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RNS Number : 9791W Watches of Switzerland Group PLC 18 July 2024
18 July 2024
Watches of Switzerland Group PLC (the "Company")
Annual Report and Accounts 2024
In compliance with Listing Rule 9.6.1, the Company announces that the
following documents have today been submitted to the UK Financial Conduct
Authority, and will shortly be available for inspection via the National
Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
1. Annual Report and Accounts 2024; and
2. Notice of Annual General Meeting of the Company, to be held at 36
North Row, London W1K 6DH at 2.30pm on 3 September 2024
In accordance with DTR 6.3.5(3) the Annual Report and Accounts 2024 and the
Notice of Annual General Meeting are accessible on the Group's website:
thewosgroupplc.com (https://www.thewosgroupplc.com/investors/results-centre/)
A condensed set of Watches of Switzerland 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 FY24 results
announcement on 27 June 2024. That information together with the information
set out below which is extracted from the Annual Report and Accounts 2024
constitute the requirements of DTR 6.3.5 which is to be communicated via an
RNS in unedited full text. This announcement is not a substitute for reading
the full Annual Report and Accounts 2024. Page and note references in the text
below refer to page numbers in the Annual Report and Accounts 2024. To view
the FY24 results announcement visit the Company website:
thewosgroupplc.com/investors
(https://www.thewosgroupplc.com/investors/results-centre/)
For further information, please contact:
Laura Battley
Company Secretary and General Counsel
+44 (0)20 7317 4604
companysecretariat@thewosgroup.com (mailto:companysecretariat@thewosgroup.com)
Additional Information
Principal risks and uncertainties
Below are descriptions of our principal risks and uncertainties and
explanations of how we manage or mitigate the risk. It is recognised that the
Group is exposed to risks wider than those listed. However, we have disclosed
those we believe are likely to have the greatest impact on our business at
this moment in time.
Principal risk description How we manage or mitigate the risk
Business Strategy Execution and Development
If the Board adopts the wrong strategy or does not implement its strategy The Board reviews its business strategy on a regular basis to determine how
effectively, the business may suffer. sales and profit can be maximised, and business operations can be made more
efficient
The Group's growth strategy exposes it to risks and the Group may encounter
setbacks in its ongoing expansion in the UK and US. The Board has significant relevant experience, including in the retail and
luxury markets
The Group's significant investments in its showroom portfolio, IT systems,
colleagues and marketing may be unsuccessful in growing the Group's business The CEO provides updates to the Board on key development opportunities and
as planned. initiatives
The acquisition of Roberto Coin Inc. in the US moves the Group into the Expansion of the property portfolio or potential acquisitions must meet strict
wholesale sector, a sector within which the Group has more limited existing payback criteria. Return on investment of marketing and other investment
internal expertise. There is strong reliance on incumbent management at activity is monitored closely
Roberto Coin Inc. to deliver the Group's strategy.
Key management information is provided to the Board on a regular basis to help
As the Group continues to make acquisitions, these may prove unsuccessful or inform strategic decision-making
divert its resources. Further growth through acquisition is dependent upon the
Group's ability to identify suitable targets, conduct effective due diligence,
negotiate transactions on favourable terms, complete such transactions and
successfully integrate the acquired businesses. The Group has adapted its strategy to take advantage of online trading, client
appointments and introduced the Luxury Watch and Jewellery Virtual Boutique to
maximise sales
The Group may fail to respond to the pressures of an increasingly changing
retail environment effectively and rapidly. The re-evaluation of priorities
and their delivery, including the consideration of initiatives to respond to The Group has diversified its operations through the expansion of mono-brand
permanent changes in client behaviours or to change working practices, is boutiques, ecommerce platforms and enhanced luxury branded jewellery offers.
