next financial maangement report

7/29/2019 Next Financial Maangement Report

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1. IntroductionNext a retail chain was launched in the UK in February 1982; the store consisted for a wide variety of clothes for both

men and women. Over the years NEXT has extensively expanded its scale of operations in UK as well as globally.

Currently there are about 536 stores of Next in the UK. The corporation has over 200 stores in 30 countries globally.

To capture the wide network of customers that the group could reach through the web, Online shopping facility waslaunched in 1999 with express delivery. The group has extensively focused on providing customer satisfaction and

constantly widening its customer base. The company also promises its shareholders extensive long term growth and

increased earnings of shares. With group operations in growth countries like China, Honk Kong as well as India the

group is certainly on the path of long term growth. Through the paper we study the financial reports of the company

and comment upon the disclosures of the non-current assets of the company. We also illustrate the importance of the

information disclosed to the users of the financial statements.

(www.nextplc.co.uk accessed on 11/11/2012)

2. Disclosure of Non-Current Assets of NEXT in the Financial Statements

IFRS constantly demands that the disclosure of information to the stakeholders of the business be robust andconstantly updated. The IFRS has constantly amended and updated the rules and regulations related to the

disclosure of the Non-current assets in the financial statements such that the high quality information is available to

all the stakeholders (Ernst and Young, 2011)

Thus each of the plc.s have to abide by the accounting standards and the rules set up by the IFRS as it is important

to disclose quality information to the stakeholders. NEXT also has to abide by the rules and regulations set up by the

IFRS, as can be seen in the disclosure of their information related to the non-current assets. Next a retail chain was

launched in the UK in February 1982; the store consisted for a wide variety of clothes for both men and women. Over

the years NEXT has extensively expanded its scale of operations in UK as well as globally. Currently there are about

536 stores of Next in the UK. The corporation has over 200 stores in 30 countries globally. To capture the wide

network of customers that the group could reach through the web, Online shopping facility was launched in 1999 with

express delivery. The group has extensively focused on providing customer satisfaction and constantly widening itscustomer base. The company also promises its shareholders extensive long term growth and increased earnings of

shares. With group operations in growth countries like China, Honk Kong as well as India the group is certainly on the

path of long term growth.

(www.nextplc.co.uk accessed on 11/11/2012)

NEXT has invested considerably in its assets as the value of the total assets has been increasing continuously since

2009 onwards. The company has experienced a marginal drop in the value of the asset in 2010; this can be attr ibuted

to the overall economic conditions prevailing in global economy, as well as the UK economy. The Global Financial

Crisis has impacted the UK economy limiting the investment of the company in the new assets. The figure below

shows the Total Assets of the company:

Figure 1: Assets of NEXT (Source: Annual Report Next 2011 accessed on 11/11/2012)

The asset of the firm have increased from 1571000 in 2007 to 1694000, there has been a minor decline in the value

of the asset in 2009, limiting the investment in the assets during the period. The UK economy has experienced a

balanced and steady growth from the early 90s till 2007; this growth has been largely attributed to the growth in

exports. The subsequent expansion of the economy has been attributed to this fact. In 2008, Britain experienced a

sharp downfall in the growth of the economy as the Global Financial Crisis spread fast to the British economy as well.


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Originated as the subprime lending crisis in America the crisis spread affecting the liquidity of the companies globally.

The British economy can describe as one of the worst affected economies as it slipped into negative growth and a

deep recession. The economy showed some signs of recovery in 2009, with marginal improvement in the economic

growth rate. Next also to some extent has been affected by the economic crisis, as the company had limited

opportunities to expand their investments in assets.

(Martin, 2010)

Asset growth of the company has been further restricted as a result of the Euro- zone crisis as well. As next is a UK

based company, European economic climate is bound to have an effect on the company. The European debt crisis

that originated in 2009, with global thinkers arguing that Europes economic situation has worsened over the past five

years. The fiscal burden on Europe has been mounting, with the situation of the Greece economy continuously

worsening, the Euro Zone has a debt/GDP ratio of 60%, the same trend has also been observed in France and

Germany as well. The rising cost of debt and the debt burden on the economy has continuously been increasing with

the Greek economy being the worse of the a lot. The crisis has intensified as a result of excessive government

spending the current Greek Debt is 300 billion ($413.6 billion) with a rising fiscal deficit of 12.7%. The continuous

contraction of the Greek economy has resulted in pressuring rest of Europe as well (cnn.com accessed on9/5/2011, Kganyago, 2012)

Despite the threat posed by Europe Next has effectively managed to undertake expansion plans, by spreading

operations in India and China. The asset of the firm have increased from 1571000 in 2007 to 1694000, there has

been a minor decline in the value of the asset in 2009 , but the company has performed considerably well has

maintained positive profits and healthy investments in assets creating value for all the stakeholders of the company.

