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1 2012 Annual Report

2 2012 Annual Report 1

3 2 El Corte Inglés Castellana store (Madrid).

4 Contents Presentation Financial highlights of the consolidated Group 4 Contribution to national income 5 Board of Directors 7 Chairman s Report 8 Part I Operating report of El Corte Inglés and its business group 12 Economic information 13 Economic analysis 14 Revenue 14 Consolidated profit 15 Investments 16 Review by business line 18 El Corte Inglés department stores 18 Hipercor hypermarkets 23 Bricor DIY 24 Convenience stores: Supercor, Supercor Exprés and Opencor 26 Sfera 28 Óptica Viajes El Corte Inglés Group 30 El Corte Inglés IT Group: Informática El Corte Inglés, Investrónica and Telecor 32 Insurance Group: Centro de Seguros y Servicios and Seguros El Corte Inglés 36 Finance: Financiera El Corte Inglés 38 Corporate social responsibility 41 Commercial dimension 44 Our business model 44 Our customers 45 Our products and services 48 Our suppliers 51 Environment 53 Social aspect 58 Our team 58 The community and the surroundings 66 Ramón Areces Foundation 70 Part II Legal documentation 74 El Corte Inglés consolidated Group 75 Independent auditors report consolidated financial statements 78 Consolidated balance sheet 78 Consolidated income statement 80 Consolidated statement of changes in equity 81 Consolidated statement of cash flows 84 Notes to the consolidated financial statements for the year ended 28 February consolidated directors report 132 El Corte Inglés, S.A Independent auditors report financial statements 138 Balance sheet 138 Income statement 140 Statement of changes in equity 141 Statement of cash flows 144 Notes to the financial statements for the year ended 28 February directors report 188 Proposed distribution of profit 190 Certificate 191 3

5 Financial highlights of the consolidated Group Share capital Shareholders equity 7, , Revenue 14, , Gross profit from operations (EBITDA) Profit from operations (EBIT) Profit before tax Consolidated net profit Cash flow Investments Amounts in millions of euros. 4

6 Contribution to national income In 2012 the El Corte Inglés Group companies contribution to national income was EUR 3,269 million, the breakdown being as follows: Millions of euros % Employees 2, Remuneration 1, Employee benefit costs Company Shareholders State, autonomous community, and local councils TOTAL 3, Contribution to National Income Shareholders 1.0% Company 10.3% Estate, Autonomous Community, and Local Councils 13.4% Employees 75.3% 5

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8 Board of Directors Chairman Isidoro Álvarez Álvarez Directors Juan Manuel de Mingo y Contreras* Leopoldo del Nogal Ropero Dimas Gimeno Álvarez Juan Hermoso Armada Florencio Lasaga Munárriz Carlos Martínez Echavarría Cartera Mancor, S.L. represented by Paloma García Peña Corporación Ceslar, S.L. represented by Carlota Areces Galán Secretary F. José Soriano Atencia (*) Deceased 14 July Board of Directors 7

9 Chairman s Report 8

10 Dear shareholders, On behalf of the Board of Directors of El Corte Inglés, I welcome you to this general meeting and thank you for your attendance in your dual capacity as shareholders and employees of the Group. It is our task here to analyse the results of last year, which spanned the period from 1 March 2012 to 28 February To open my presentation, I should point out that the period has been marked by the general economic recession and by the confluence of factors themselves highly detrimental to Spanish household consumption. We are now in our fifth consecutive year of slumping retail sales volumes. The El Corte Inglés Group has operated in such a complex scenario with the following results: Consolidated revenue at 28 February stood at EUR 14, million, representing a 7.8% fall on Net profit amounted to EUR million, down 18.3% on Added to these aggregates are the following figures: EBITDA of EUR million; cash flows of EUR million; shareholders equity of EUR 7, million; contribution to national income of EUR 3,269 million; and investments of EUR 570 million. By line of business, El Corte Inglés obtained a sales volume of EUR 8,542 million down 7.3% and a net profit of EUR million. Viajes El Corte Inglés ranked second with sales of EUR 2,238 million down 7.7% and net profit of EUR 41 million. At 2012 year-end, it had 599 agencies, 506 in Spain and 93 abroad. Hipercor achieved a volume of business of EUR 1,867 million, which represents a decrease of 11.7% and profit of EUR 4.48 million. The technology companies (Informática El Corte Inglés, Investrónica and Telecor) earned revenue of EUR 700 million -down 4.4%- and net profit of EUR 38 million. The Supercor and Supercor Exprés convenience stores made sales amounting to EUR 423 million, representing an increase of 5.1%. Opencor s sales reached EUR 244 million after reducing the number of stores as part of the restructuring and resource streamlining programme for these retail formats. Sfera increased sales by 9.4% to reach EUR 135 million and net profit of EUR 10 million. It currently has 88 stores, 20 of which are located abroad, with its operations in Mexico of particular importance. Chairman s Report 9