paramount in the current environment. There is international market diversification reducing reliance on one
territory
Key Suppliers and Supply chain
The manufacture of key luxury watch brands is highly concentrated among a The Group fosters strong relationships with brand partners and other
limited number of brand partners and the production of luxury watches is suppliers, many of which have been held for a significant length of time
limited by the small number of master watchmakers and the availability of
artisanal skills. Owners of luxury watch brands control distribution through
strict, Selective Distribution Agreements. Consequently, the relationship with
owners of luxury watch brands is crucial to the Group's success. Supplier distribution contracts are monitored to ensure continued compliance
with contractual obligations
Some of the Group's distribution agreements with luxury watch brands provide
owners of such brands with a right to terminate the agreement in the event of The Group works collaboratively with brand partners to identify product trends
a change of control and/or management of the Group. The Group is subject to and forward demand
the risk that owners of luxury watch brands may decide to terminate these
contracts or otherwise not to renew them upon expiry, or to reduce the number
of agencies they grant to the Group.
Continued focus on providing exceptional client experience, representing the
brands in the best possible way
The Group's distribution agreements with suppliers do not guarantee a steady
supply of merchandise.
Client experience is further elevated through new, larger showrooms that are
supported by the brands
The Group's business model may also come under significant pressure should the
owners of luxury watch and jewellery brands choose to distribute their own
watches, increasingly or entirely by-passing third-party retailers such as the In-depth training for showroom colleagues is provided, including specific
Group. training provided by the brand partners
The Group's sales mix is becoming more broad-based, with less reliance on
individual brands to drive success
Review opportunities to extend our expertise into complementary business and
service models
Client Experience and Market Risk
An inability to maintain a consistent high-quality experience for the Group's The Group provides the ultimate luxury environment for its clients to feel
clients across the sales channels, particularly within the showroom network, welcome, appreciated and supported
could adversely affect business.
Our Xenia Client Experience Programme further elevates our client experience
The increased number of registration of interest (ROI) watches could adversely proposition (refer to page 40)
impact the perceived client experience.
Our brand partners audit and assess our client experience enabling us to
The Group faces competition and any failure by the Group to compete independently benchmark and evaluate our performance
effectively could result in a loss of market share or the ability to retain
supplier agencies. Long-term consumer attitudes to diamonds, gold and other
precious metals and gemstones could be affected by a variety of issues,
including concern over the source of raw materials, the impact of mining and Exceptional training is provided for our showroom colleagues, and other
refining of minerals on the environment, labour conditions in the supply client-facing colleagues, to allow them to provide the best client service,
chain, and the availability and perception of substitute products, such as along with in-depth product knowledge
cubic zirconia and laboratory- created diamonds. Equally, longer term consumer
attitudes to more technologically advanced watches, such as 'smart watches'
could reduce consumer demand for luxury watches.
The CRM database allows the Group to engage with the client on their journey
from a potential to a loyal client
The Group continues to invest in and develop its product offering to improve
the value offered to consumers, retailers, and manufacturers
Competitor activity is monitored in detail, enabling strategic decision-making
on key market positions
Our Luxury Watch and Jewellery Virtual Boutique experience is a unique
differentiator and recognised as a competitive advantage, as is the Group's
scale and technological capabilities
Consumer trends are monitored to ensure product ranges remain aligned to
client demand
Colleague Talent and Capability
The Group depends on the services of key talent to manage its business, and The Trading Board considers the development of senior management to ensure
the departure of such colleagues or the failure to recruit and retain suitable there are opportunities for career development, promotion, and appropriate
personnel could adversely affect the Group's business. succession
Client experience is an essential element in the success of the Group's The Nomination Committee considers the succession planning for the Board, and
business, where many clients prefer a more personal face-to-face experience senior management
and have established strong relationships with the Group's retail colleagues.
An inability to recruit and retain suitably qualified colleagues, especially
with specialised knowledge of luxury watches and jewellery, would have a
material impact on the Group. The Company's recognition programmes are in place to incentivise and motivate
colleagues
A wide range of training and development programmes are available to
colleagues
The Colleague Engagement Survey provides an insight into what colleagues feel
would make the Group an even better place to work
The Group continually reviews the remuneration and benefits packages for all
colleagues
We utilise a two-way engaging communications platform, Workplace, globally.
