DSG international plc Annual report and accounts 2007/08 accounts and report Annual plc international DSG Value Choice Service DSG international plc Maylands Avenue, Hemel Hempstead, Herts HP2 7TG Tel 0844 800 2030 www.dsgiplc.com Annual report and accounts 2007/08 CREST The Company’s shares are traded on CREST. CREST is a voluntary system which enables shareholders to DSG international is hold and transfer their shareholdings electronically rather than by paper. Shareholders holding shares in this way can opt to receive their dividends through the CREST system. Unsolicited mail one of Europe’s leading The Company is obliged to make its share register available to third parties on payment of a prescribed fee. This may result in shareholders receiving unsolicited mail. If you wish to limit the receipt of unsolicited mail specialist electrical you should write to: The Mailing Preference Service, FREEPOST 22, London W1E 7ER or register on their website at retailing groups. www.mpsonline.org. ShareGift The Orr Mackintosh Foundation operates a charity share donation scheme for shareholders with small parcels of shares whose value makes it uneconomic to sell them. Details of the scheme are available on the ShareGift internet site, www.sharegift.org. Group Overview Consolidated Financial Statements 01 Financial Highlights 65 Statement of Directors’ Responsibilities Financial calendar 02 Group Profile 66 Independent Auditors’ Report Final dividend record date 15 August 2008 04 Chairman’s Statement 68 Consolidated Income Statement Annual General Meeting 3 September 2008 69 Consolidated Statement of Payment of final dividend 26 September 2008 Business and Financial Review Recognised Income and Expense Payment of 2008/09 interim dividend January 2009 06 Chief Executive’s Statement 70 Consolidated Balance Sheet 10 Key Financials and Developments 71 Consolidated Cash Flow Statement 10 Overview 72 Notes to the Financial Statements 12 Business Performance Alternative Format – Electricals Division Parent Company Financial Statements – Computing Division 125 Independent Auditors’ Report on the – e-commerce Division Parent Company Financial Statements If you would like this Annual Report and Accounts – Financial Position 127 Balance Sheet of the Parent Company 128 Notes to the Parent Company or any other shareholder documentation in an Corporate Responsibility Review Financial Statements alternative format, please send a request to 22 Corporate Responsibility Review Shareholder Information [email protected]. Directors and Management 134 Five Year Record 26 Board of Directors 136 Shareholder Information 28 Executive Committee Printed in the UK by MPG impressions, Environmental Management System ISO 14001 Governance accredited and Forest Stewardship Council (FSC) 30 Directors’ Report chain of custody certified. 41 Corporate Governance Report 47 Audit Committee Report This report is printed utilising vegetable based inks on 49 Nominations Committee Report Revive 50:50 Silk and Revive 50:50 offset which is 51 Remuneration Report produced with 50% recycled fibre from both pre- and post-consumer sources, together with 50% ECF (Elemental Chlorine Free) fibre from sustainable forests independently certified according to the rules of the Forest Stewardship Council. DSG international plc 01 Annual report and accounts 2007/08 Financial Group Highlights Overview Business Financial Underlying Group sales* Review £million and 2007/08 8,545.9 2006/07 7,929.7 2005/06 6,984.4 Corporate 2004/05 6,451.8 Responsibility 2003/04 5,947.3 Underlying profit before taxation* Review £million 2007/08 205.3 2006/07 295.1 Management Directors 2005/06 311.0 2004/05 289.9 and 2003/04 289.8 Underlying diluted earnings per share* Pence Governance 2007/08 7.8 2006/07 10.9 2005/06 11.8 2004/05 10.9 2003/04 11.1 Dividends per share Statements Consolidated Pence 2007/08 5.45 2006/07 8.87 Financial 2005/06 8.45 2004/05 8.05 2003/04 7.32 Financial Parent Company Statements Information Shareholder * Underlying results exclude the effects of amortisation of acquired Certain statements made in this document are forward-looking. Such intangibles, net restructuring and business impairment charges, other statements are based on current expectations and are subject to a one-off items, profit on sale of investments, net fair value remeasurements number of risks and uncertainties that could cause actual results to differ of financial instruments and, where applicable, discontinued operations. materially from any expected future events or results referred to in these Figures for 2007/08, 2006/07, 2005/06 and 2004/05 are presented under forward-looking statements. Unless otherwise required by applicable International Financial Reporting Standards (IFRS). Figures for 2003/04 laws, regulations or accounting standards, we do not undertake any are presented under UK GAAP as previously reported and whilst they have obligation to update or revise any forward-looking statements, whether been restated to exclude discontinued operations, have not been restated as a result of new information, future developments or otherwise. for any new UK accounting standards which may now apply. Nothing in this document should be regarded as a profit forecast. 