11 Óptica 2000, the chain specialising in vision and hearing health, ended the year with revenue of EUR 77 million down 2.7% on 2011 and a net profit of EUR 4.6 million. Bricor s sales reached EUR 80 million down 22.6% but net profit improved on In 2012 Bricor stores were incorporated into El Corte Inglés and Hipercor stores. The insurance group increased activity to reach EUR 155 million, which represents an increase of 7.4%, and net profit of EUR 37 million. Revenue for Financiera El Corte Inglés amounted to EUR million, representing a net profit of EUR 43 million. Noteworthy events in the year include: Sustaining the strength of the department store as a retail format. Not only does El Corte Inglés contribute 58.7% to the Group s consolidated revenue, but it also remains the leading European department store. Bolstering employment, which enabled us to end 2012 with a total workforce of 96,678 employees, 94% of which had an indefinite-term employment contract. Completing expansion works at the Castellana store in Madrid, which saw it consolidated as an exceptional sales space and emblem of innovation. Certain of its most novel offerings and stores, such as Gourmet Experience, are being rolled out at other stores with excellent acceptance by our customers. Lastly, the opening of two new El Corte Inglés and Hipercor stores, one in Córdoba and the other in the Puerto Venecia shopping centre (Zaragoza), as well as a Hipercor store and El Corte Inglés outlet in Badajoz. Dear shareholders, Spain s economic reality is well-known. As a company, our domestic operations cannot evade its effects and we must continue making efforts in management to overcome the difficulties. Our Group is facing the new challenges with its time-tested determination and striving for innovation, renewal and ongoing improvement. We are streamlining management in purchasing with three fundamental objectives: improving supply sources, establishing greater discipline to decrease excess merchandise and improving margins. This enables us to continue to match our pricing policy to market demands. As both an obligation and desire, we are looking to buttress e-commerce based on the current strength of our platform, which has become a benchmark with more than 3.5 million registered uses, 30 specialist stores and 137 million visits, reflecting annual growth of 11.6%. 10

12 And we believe that there are new, highly attractive areas for business, such as the development of shopping tourism. Coupling the fact that Spain is the second most visited European country with the significant competitive advantages that we boast, it is easy to see that there is vast room for growth in shopping tourism. This type of tourism, which generates significant revenue in other surrounding countries, is still minor in Spain. Lastly, my fellow shareholders, we remain steadfast in our innovation efforts and are constantly developing new offerings. This drive has led us to create and introduce new brands and product categories and to pioneer different areas of activity with renovated services tailored to our customers. And most importantly, our Group remains true to its values and strengths, retains its market share and stands as a benchmark for Spanish consumers. As both shareholders and employees, I would like to thank you for your valuable contribution. You are all participants in the constant efforts made in managing, developing and improving resources to make the Company more efficient. Regardless of the market s behaviour, we strive to continue developing innovative offerings and cultivate all business areas. To meet these goals, I look to all of you, to all our professional teams, to the contribution of our suppliers and to the trust of our customers. I encourage you to continue facing the current difficulties with dedication, imagination and endeavour. And I encourage you to maintain the great identity markers of El Corte Inglés quality, service, a wide range of offerings, firm guarantees and innovation. All that remains for me is to ask for your approval of the Management of the Board and the Financial Statements for Many thanks, Isidoro Álvarez Álvarez Chairman s Report 11

13 Part I Operating report of El Corte Inglés and its business group Economic information 13 Corporate social responsibility 41 12