This social channel underpins Group communications to colleagues
Data Protection and Cyber Security
The increasing sophistication and frequency of cyber-attacks, coupled with Dedicated Group Data Protection Officer in place
data protection laws, highlight the escalating information security risk
facing all businesses. Significant investment in systems development and security programmes
As the Group operates in the UK and US markets, the regulatory environment Systems vulnerability and penetration testing is carried out regularly
surrounding these areas is considered more complex.
The Group Data Protection Committee meets regularly to review related
Security breaches and failures in the Group's IT infrastructure and networks, processes and emerging risks
or those of third parties, could compromise sensitive and confidential
information and affect the Group's reputation.
Information security and data protection policies, procedures, and training in
place
Theft or loss of Company or client data or potential damage to any systems
from viruses, ransomware or other malware could result in fines and
reputational damage to the business that could negatively impact on our sales.
Enhanced multi-factor authentication (MFA) enforced across the Group
Next Generation email security system implemented
New 24/7 security operations centre (SOC) service onboarded
Improved reporting capabilities allow all colleagues to promptly report any
suspicious content or activity they encounter
External maturity assessment conducted to validate continuous security
improvement programme
Business Interruption
Adverse weather conditions, pandemics, travel disruption, natural disasters, The Group has a framework of operational procedures and business continuity
terrorism, acts of war or other external events could adversely affect plans that are regularly reviewed, updated, and tested
consumer discretionary spending or cause a disruption to the Group's
operations.
The multi-channel model allows clients to continue their relationship with us
and to purchase in the event of disruption to any single channel
The inability of the Group to be able to operate showrooms or a significant
reduction in available colleagues to operate the business, such as during a
material pandemic, would significantly impact the operations of the business.
Robust security arrangements are in place across our showroom network to deter
and prevent crime and, in the event of an incident, protect people and
products
The Group offers flexible delivery options (home delivery or click and collect
in showroom) and its online operations rely on third-party carriers and
transportation providers. The Group's shipments are subject to various risks,
including labour strikes and adverse weather. A comprehensive insurance programme is in place to offset the financial
consequences of insured events
The Group may experience significant theft of products from its showrooms,
distribution centres or during the transportation of goods. Loss of high-value A detailed IT development and security roadmap is in place aligned to our
low-availability pieces could damage our reputation and our clients may become strategy
less inclined to visit our showrooms.
Reliable and reputable third-party logistic partners have been engaged to
Disruptions to, or failures in, the Group's IT infrastructure and networks, or ensure the secure transportation of goods
those of third parties, could disrupt the Group's operations, especially
during periods of increased reliance on these systems such as those
experienced during the pandemic lockdowns.
The Group has in place action plans to effectively deal with the impact of a
pandemic on business operations
The Group relies on IT networks and systems, some of which are managed by
third parties, to process, encrypt, and transmit electronic information, and
to manage or support a variety of business processes and activities, including Revised and enhanced the crisis response programme implemented Group-wide
sales, supply chain, merchandise distribution, client invoicing and collection
of payments.
Regulatory and Compliance
Fines, litigation, and reputational damage could arise if the Group fails to The Group actively monitors both regulatory developments in the UK, US and
comply with legislative or regulatory requirements including, but not limited Europe and compliance with existing obligations
to, consumer law, health and safety, employment law, data protection,
anti-bribery and corruption, competition law, anti-money laundering and supply
chain regulations.
Clear Group policies and procedures are in place, including, but not limited
to, anti-bribery, corruption and fraud, whistleblowing, and data protection
As the Group continues its US expansion and trades in increasing state
jurisdictions, there is a risk the business lacks the detailed knowledge of
local US laws and regulations resulting in a breach, significant fine, and Mandatory induction briefings and training for all colleagues on regulation
reputational impact. and compliance
Experienced in-house legal team with external expertise sought as needed
The established culture and values foster open, honest communication
Operational activities have been amended, and continue to be updated, to
comply with guidance provided by the Government to prioritise the safety of
colleagues and clients
Regulatory compliance reviews form part of the rolling Internal Audit plan
Economic and Political
The Group's business is geographically concentrated in the UK and US, with a Regular monitoring of economic and political events
more limited European footprint. Any sustained stagnation or deterioration in
the luxury watch or jewellery markets or decline in consumer spending in these
territories could have a material adverse impact on the Group's business.
