
Moreover, the interests of shareholders are made sure to be respected by the company.

In short, the corporate governance section in the annual report provides its users effective
and valuable information regarding the transparency of the company.

Conclusion

This paper has provided a detailed look into the annual report and the website of NEXT
PLC. The company has been very effective in declaring both of its financial and non-financial
information in the annual report and its website. A lot of information is provided to the users,
ensuring the transparency of the companys situation. Besides, from the financial statements, it
can be observed that the company performed well during the period of January 2014 to January
2015. The company operated more efficiently. It also bought back shares as committed to
increase the EPS ratio. During the observed period, the company distributed its surplus cash to
its shareholders through the form of more dividends. However, more distribution of dividends
may indicate that the company had no big projects to carry out at that time.