14 Economic information Economic analysis 14 Review by business line 18 13

15 Economic analysis This section details the revenue and consolidated profit obtained by the El Corte Inglés Group based on the contribution of each of the main lines of business and the investments made in Revenue Format % Share % Change 12/11 El Corte Inglés department stores , , (7.3) Hipercor hypermarkets , , (11.7) Bricor DIY (22.6) Supercor & Sup. Exprés supermarkets Opencor convenience stores (27.7) Sfera Óptica (2.7) Viajes El Corte Inglés Group , , (7.7) El Corte Inglés IT Group (4.4) Insurance Group Other lines of business (11.3) Total , , (7.8) Amounts in millions of euros. Consolidated revenue totalled EUR 14,552 million in 2012 (year ended 28 February 2012), down 7.8% on The economic situation and general uncertainty had a notable effect on consumer spending, as reflected in the Group s results. Against this backdrop, the retail industry was affected by shrinking household expenditure, the new taxation framework and, most particularly, by the increase and reclassification of VAT rates. These circumstances led to a drop in average purchase spend, a move towards lower-priced products and a reduction in margins. As regards the El Corte Inglés Group as a whole, the three business lines that made the greatest contribution to consolidated revenue continued to be department stores, hypermarkets and travel agencies, which together account for 87% of the business volume. Large department stores held up strongly as a commercial format, achieving revenue of EUR 8,542 million. 14

16 Revenue 2012: 14, millions of euros The Group s consolidated revenue over the last four years has been as follows: Revenue / millions of euros 16,356 16,413 15,778 14,552 Consolidated profit The contribution to consolidated profit of the Group s lines of business was as follows: Format % Share % Change 12/11 El Corte Inglés department stores (11.2) Hipercor hypermarkets (87.5) Bricor DIY (3.9) (15.54) (18.91) 17.8 Supercor & Sup. Exprés supermarkets (1.8) (7.03) (9.40) 25.2 Opencor convenience stores (5.0) (20.14) (14.92) (35.0) Sfera >100 Óptica (11.4) Viajes El Corte Inglés Group (23.3) El Corte Inglés IT Group (9.7) Insurance Group Finance: Financiera El Corte Inglés Other business lines (87.9) Consolidation adjustments and eliminations (229.14) (253.43) 9.6 CONSOLIDATED PROFIT (18.3) PROFIT ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (0.99) 0.20 (*) PROFIT FOR THE YEAR ATTRIBUTABLE to the parent (18.9) Amounts in millions of euros. (*) Change not representative. ECONOMIC INFORMATION Economic analysis 15

17 Investments 2012: millions of euros The Group s consolidated profit for 2012 (year ended 28 February 2013) stood at EUR million, down 18.3% on The Board of Directors of El Corte Inglés, S.A., as the Parent, will propose to the shareholders at the Annual General Meeting payment out of profit of a dividend equal to 10% of the par value of each existing share entitled to receive it. The provisional calculation of the proposed dividend payment is as follows: Investments In 2012 the consolidated Group invested a total of EUR million, the detail being as follows: Thousands of euros Property, plant and equipment Intangible assets Non-current financial assets Thousands of euros Dividend payable 42,728 Voluntary reserves 217,966 PROFIT OF EL CORTE INGLÉS, S.A. 260,694 Following this distribution of profit of El Corte Inglés, S.A., the consolidated Group s shareholders equity is as follows: Thousands of euros Share capital 486,864 Reserves and other 6,861,978 total 7,348,842 El Corte Inglés store in the Marineda City shopping centre (A Coruña). 16

18 The investments in property, plant and equipment were as follows: various business lines, and to refurbishment and renovation work carried out at existing stores. Thousands of euros Land and buildings Machinery, fixtures and tools Furniture Computer hardware Property, plant and equipment in the course of construction Most of these investments relate to the commitments acquired and the projects initiated in prior years in relation to the opening of new stores of the Group s In 2012 two stores were opened with a joint El Corte Inglés and Hipercor, one in Córdoba and the other located in the Puerto Venecia shopping centre in Zaragoza. A new store was also opened in the El Faro shopping centre in Badajoz that includes the Hipercor and El Corte Inglés Outlet formats. Refurbishment and renovation work was also begun at the Castellana and Goya stores, both in Madrid, and at the Bahía Sur store in Cádiz. Mention must also be made of the opening of Bricor stores at various El Corte Inglés and Hipercor stores. ECONOMIC INFORMATION Economic analysis 17