Focus on client service to attract and retain clients
The Group or its suppliers may not be able to anticipate, identify and respond
to changing consumer preferences in a timely manner, and the Group may not The Group updates internal return on investment hurdles and criteria to
manage its inventory in line with client demand. reflect changing market environments
Ongoing legal, political, and economic uncertainty in the UK, US and Detailed sales and inventory data is analysed to anticipate future trends and
international markets could give rise to significant currency fluctuations, demand, taking into consideration the current economic environment
interest rate increases, adverse taxation arrangements or affect current
trading and supply arrangements.
Through continued expansion in the US, the Group is not wholly dependent on
the economic or political environment in one single market
Brand and Reputational Damage
The Watches of Switzerland Group's trading brands and its corporate brand are The Group has a clear and open culture with a focus on trust and transparency
an important asset, and failure to protect the Group's reputation and brand
could lead to a loss of trust and confidence. This could result in a decline
in the client base, affect the ability to recruit and retain the best people,
and damage our reputation with our suppliers or investors Excellent client experience is a key priority of the Group and subject to
independent scrutiny by our major brand partners through mystery shopping
programmes
The Group undertakes regular client engagement to understand and adapt the
product, offer, and showroom environment
The use of impactful, digital-led marketing, along with an in-depth knowledge
of products, makes the Group an authority in the markets it serves
Training and monitoring of adherence by colleagues to Group policies and
procedures
The Group has conducted a materiality assessment to understand the priorities
and focus areas of its stakeholders, including colleagues, brand partners and
other suppliers, investors and community groups
Financial and Treasury
The Group's ability to meet its financial obligations and to support the The Group maintains a £225 million revolving credit facility with a term of
operations and expansion of the business is dependent on having sufficient four years remaining
funding over the short, medium and long term. The Group is reliant on the
availability of adequate financing from banks and capital markets to meet its
liquidity needs.
The Group's net cash position and available funding is actively managed
through a Group Treasury policy and cash flow projections are regularly
monitored by management and the Board
The Group's level of indebtedness could adversely affect its ability to react
to changes in the business and may limit the commercial and financial
flexibility to operate the business.
Exchange and interest rates are regularly reviewed to determine if hedging
should be put in place
The Group is exposed to foreign exchange risk and profits may be adversely
impacted by unforeseen movements in foreign exchange rates.
A three-year strategic cash flow is prepared and stress-tested, including the
impact on covenant calculations
Significantly reduced trading over an extended period, due to a pandemic,
could impact the business's ability to operate within committed credit
facilities. Quarterly meeting with the lenders' agent to update on forecast and trading
To support the financing of the Roberto Coin Inc. acquisition and provide
additional headroom, a short-term loan facility of US$115 million has been
agreed, extendable up to February 2026
Climate Change
The increased frequency of extreme weather events may lead to the significant The Board has overall responsibility for managing climate- related risks, as
disruption of retail showrooms, offices, and distribution centres, through well as ensuring our strategy creates value and achieves our Purpose to WOW
flooding and strong winds. The supply chain may also be impacted through our clients, while caring for our colleagues, our communities and our planet
transporting goods to showrooms.
Climate related issues are addressed on a regular basis by the ESG Committee,
In a changing climate, there is the potential for higher insurance premiums which is chaired by an Independent Non-Executive Director
for business operations, especially ones located in specific geographies.
The ESG Committee challenges our ESG Steering Group on progress against goals
The increasing cost of energy and potential regulatory mechanisms on direct and targets
carbon emissions, may impact business financials and profit if the Group
cannot transition to a more low-carbon business model.
