Dixons Retail plc Retail Dixons Dixons Retail plc Annual Report and Accounts 2010/11 Bringing Annual Report and Accounts and Report Annual life to technology 2010/11 Dixons Retail plc Maylands Avenue Hemel Hempstead Hertfordshire HP2 7TG Tel 0844 800 2030 www.dixonsretail.com Dixons Retail plc is a specialist electrical retailer and services company which sells consumer electronics, personal computers, domestic appliances, photographic equipment, communication products and related services. We are one of Europe’s leading specialist electrical retailing groups. We trade through over 1,200 stores and online, spanning 28 countries and we employ 38,000 people. www.dixonsretail.com Designed and produced by MerchantCantos www.merchantcantos.com Photography by Dennis Davis: Dennis Davis Photography and Dixons Retail plc Digital Studio. Printed at St Ives Westerham Press Ltd, ISO9001, ISO14001, FSC certified and CarbonNeutral The papers used in this report are Revive 50:50 Silk and Revive 50:50 Offset. They are produced from 50% recycled fibre from both pre- and post-consumer waste sources, together with 50% Elemental Chlorine Free fibre from well-managed forests independently certified according to the rules of the Forest Stewardship Council. The inks used are all vegetable oil based. Dixons Retail plc Annual Report and Accounts 2010/11 01 01 Overview Business 02 Group at a Glance Business -- Highlights 05 Overview 04 Chairman’s Statement 05 Chief Executive’s Review 08 08 Summary Strategic Underlying Group sales(1) Directors’ 08 Bringing life to Strategic -- (£million) Report Summary technology 22 and 16 Business Model 2010/11 8,154.4 18 Looking Forward 2009/10 8,320.0 Business 19 Key Performance 2008/09 7,955.8 Review Indicators 20 Risks to Achieving the 2007/08 8,074.8 Group’s Objectives 2006/07 7,531.7 EBIT(4) (£million) 23 Review Performance 23 Overview Performance -- 2010/11 127.6 Review 25 UK & Ireland 35 2009/10 133.2 26 Nordics 27 Other International 2008/09 95.3 28 Pure Play e-commerce 2007/08 214.3 29 Group Financial 2006/07 279.2 Summary 32 Corporate Responsibility Report Underlying profit before tax(1) (£million) 2010/11 85.3 36 Governance Corporate 36 Board of Directors 2009/10 90.9 Corporate -- Governance 37 Executive Committee 55 2008/09 70.6 38 Statutory Information 2007/08 228.4 40 Corporate Governance Report 2006/07 304.2 44 Audit Committee Report 45 Nominations Committee Report Underlying diluted earnings per share(1,5) 46 Remuneration Report (pence) 55 Directors’ Responsibilities 2010/11 1.6 2009/10 1.5 56 Statements Financial Financial 56 Independent Auditor’s 62 Notes to the 2008/09 1.3 -- Statements Report Consolidated Financial 119 2007/08 7.0 57 Consolidated Income Statements Statement 108 Company Balance 2006/07 9.4 58 Consolidated Statement Sheet of Comprehensive 109 Company Cash Income and Expense Flow Statement 59 Consolidated Balance 110 Company Statement of Note: References related to definitions appear on page 24. Sheet Changes in Equity 60 Consolidated Cash Flow 111 Notes to the Company Statement Financial Statements 61 Consolidated Statement of Changes in Equity 120 120 Information Shareholder Shareholder 120 Five Year Record Information 122 Shareholder -- Information 124 123 Index Cautionary statement Certain statements in this Annual Report and Accounts are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future events or results referred to in these forward looking statements. Unless otherwise required by applicable laws, regulations or accounting standards, we do not undertake any obligation to update or revise any forward looking statements, whether as a result of new information, future developments or otherwise. Nothing in this Annual Report and Accounts should be regarded as a profit forecast. Dixons Retail plc Annual Report and Accounts 01 2010/11 Directors’ Report Business Overview Leading European Group at a Glance electrical retailing and services company www.currys.co.uk www.elkjop.no www.pcworld.co.uk www.elgiganten.se www.dsgibusiness.com www.elgiganten.dk www.knowhow.co.uk www.gigantti.fi www.lefdal.com UK & Ireland Nordics For more information please go to page 25 For more information please go to page 26 Our brands Currys and PC World are the UK & Ireland’s Our brands Elkjøp is the leading specialist electrical largest specialist electrical retailing and retailer across the Nordics. services chains. Elkjøp and Lefdal stores operate in We operate from High Street stores, Norway, El Giganten in Sweden and Superstores and Megastores. We are Denmark and Gigantti in Finland. increasingly opening combined 2-in-1 Currys and PC World stores across all formats, bringing customers the benefits of both brands in one convenient location. Dixons Travel stores are based at all major UK airports. KNOWHOW is our new market leading services brand. Highlights Highlights Our Renewal and Transformation plan is working and customers Elkjøp continues