25 July 2024
ANNUAL REPORT 2023/24, NOTICE OF ANNUAL GENERAL MEETING 2024 AND PROXY FORM
Currys plc (the 'Company') has today published its Annual Report and Accounts 2023/24 and Notice of Annual General Meeting 2024. These documents are available to view on the Company's website at www.currysplc.com/investors. In addition, they have been posted or otherwise made available to shareholders depending on their elected method of communication.
The Annual Report and Accounts have been prepared using the single electronic reporting format specified in the UK Transparency Directive European Single Electronic Format ("ESEF").
In accordance with Listing Rule 9.6.1, the Annual Report and Accounts 2023/24, Notice of Annual General Meeting 2024 and Form of Proxy have been submitted to the National Storage Mechanism, where they will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
The Company's 2024 Annual General Meeting (the 'AGM') will be held at 11.00am on Thursday 5 September 2024 at Hilton London Kensington, 179 - 199 Holland Park Avenue, London SW11 4UL.
Shareholders are encouraged to vote in favour of all resolutions proposed in advance of the AGM, and to submit any questions they may have for any member of the Board to cosec@currys.co.uk. Please submit your votes and questions before 11.00am on Tuesday 3 September 2024.
The information included in the Appendix to this announcement has been extracted from the Annual Report and Accounts 2023/24 and is reproduced here solely for the purposes of complying with the requirements of Disclosure Guidance and Transparency Rule ('DTR') 6.3.5 in respect of how to make annual financial reports available to the public.
The content of this announcement, including the Appendix, should be read in conjunction with the Company's Preliminary Results announcement, which was released on 27 June 2024 and is available on the Company's website at www.currysplc.com/investors.
Together, these announcements constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the full Annual Report and Accounts 2023/24. Defined terms used in the Appendix refer to terms as defined in the Annual Report and Accounts 2023/24. Page numbers and cross references in the Appendix refer to pages and sections of the Annual Report and Accounts 2023/24.
Appendix
A. Principal risks to achieving the Group's objectives (pages 54 to 59)
The Group recognises that taking risks is an inherent part of doing business and that competitive advantage can be gained through effectively managing risk. The Group has developed and continues to evolve robust risk management processes, and risk management is integrated into business decision making. The Group's approach to risk management and risk governance framework is set out in the Corporate Governance Report on pages 81 to 93. The risks are linked to the strategic priorities on pages 14 to 15.
Our approach to horizon scanning and emerging risks
In order to promote sustainable success, the business continues to analyse the risks likely to emerge in the short, medium and longer term that may impact the delivery of our strategy. To provide a view over the medium to longer term, a horizon scanning approach is required.
Our approach to undertaking horizon scanning is based on conducting both reviews of external thought leadership and also through obtaining the views of key business stakeholders on emerging risks. The horizon scanning exercise is updated at least semi-annually to ensure that the horizon is consistently scanned for developments and changes that may impact the business. The Risk Committee is asked to review and discuss the horizon risks and to form a view as to whether any of these should be considered a principal risk.
Risks and potential impacts
The Group continues to develop its risk management processes, fully integrating risk management into business decision making. The risk management process mirrors the operating model with each business unit responsible for the ongoing identification, assessment and management of their existing and emerging risks. The output of these assessments is aggregated to compile an overall Group level view of risk.
The principal risks and uncertainties, together with their potential impacts and changes in net risk since the last report, are set out in the tables below along with an illustration of actions being taken to mitigate them.
Key changes to the Risk Profile
During 2023/24 a number of changes were made to the Group Risk profile, these included:
· The supply chain logistics risk has been removed as a principal risk due to being consistently assessed as low, and aspects such as rising costs/inflation forming part of the macroeconomic environment risk. The remaining supply chain sourcing risk has been renamed to supply chain resilience.
· The financial services regulation risk has increased in likelihood due to the heightened regulatory landscape and associated increase in regulation and legislation.