Key climate related risks and opportunities are governed via our Audit &
Risk Committee along with the accuracy of and compliance with ESG-related
The Group's reliance on premium raw materials, which are a finite resource, disclosures, including TCFD
increases its exposure to resource scarcity, and the potential increased cost
of obtaining these resources in a challenging supply chain environment.
The ESG agenda continues to evolve rapidly and climate training has been
introduced for Board members to ensure they have sufficient knowledge for
The Group may fail to implement its mitigation strategy to reduce its impact effective decision-making
on the climate and manage the risk appropriately, leading to increased
scrutiny from stakeholders and investors, resulting in reputational damage.
The CEO has overall operational responsibility for climate strategy and the
mitigation of related risks
The CFO has day-to-day operational responsibility for climate- related risks
and opportunities and chairs a regular ESG Steering Group, which reports into
the ESG Committee
The Group has a dedicated Head of Sustainability and ESG, who has significant
experience in relation to climate change
The ESG Steering Group is responsible for assessing and managing climate
related risks and opportunities against KPIs aligned to our ESG pillars of
'People, Planet and Product' and ensuring all operational matters in respect
of our ESG Strategy are fully embedded into our business strategy and
operation, including an underpin to Group bonus programmes (refer to pages
185)
Each ESG pillar is supported by Working Groups, which include senior
operational managers, with input from external consultants
The Group undergoes numerous external assessments on climate and
sustainability activities
Further information on the financial risks we face and how they are managed is
provided on pages 130 to 139 of the Annual Report and Accounts 2024.
Directors' Responsibility Statement
The Directors are responsible for preparing the Annual Report and Accounts in
accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each
financial year that give a true and fair view of the state of affairs of the
Group and the Company as at the end of the financial year, and of the profit
or loss of the Group for the financial year.
Under that law the Directors have elected to prepare the Group Financial
Statements in accordance with UK adopted international accounting standards
and have elected to prepare the Company's Financial Statements in accordance
with United Kingdom Generally Accepted Accounting Practice, including FRS 102
(The Financial Reporting Standard applicable in the United Kingdom and the
Republic of Ireland) and the Companies Act 2006.
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 the Annual Report and Accounts, the Directors are required to:
- Select suitable accounting policies in accordance with IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors (or in respect of the
parent company Financial Statements, Section 10 of FRS 102) and then apply
them consistently;
- Make judgements and accounting estimates that are reasonable and prudent;
- Present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
- Provide additional disclosures when compliance with the specific
requirements in IFRSs (or in respect of the parent company financial
statements, FRS 102) is insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the Group's
financial position and financial performance;
- For the Group Financial Statements, state whether International Financial
Reporting Standards in conformity with the requirements of the Companies Act
2006 and UK adopted international accounting standards have been followed,
subject to any material departures disclosed and explained in the Financial
Statements;
- For the Parent Company Financial Statements, state whether applicable UK
accounting standards, FRS 102, have been followed, subject to any material
departures disclosed and explained in the Parent Company Financial Statements;
- Prepare the Financial Statements on the going concern basis unless it is
inappropriate to presume that the Group and the Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and 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
comply with the Companies Act 2006. 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.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic report, Directors' report, Directors' Remuneration
Report and Corporate Governance statement that comply with that law and those
regulations. The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Company's website.
Each of the Directors, whose names and functions are listed on pages 148 and
149 of the Annual Report and Accounts 2024 confirms that, to the best of their
knowledge:
- that the Group Financial Statements, which have been prepared in accordance
with UK adopted international accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit of the Group;
- that the Annual Report and Accounts 2024, including the Strategic Report,
includes a fair review of the development and performance of the business and
the position of the Company and undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and
uncertainties that they face;
- that they consider the Annual Report and Accounts 2024, taken as a whole, is
fair, balanced and understandable and provides the information necessary for
shareholders to assess the Company's position, performance, business model and
strategy.
The Directors of Watches of Switzerland Group PLC are listed in the Group's
Annual Report and Accounts 2024 and on the Group's website: thewosgroupplc.com
(http://thewosgroupplc.com/)
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