to perform strongly in all of its markets and is are experiencing better store environments, improved ranges and expanding its business significantly as we grow market share increased levels of service. across the Nordic region. Elkjøp operates an efficient operating model with centralised warehousing in Sweden serving all four 250 stores have been transformed so far, 31 of which are principal markets in which it operates. With the lowest store- Megastores. based cost to sales ratio in the Group it provides the basis for the We launched KNOWHOW, our new face of service and product favoured operating model for the Group. support which puts customers at the heart of everything we do. Elkjøp is increasing its footprint through Megastores by extending This features delivery and installation, set up of equipment and or refitting existing stores as well as refurbishing superstores to upgrades, help and support as well as repairs and protection. the new Group format. During the year Elkjøp delivered strong The multi-channel offering provides customers with the performance in Norway and delivered particularly strong convenience of online shopping alongside the accessibility improvement in Denmark, Finland and Sweden. of our stores, particularly through the reserve&collect facility. Dixons Travel is expanding its brand overseas with operations now in Copenhagen, Rome, Milan and Dublin airports. Underlying sales Number of stores Selling space Underlying sales Number of stores Selling space (£million) (‘000 sq ft) (£million) (‘000 sq ft) 3,816.1 642 8,187 2,268.9 285 4,223 Average selling area Average employees Average selling area Average employees per store per store (sq ft) (sq ft) 12,752 23,091 14,818 7,343 Dixons Retail plc 02 Annual Report and Accounts 2010/11 01 01 Overview Business Underlying sales by division Directors’ Report 1 -- Business Overview (£million) 4 05 3 1 UK & Ireland £3,816.1m 2 Nordics £2,268.9m 3 Other International £1,226.7m 4 Pure play e-commerce £842.7m 2 www.kotsovolos.gr www.pixmania.com www.unieuro.it www.dixons.co.uk www.electroworld.cz www.electroworld.gr www.electroworld.com.tr Other International Pure play e-commerce For more information please go to page 27 For more information please go to page 28 Our brands Kotsovolos is Greece’s leading specialist Our brands PIXmania is one of the largest pure play electrical retailer. electrical retailers in Europe operating in 26 countries. In Italy, we operate Unieuro electrical stores with some as combined 2-in-1 Dixons.co.uk is one of the leading UK Unieuro and PC City stores. online electrical retail brands. In the Czech Republic and Slovakia, we operate under the Electro World brand. In Turkey, we operate the Electro World brand with a local joint venture partner. Highlights Highlights The turnaround in Italy remains on track and the business Our pure play brands work together with our store based delivered a positive EBITDA performance in the year, the first for multi-channel brands to provide our customers with the shopping several years. trip that suits their needs. Trading conditions in Greece remain difficult, however, Kotsovolos Overall the Group continues to see strong growth in the continues to generate cash and as market leader is well multi-channel operations. positioned to gain further market share. The functionality of PIXmania’s e-merchant platform was Electro World in Central Europe is already a leading brand and is developed further for Dixons.co.uk to provide an improved online well positioned for the development of the Czech and Slovakian shopping experience. markets in the medium term. Electro World in Turkey remains a long term opportunity for the Group with our joint venture partner. Underlying sales Number of stores Selling space Underlying sales Number of stores Selling space (£million) (‘000 sq ft) (£million) (‘000 sq ft) 1,226.7 308 4,429 842.7 17 24 Average selling area Average employees Average selling area Average employees per store per store (sq ft) (sq ft) 14,380 6,191 1,412 1,398 Dixons Retail plc Annual Report and Accounts 03 2010/11 Directors’ Report In March this year we launched the KNOWHOW brand in the UK Business Overview which encompasses all our after-sales services. KNOWHOW clearly puts the customer at the heart of everything we do and Chairman’s Statement empowers all our colleagues to focus determinedly on our customers. Our KNOWHOW distribution and repair centre in John Allan Newark is world class. The logistics, distribution, repair and services areas are far better than many of our competitors. The efficient operation illustrates how far we have progressed in getting it right for customers first time. During the early part of the financial year we successfully issued a £150 million bond due 2015, which enabled us to repurchase just under half of the Group’s existing 2012 Bonds as well as extend the maturity of the Group’s working capital facility to 2013.