Principal risks and uncertainties
| 1. Business Continuity/IT disaster recovery | Risk owner: Chief Operating Officer | Risk Category: Operational | |
| Risk movement: Stable
Link to strategy: Easy to shop, Customers for life, Colleagues
Considered in the Viability statement: Yes
| What is the risk? A major incident impacts the Group's ability to trade and business continuity plans are not effective, resulting in an inadequate incident response. | ||
| What is the impact? • Reduced revenue and profitability • Deteriorating cash flow • Reputational damage • Loss of competitive advantage | |||
| How we manage it • Business continuity and crisis management plans in place and tested for key business locations. • Enablement of home working for office based and contact centre colleagues. • Disaster recovery plans in place and tested for key IT systems and data centres. • Cross functional crisis team to manage response to significant events. • Major risks insured. • Business Continuity Policy. | |||
| Changes since last report This risk has remained stable over 2023/24. | |||
| 2. Business transformation | Risk owner: Chief Information Officer | Risk Category: Strategic | |
| Risk movement: Stable
Link to strategy: Easy to shop, Customers for life, Colleagues
Considered in the Viability statement: Yes
| What is the risk? Failure to respond with a business model that enables the business to compete against a broad range of competitors on service, price and/or product range.
Failure to optimise digital opportunities.
Failure to respond to changes in consumer preferences and behaviours. | ||
| What is the impact? • Reduced revenue and profitability • Deteriorating cash flow • Reduced market share | |||
| How we manage it • Continued strengthening of digital expertise as part of omnichannel capability. • Transformation Programme office established and delivering key strategic objectives. • Development of customer credit propositions. • Enhancement of data analytics capabilities. • Robust portfolio governance. | |||
| Changes since last report This risk has remained stable over 2023/24. | |||
| 3. Crystallisation of legacy tax issues | Risk owner: Chief Financial Officer | Risk Category: Financial | |
| Risk movement: Stable
Link to strategy: Easy to shop, Customers for life, Colleagues
Considered in the Viability statement: No
| What is the risk? Crystallisation of potential tax exposures resulting from legacy corporate transactions, employee and sales taxes arising from periodic tax audits and investigations across the various jurisdictions in which the Group operates. | ||
| What is the impact? • Financial penalties • Reduced cash flow • Reputational damage | |||
| How we manage it • Board and internal committee oversight actively monitors tax strategy implementation. • Appropriate engagement of third party specialists to provide independent advice where deemed appropriate. • The Group remains committed to achieving a resolution with HMRC in relation to open tax enquiries. | |||
| Changes since last report This risk has remained stable over 2023/24. | |||
| 4. Data protection | Risk owner: Chief Information Officer | Risk Category: Regulatory | |
| Risk movement: Stable
Link to strategy: Easy to shop, Customers for life
Considered in the Viability statement: No
| What is the risk? Major loss of customer, colleague or business sensitive data.
Inadequacy of internal systems, policy, procedures and processes to comply with the requirements of EU General Data Protection Regulation ('GDPR'). | ||
| What is the impact? • Reputational damage • Financial penalties • Reduced revenue and profitability • Deteriorating cash flow • Loss of competitive advantage • Customer compensation | |||
| How we manage it • The operation of a data management function to ensure compliance with GDPR operational processes and controls. • The operation of a data protection office to ensure appropriate governance and oversight of the Group's data protection activities. • Control activities operate over management of customer and employee data in accordance with the Group's data protection policy and processes. • Investment in information security safeguards. • IT security controls and monitoring. | |||
| Changes since last report This risk has remained stable over 2023/24. | |||
| 5. Financial, liquidity and treasury | Risk owner: Chief Financial Officer | Risk Category: Financial | |
| Risk movement: Stable
Link to strategy: Grow profits
Considered in the Viability statement: Yes
| What is the risk? Failure to manage Currys' access to sufficient liquidity at any given time may impact our ability to meet our obligations and business growth plans. | ||
| What is the impact? • Committed funding facilities could be fully utilised if not monitored limiting our ability to invest in the business, pension scheme or distribute to shareholders. • Knock on detrimental impacts on other areas of liquidity, for example credit insurers decreasing cover which could result in working capital outflow or suppliers reducing payment terms. • Given the external lending environment, the ability to raise further funding could be more difficult. | |||
| How we manage it • Regular monitoring of cash and liquidity levels takes place at the Tax and Treasury Committee. • Bank facility and covenant cover levels are reviewed and negotiated. • Capex prioritisation sessions are undertaken by the Executive Committee to identify cost saving initiatives. • Triennial pensions revaluation process. | |||