19 Review by business line Following is a review of the business performance in 2012 of each of the Group s current business lines and sales formats. El Corte Inglés department stores The department store format maintained its strength as a business model and remains the most significant line in the Group taken as a whole with a contribution to consolidated revenue of 58.7%. Despite the fall-off in consumption and the difficulties facing the business, revenue for 2012 stood at EUR 8,542 million, with net profit of EUR 265 million. The appeal of the commercial offering, the ability to adapt to cater to customers with varying tastes and economic possibilities, and the ongoing improvements made to management systems have made it possible to overcome the difficulties present in the retail industry without losing sight of our commitment to quality, range and guarantees. In Portugal, as in the Spanish market, major endeavours were undertaken to lower prices combined with the launch of numerous promotion campaigns aimed at making the customer s purchase decision easier. The adverse economic situation took its toll on sales, which led to changes in the management of virtually all areas -from stock control to energy consumption-, which made it possible to make significant cost adjustments and savings. Commercial offering El Corte Inglés is characterised by its wide-ranging and varied commercial offering, which is constantly being updated and adapted to the latest market demands. We bring in new items in all areas: fashion and accessories, technology, sport, culture and art, decoration, food, catering, customer service, assistance to tourists, etc. This spirit of renewal includes the introduction of new labels and the launch of new products such as the Gloria Ortiz and Emidio Tucci proprietary perfume brands in the perfumery area, or the new Black Collection, also by Emidio Tucci, for men s fashion. El Corte Inglés is an enormous shop window to which new brands are added each year, the common denominator of which is quality and innovation. Noteworthy in this regard is the recent inclusion of labels such as Vince Camuto, Steve Maden, Ugg or Liu Jo in the fashion accessory area; Cimento and Stroili in the jewellery department; or Michael Kors, Karen Millen or Police in the bijoux jewellery section. Also in the area of fashion -in which El Corte Inglés is perceived as a benchmark due to the considerable range of available brands- there were other new developments which include the inclusion of the Rachel Roy brand exclusively at El Corte Inglés. In the autumn Couchel, a proprietary brand of special-size clothing for women that produces modern high quality designs at a fair price, was included. Of equal note was the creation, by the designer Juanjo Oliva, of a special collection for Elogy, an El Corte Inglés exclusive label. Through this initiative the style of a prestigious fashion designer is made available to the public at affordable prices. New technologies, e-commerce and the digital environment continue to capture our interest. The El Corte Inglés website has been consolidated in order to offer an improved online purchasing experience with new tools such as the recently rolled out PayPal payment method. The last quarter of 2012 also saw actions with brands such as Spotify for the sale of cards to subscribe to its music streaming system; with Filmotech for the start-up of the largest Spanishlanguage online video club; and with Wuaki.tv for the distribution of Hollywood films over the internet. A multichannel platform was launched that includes both the in-store service and the new digital internet products on the dedicated website that offers everything that the bride and groom and their guests might need for the ceremony, reception, 18

20 ECONOMIC INFORMATION Review by business line 19

21 El Corte Inglés department stores Revenue in 2012: 8, millions of euros wedding list or honeymoon. One of the new features of this website is that it groups together around 1,800 companies, many of them SMEs, which add an extensive and varied range of commercial and service offerings to those already provided by El Corte Inglés. We have continued to develop commercial formats that enjoy the support of our customers such as the Gourmet Experience, a concept that melds the quality tapas experience with the sale of gourmet products. In autumn, and boasting spectacular views over Madrid s Gran Vía, we inaugurated our fourth Gourmet Experience at the Callao store. Various establishments have also seen the installation of Health and Beauty areas where the latest treatments and advances relating to health and beauty are offered. The Art section at the Castellana store in Madrid has also extended its experience as a contemporary art gallery to Barcelona and Marbella. We pay special attention to the foreign tourists who visit our stores, making a series of additional services available to them, such as managing VAT refunds, sending goods to their hotels or countries of origin, and information in various languages. Promotional campaigns The overall economic situation affected the promotional campaigns carried out in 2012, offering high quality products at very competitive prices. Payment facilities have also been made more freely available, with various financing or deferred-payment actions so that the customers can acquire the products or services that they want. The digital environment is strengthened as a communications tool and as a channel to carry out promotional campaigns. In addition to the campaigns launched on the Group web pages, in 2012 the presence of El Corte Inglés in the social networks increased, where we maintain a continuous and open dialogue with customers and society in general, across platforms such as Facebook or Twitter. El Corte Inglés is the only Spanish company to feature in the Top 10 of the talented brands, according to the Facebook IQ study conducted by New York University. In terms of advertising, the Company once more demonstrated its capacity for high visibility with the launch of the Emidio Tucci Black Collection in October It also had the backing of familiar faces such as the Australian actress Naomi Watts, who filmed the El Corte Inglés Christmas TV commercial under the orders of director Juan Antonio Bayona, or the Spanish actress Maribel Verdú who starred in the sales campaign adverts. Internet commerce The El Corte Inglés website continues to be an e-commerce benchmark with close to 137 million visits, up 11.6% on It also has over 3.5 million registered users and 30 stores adapted to all types of customers with varying economic possibilities. 20