02 DSG international plc Annual report and accounts 2007/08 Average selling Sales Selling space area per store Our brands Description Highlights (£million) Stores (’000 sq ft) (sq ft) Employees Group Profile The UK’s biggest electricals Dixons Tax Free opened chain, combining superstores four new stores in 2,779.6* 537* 5,052* 9,408* 14,614* and Currys.digital on the Terminal 5 at Heathrow high street. Dixons Tax Airport. Trial stores for Free stores are based at Currys and Currys.digital Electricals UK airports and the new formats will be in Eurotunnel terminal. place for Christmas 2008. Sales by sector £million The leading Nordic Elkjøp opened its first electrical retailer. 50,000 ft2 large store 1,564.2* 274* 3,846* 14,036* 5,929* Computing £2,161.9m format in Oslo. It will roll Electricals £5,731.7m out across the Nordics. e-commerce £652.3m Specialist electrical During the year UniEuro retailer in Italy. appointed a new 663.0* 185* 2,821* 15,249* 2,824* managing director, together with other senior appointments. Greece’s leading electrical Kotsovolos continued retailer, operating as Kotsovolos to consolidate its position 374.0* 89* 939* 10,551* 1,820* and Electro World in Greece as Greece’s leading and Electro World in Turkey. specialist electrical retailer. Total sales were up 13%. Sales by region £million Electrical stores in The successful Electro Hungary, the Czech World large store format 203.5* 31* 1,008* 32,516* 1,970* UK & Ireland £4,969.3m Republic and Poland. was rolled out in Greece Southern Europe £1,682.8m and Turkey. Nordic £1,606.0m Ireland’s leading Ireland grew total sales Central Europe £287.8m Ireland electrical retailer. by 5% across the year. 147.4* 30* 303* 10,100* 619* UK’s biggest chain of Three new format PC computing superstores. World stores opened, with 1,421.7* 160* 2,528* 15,800* 8,311* further stores planned. The TechGuys sales doubled in the year. Computing Specialist computing PC City stores in Italy superstores in Spain, and Sweden are being 343.2* 63* 981* 15,571* 1,423* Italy and Sweden. integrated into existing local operations. Specialist provider of business New initiatives in IT solutions comprising customer service, training 397.0* –* –* –* 809* PC World Business, Equanet, and development have MacWarehouse and been implemented and Microwarehouse. have started to deliver benefits to customers. PIXmania is a pan-European Dixons.co.uk experienced online electrical retailer. strong sales growth of 652.3* –* –* –* 1,339* Dixons.co.uk is one of the 65%. Dixons.co.uk and leading UK electrical e-tailers. other multi-channel operations are to be transferred onto PIXmania’s platforms e-commerce during 2008. DSG international plc 03 Annual report and accounts 2007/08 Average selling Sales Selling space area per store Our brands Description Highlights (£million) Stores (’000 sq ft) (sq ft) Employees Group The UK’s biggest electricals Dixons Tax Free opened chain, combining superstores four new stores in 2,779.6* 537* 5,052* 9,408* 14,614* Overview and Currys.digital on the Terminal 5 at Heathrow high street. Dixons Tax Airport. Trial stores for Free stores are based at Currys and Currys.digital Electricals UK airports and the new formats will be in Eurotunnel terminal. place for Christmas 2008. Business Financial The leading Nordic Elkjøp opened its first 2 1,564.2* 274* 3,846* 14,036* 5,929* Review electrical retailer. 50,000 ft large store and format in Oslo. It will roll out across the Nordics. Specialist electrical During the year UniEuro retailer in Italy. appointed a new 663.0* 185* 2,821* 15,249* 2,824* Corporate managing director, Responsibility together with other senior appointments. Greece’s leading electrical Kotsovolos continued Review retailer, operating as Kotsovolos to consolidate its position 374.0* 89* 939* 10,551* 1,820* and Electro World in Greece as Greece’s leading and Electro World in Turkey. specialist electrical retailer. Total sales Management Directors were up 13%. Electrical stores in The successful Electro and Hungary, the Czech World large store format 203.5* 31* 1,008* 32,516* 1,970* Republic and Poland. was rolled out in Greece and Turkey. Ireland Ireland’s leading Ireland grew total sales Governance electrical retailer. by 5% across the year. 147.4* 30* 303* 10,100* 619* UK’s biggest chain of Three new format PC computing superstores. World stores opened, with 1,421.7* 160* 2,528* 15,800* 8,311* further stores planned. The TechGuys sales doubled in the year. Statements Consolidated Computing Specialist computing PC City stores in Italy superstores in Spain, and Sweden are being 343.2* 63* 981* 15,571* 1,423* Italy and Sweden. integrated into existing Financial local operations.