| Changes since last report This risk has remained stable over 2023/24. | |||
| 6. Financial services regulation | Risk owner: Chief Commercial Officer | Risk Category: Regulatory | |
| Risk movement: Increased
Link to strategy: Easy to shop, Customers for life, Colleagues
Considered in the Viability statement: Yes
| What is the risk? Failure to manage the business of the Group in compliance with FCA regulation and other financial services regulation to which the Group is subject in a number of areas including insurance operations and consumer credit activities. | ||
| What is the impact? • Enforcement action by the regulator • Loss of authorisation and inability to trade regulated products • Reputational damage • Financial penalties • Reduced revenues and profitability • Deteriorating cash flow • Customer compensation | |||
| How we manage it • Board oversight and risk management structures monitor compliance and ensure that the Company's culture focuses on good customer outcomes. • Regulatory Compliance Committee, Product Governance and other internal governance structures. • Financial Services Risk Management Framework in place. • Compliance monitoring and internal audit review of the operation and effectiveness of compliance standards and controls. | |||
| Changes since last report This risk has increased in likelihood over 2023/24. | |||
| 7. Health and Safety | Risk owner: Chief Operating Officer | Risk Category: Operational | |
| Risk movement: Stable
Link to strategy: Easy to shop, Customers for life, Colleagues
Considered in the Viability statement: Yes
| What is the risk? Failure to prevent injury or loss of life to customers, colleagues, contractors, franchisee partners, agency staff and the public which may have serious financial and reputational consequences. | ||
| What is the impact? • Employee/customer illness, injury or loss of life Reputational damage • Financial penalties • Legal action | |||
| How we manage it • Group Health and Safety strategy. • Comprehensive Health and Safety policies and standards supporting continued improvement. • Operational Health and Safety teams located across business units. • Risk assessment programme covering retail, support centres, distribution and home services. • Incident reporting tool and process. • Health and Safety training and development framework. • Health and Safety inspection programme. • Audit programme including factory audits for own brand products and third party supply chains. | |||
| Changes since last report This risk has remained stable over 2023/24. | |||
| 8. Information security | Risk owner: Chief Information Officer | Risk Category: Technology | |
| Risk movement: Stable
Link to strategy: Easy to shop, Customers for life, Colleagues
Considered in the Viability statement: Yes
| What is the risk? Inadequate governance and control around information security could result in an information security breach compromising the confidentiality, integrity and/or availability of customer, colleague or supplier data. | ||
| What is the impact? • Reputational damage • Financial penalties • Reduced revenue and profitability • Deteriorating cash flow • Customer compensation • Loss of competitive advantage | |||
| How we manage it • Significant investment in information security safeguards, IT security controls, monitoring, in-house expertise and resources as part of a managed information security improvement plan. • Information security policy and standards defined and communicated. • Technology Risk Forum with responsibility for oversight, co-ordination and monitoring of information security policy and risk. • Infosec training and awareness programmes for employees. • Audit programme over key suppliers' information security standards. • Introduction of enhanced security tooling and operations. • Ongoing programme of penetration testing. | |||
| Changes since last report This risk has remained stable over 2023/24. | |||
| 9. IT systems and infrastructure | Risk owner: Chief Information Officer | Risk Category: Technology | |
| Risk movement: Stable
Link to strategy: Easy to shop, Customers for life, Colleagues
Considered in the Viability statement: Yes
| What is the risk? A key system becomes unavailable for a period of time impacting our ability to trade and continue operations. | ||
| What is the impact? • Reduced revenue and profitability • Deteriorating cash flow • Loss of competitive advantage • Restricted growth and adaptability • Reputational damage | |||
| How we manage it • Ongoing IT transformation to align IT infrastructure to future strategy. • PEAK planning and preparation to ensure system stability and availability over high-demand periods. • Individual system recovery plans in place in the event of failure which are tested in line with an annual plan, with full recovery infrastructure available for critical systems. • Long term partnerships with tier 1 application and infrastructure providers established. • A mature IT service design and transition process controls and manages the transition of new and changed services into production. | |||
| Changes since last report This risk has remained stable over 2023/24. | |||
| 10. Macroeconomic environment | Risk owner: Chief Financial Officer | Risk Category: Strategic | |