22 El Corte Inglés department stores Hipercor hypermarkets El Corte Inglés department stores: 86 (*) In Spain: 84 AndaluSIa Algeciras, Cádiz, Córdoba (2), El Ejido, Granada, Jaén, Linares, Malaga (2), Marbella (2), Mijas, San Fernando, San Juan de Aznalfarache and Seville (3) Aragón Zaragoza (3) Asturias Avilés, Oviedo (2) and Gijón Cantabria Santander Castilla- La Mancha Albacete, Guadalajara and Talavera de la Reina Castilla y León Burgos, León, Salamanca and Valladolid (2) CataLONIA Barcelona (5), Cornellà, Sabadell and Tarragona Valencia autonomous community Alicante, Castellón de la Plana, Elche and Valencia (4) Extremadura Badajoz Galicia A Coruña (2), Santiago de Compostela and Vigo Balearic islands Palma de Mallorca (2) CanarY ISLANDS Las Palmas de Gran Canaria (2) and Santa Cruz de Tenerife (2) Madrid Alcorcón, Getafe, Leganés (2), Madrid (11) and Pozuelo de Alarcón NavarrE Pamplona Basque Country Bilbao (2), Eibar and Vitoria REGION OF Murcia Cartagena and Murcia (2) In Portugal: 2 Lisbon and Vila Nova de Gaia - Oporto Hipercor hypermarkets: 42 (*) AndaluSIa Algeciras, Cádiz, Córdoba, El Ejido, Granada, Huelva, Jerez, Málaga, Marbella, Mijas, San Juan de Aznalfarache and Sevilla (2) Aragón Zaragoza (2) Asturias Avilés, Gijón and Oviedo Cantabria Santander Castilla- La Mancha Guadalajara Castilla y León Burgos and Valladolid CatalONIA Barcelona, Cornellà and Girona Valencia Autonomous Community Elche and Valencia extremadura Badajoz Galicia A Coruña and Santiago de Compostela Canary Islands Las Palmas de Gran Canaria Madrid Alcalá de Henares, Alcorcón, Arroyomolinos, Getafe, Leganés, Madrid (4) and Pozuelo de Alarcón REGION OF Murcia Murcia (*) Data at 28 February ECONOMIC INFORMATION Review by business line 21

23 Hiper specialist Hipercor has become a hyper specialist that expands its range of customer services in the areas of automotive, electronics and DIY. As regards the first of these areas, the presence of the Motortown proprietary brand has been increased for the automotive world and accessories, which complements the workshop for cars and motorcycles which is in the same establishment. The electronics and DIY sections have an extensive commercial offering that differentiates them from other competitors. A number of the hypermarkets also include Bricor stores, thereby enriching the DIY commercial and services offering. 22 Hipercor in the Puerto Venecia shopping centre (Zaragoza).

24 Hipercor hypermarkets Revenue in 2012: 1, millions of euros Hipercor hypermarkets The Hipercor hypermarket chain obtained revenue of EUR 1,867 million, down 11.7% on 2011, with profit of EUR 4.48 million. This performance was affected mainly by the economic situation and falling consumption. In any case, the chain has made headway with its plan to optimise internal management which has led to an improved inventory system, a reduced inventory and cost savings. This has been accompanied by an organisational change that provides for a better distribution of the workload. In 2012 three new Hipercor stores were opened: one in Cordoba in May, one in Badajoz in September and one in Zaragoza in October, the latter two are located in the El Faro and Puerto Venecia shopping centres, respectively. Also, significant renovation work was undertaken at the Campo de las Naciones and Vista Alegre hypermarkets, both in Madrid. The three stores opened in the year continue the hypermarket philosophy of offering an extensive selection of products to set them apart from the competitors, and have adopted a new store model with a more modern, easy and enjoyable structure for consumers. This new approach, which will be adapted gradually to the rest of the chain, locates all fresh produce in the centre of the store, which stands out as a result of its high quality and very competitive prices and which is reviewed on an ongoing basis, in line with the new strategy adopted by the Group. This drop in prices was also helped by the new purchasing policy that attempts to go to the origin of the product by reducing the number of middlemen. As part of our policy of constant innovation, in some of our fishmongers sea water has started being used for better preservation and maintenance of the natural properties of the products. Also in our fruit and vegetable section, the zero kilometre concept has started to be implemented which promotes the sale of fresh fruit and vegetables harvested on the day and in locations close to the store. The textile section has seen changes to the arrangement of the garments in order to allow for better presentation and visualisation. These are basic articles, of good quality and taste, with highly attractive prices. As regards our promotional policy, a new system of bonuses has been created that allow families to plan their shopping and obtain major savings. In 2012 we launched a new policy that enables us to offer the same quality and service as always but at lower prices in order to help families in the prevailing circumstances. This has been achieved by permanently reviewing the 5,000 most frequently demanded products to ensure that they may always be purchased at our stores at all times at highly competitive prices. This price list is checked weekly in relation to fresh produce and every two weeks in the grocery, drugstore and perfumery areas. ALIMENTACIÓN DROGUERÍA PERFUMERÍA ECONOMIC INFORMATION Review by business line 23