3. Benefits to the Users of Financial Statements

The main objective of the use of financial statements is to enable the assessment of financial performance of the

corporation. The analysis of the financial statements of the company enables the stakeholders to analyse the

business professionally and ensure the creation of value for their investment. The financial statements of the

corporation reflect the changes in the policies of the company as well as any accounting changes that have been

introduced by the accounting governing bodies like the IFRS. Therefore it would not be incorrect to say that the

financial statements are a reflection of the decision making that takes place in the organization. As a public limited

company NEXTs financial information has to be disclosed to the general public through its annual reports. The

annual reports of the firm contain a wide variety of information related to the Assets and the liabilities of the firm. The

users of the financial statements are wide and differed, these range from customers, suppliers, investors as well as

the management of the firm. The financial statement of NEXT provides a detailed account on the Non-Current Assetsof the firm. The report clearly states the current value of the assets, as well accounts for the sale and purchase of any

asset if conducted over the year. Depreciation is critical to the value of a non-current asset.

Depreciation has also been effectively accounted for. Each of the non-current assets has a distinct depreciation

account and clearly highlights the depreciation process over the current fiscal. Therefore it would not be incorrect to

say that the financial statements of NEXT provide suitable information to the users of these reports. They effectively

satisfy the needs of all the stakeholder groups. The main objective of the use of financial statements is to enable the


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assessment of financial performance of the corporation. The analysis of the financial statements of the company

enables the stakeholders to analyse the business professionally and ensure the creation of value for their investment.

The financial statements of the corporation reflect the changes in the policies of the company as well as any

accounting changes that have been introduced by the accounting governing bodies like the IFRS. Therefore it would

not be incorrect to say that the financial statements are a reflection of the decision making that takes p lace in the

organization. The financial statements effect the final decision making undertaken by the management of the firm. Forinstance in the above case of NEXT where a marginal decrease in the growth of assets has been projected between

2009-2010 , as the assets of the firm have decreased from 1.7 million (approx.) to 1.6 million (approx.) , the

management should effectively identify the change in the value of the asset. After the identification of the change in

the value of the asset, the reason for the decrease in the value should be identified. In this case , NEXT has invested

considerably in its assets as the value of the total assets has been increasing continuously since 2009 onwards. The

company has experienced a marginal drop in the value of the asset in 2010; this can be attributed to the overall

economic conditions prevailing in global economy, as well as the UK economy. The Global Financial Crisis has

impacted the UK economy limiting the investment of the company in the new assets. Thus, the use of the financial

statement by the management can enable them to identify the problem areas and then adopt effective strategies to

overcome those problems, over the next accounting period. The financial statements reflect the true view of the

position of the company.

(Tulsian 2002, Martin 2010 and Annual Report Next 2011- accessed on 11/11/2012)

Thus, the financial statements disclosures a critical to the success of such an organization as the users of these

financial statements are spread globally. Next has effectively taken care of all the prescribed accounting standards

and the financial disclosures are aimed at satisfying the differed needs of the stakeholders of the company.

4. Conclusion

The annual reports of the firm contain a wide variety of information related to the Assets and the liabilities of the firm.

The users of the financial statements are wide and differed, these range from customers, suppliers, investors as wellas the management of the firm. The financial statement of NEXT provides a detailed account on the Non-Current

Assets of the firm. The report clearly states the current value of the assets, as well accounts for the sale and

purchase of any asset if conducted over the year. Depreciation is critical to the value of a non-current asset. Over the

years NEXT has extensively expanded its scale of operations in UK as well as globally. Currently there are about 536

stores of Next in the UK. The corporation has over 200 stores in 30 countries globally. To capture the wide network of

customers that the group could reach through the web, Online shopping facility was launched in 1999 with express

delivery. The group has extensively focused on providing customer satisfaction and constantly widening its customer

base. The company also promises i ts shareholders extensive long term growth and increased earnings of shares.

With group operations in growth countries like China, Honk Kong as well as India the group is certainly on the path of

long term growth. Thus, the financial statements disclosures a critical to the success of such an organization as the

users of these financial statements are spread globally. Next has effectively taken care of all the prescribed

accounting standards and the financial disclosures are aimed at satisfying the differed needs of the stakeholders of

the company.


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5. References

Business overview Next Plc. Next Plc. N.p., n.d. Web. 14 Nov. 2012. .

Ernst, Young. IFRS 7 Financial Instruments: Disclosures Impending changes effective for 2011 and 201. Ernst

and Young 7.1 (2010): 1. Print.

Next, Plc. Next. Annual Report Next 2011 1.1 (2011): 1 -150. Print.

Martin, Bill. Rebalancing the British economy: a strategic assessment. UK Innovation Research Centre 1.1 (2010):

1-100. Print.

Tulsian, P. C.. Accountancy for CA intermediate examination. New Delhi: Tata McGraw-Hill Pub., 2001. Print

Next, Plc. Next. Annual Report Next 2011 1.1 (2011): 1 -150.

next financial maangement report

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