| Risk movement: Stable
Link to strategy: Easy to shop, Customers for life, Colleagues
Considered in the Viability statement: Yes
| What is the risk? The external macroeconomic environment in which we operate remains challenging with a range of existing, evolving and new emerging risks driving pressure on our financial performance. | ||
| What is the impact? • The potential for increased operating costs to Currys plc • The potential for external factors to impact consumer demand which may in turn result in electrical spend by customers | |||
| How we manage it • Rolling forecast to analyse future expected performance across the financial year. • Business plan updates to the Executive Committee to analyse the investment initiatives taking place and progress against delivery and financial benefits, alongside more detailed daily and weekly training performance. • Cost flexibility in operating model. • Hedging strategy in place (for foreign exchange and energy). • Expanding the availability of our credit and service offerings for customers. | |||
| Changes since last report This risk has remained stable over 2023/24. | |||
| 11. Product safety | Risk owner: Chief Operating Officer | Risk Category: Operational | |
| Risk movement: Stable
Link to strategy: Customers for life
Considered in the Viability statement: No
| What is the risk? Unsuitable procedures and due diligence regarding product safety, particularly in relation to OEM sourced product, may result in poor quality or unsafe products provided to customers which pose risk to customer health and safety. | ||
| What is the impact? • Financial penalties • Reduced cash flow • Reputational damage | |||
| How we manage it • Factory audits conducted over OEM suppliers. • Technical evaluation of OEM products prior to production. • Product inspection of OEM products prior to shipment. • Monitoring of reported incidents. • Safety governance reviews conducted by internal by Technical and Business Standards teams. • Establish protocols and procedures to manage product recalls. | |||
| Changes since last report This risk has remained stable over 2023/24. | |||
| 12. Supply chain resilience | Risk owner: Chief Operating Officer | Risk Category: Operational | |
| Risk movement: Stable
Link to strategy: Easy to shop, Customers for life, Colleagues
Considered in the Viability statement: No
| What is the risk? Failure to actively understand, manage and deepen key supplier and brand relationships who contribute materially to our business weakens our ability to respond to external shocks. | ||
| What is the impact? • Disruptions to supply of goods • Pricing and stock availability terms could worsen, leading to deceasing sales/reduced margin • Reduced revenue and profitability • Deteriorating cash flow • Reduced market share | |||
| How we manage it • Ensuring alignment of key suppliers to future strategy and meetings with strategic suppliers' management. • Continuing to leverage the scale of operations to strengthen relationships with key suppliers and maintain a good supply of scarce products. • Working with suppliers to ensure availability of products through key supplier group engagement programme. • Ethical supply chain due diligence over our supplier base. • Control structures to ensure appropriate supplier relationship management for GFR, GNFR and OEM. | |||
| Changes since last report This risk has remained stable over 2023/24. | |||
| 13. Sustainability | Risk owner: Chief People, Communications and Sustainability Officer | Risk Category: Strategic | |
| Risk movement: Stable
Link to strategy: Easy to shop, Customers for life
Considered in the Viability statement: No
| What is the risk? Our commitment to sustainability and being a good corporate citizen is either not delivered or not adequately communicated to, or recognised by, customers and investors. | ||
| What is the impact? • Reduced cash flow as customers shop elsewhere • Reputational damage • Loss of competitive advantage | |||
| How we manage it • Roadmap to Net Zero by 2040. • Commitment to EV100. • Oversight from the Group Sustainability Leadership Team, ESG Committee, ExCo and the Board. • Group ESG strategy regularly reviewed • Independent reviews on environmental practices e.g. CDP. • Partnerships with reputable external agencies Circular Electronics Partnership (on circular economy), British Retail Consortium (on climate change), Digital Poverty Alliance. • Management reporting on progress against target for e-waste and emissions with metrics for both included in annual bonus scorecard. | |||
| Changes since last report This risk has remained stable over 2023/24. | |||
B. Responsibility Statement (page 142)
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
• the Strategic Report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
We consider 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's position and performance, business model and strategy.
By Order of the Board
Alex Baldock, Group Chief Executive
Bruce Marsh, Group Chief Financial Officer
26 June 2024
* The directors of Currys plc as at 26 June 2024 are listed on pages 74, 76 and 77 of the Annual Report and Accounts 2023/24.
ENDS
For further information:
Dan Homan Investor Relations Director +44 (0)7401 400442
Sarah Thomas Deputy Company Secretary +44 (0)7401 373 188
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