25 Bricor DIY Revenue in 2012: millions of euros Bricor DIY Bricor, the chain specialising in DIY, interior decoration, gardening and kitchen and bathroom projects, achieved revenue of EUR 80 million, down 22.6% on The decrease mainly arose as a result of the recession in the construction industry which has affected all the related subsectors. Brico incurred a loss of EUR 15.5 million, although an improvement was observed compared with 2011 due to the cost saving and management efficiency policies. The immediate returns obtained with the new urban DIY format developed in 2012 also had an impact through the opening of Bricor stores inside El Corte Inglés and Hipercor establishments. As a result of this new retail concept, Bricor has eight urban stores in addition to the existing eight superstores in The new format enables the flagship s growth strategy to be adapted to the new market dynamics, thus satisfying the demands of customers seeking household DIY solutions at the best possible price and without having to travel to the outskirts of the city. Over 80% of the articles sold by the chain are from Spanish suppliers. The good relationship enjoyed with our suppliers has led to the performance of a series of joint actions, culminating in 2013 in a marketing campaign to boost the DIY industry in the Spanish market. Another of Bricor s distinguishing features is its active environmental policy which is supported by numerous campaigns to raise public awareness. One such campaign is the Perform your own energy efficiency audit which, under the slogan Save money! Sustainability benefits you!, aims to show customers how to economise in areas such as lighting, heating and energy. As a result of its capacity to offer customers the best brands and services, Bricor received the Best Commercial Practices Award based on manufacturercustomer collaboration, awarded by the Hardware and DIY Committee of the Spanish Association for Commercial Codification (AECOC), which brings together more than 1,000 industrial and distribution companies. Bricor focused its endeavours on offering a wide range of products and services while maintaining a policy of very competitive prices. For the new urban stores, an assortment of products was selected to respond to local demands, offering up to 12,000 product references of leading Spanish and international brands. Based on a survey conducted among customers of the new stores, the most highly appreciated features are the wide range of our offering and the possibility for customers to choose between carrying out the project or household refurbishment themselves or getting our trained professionals to do it, either fully or partially. This is one of the Bricor chain s differentiating factors. Moreover, for customers preferring a wider range of options, Bricor s major stores offer more than 45,000 references. 24

26 Customer training Brico Stores: 16 (*) In Spain: 14 AndaluSIa: 4 galicia: 1 One of Bricor s distinguishing features is its commitment to training. In addition to the environmental awareness campaigns, the chain also offers customers a variety of training programmes in DIY techniques. All in all more than 200 training videos are available (downloadable using Quick Response (QR) Codes) illustrating how to approach DIY and how to choose the appropriate product for each project. CatalONIA: 1 madrid: 7 Valencia Autonomous Community: 1 In Portugal: 2 (*) Data at 28 February ECONOMIC INFORMATION Review by business line 25

27 Supercor and Supercor Exprés Revenue in 2012: millions of euros Convenience stores Supermarkets: Supercor and Supercor Exprés Convenience stores: Opencor In 2012 the Group progressed with the reorganisation and optimisation of resources of the convenience store formats in the food and mass consumer sector (Supercor, Supercor Exprés and Opencor), a change which was initiated in 2011 in line with new consumer habits and the boom in the convenience channel. This strategy was further enhanced by the deregulation of commercial opening hours in various autonomous communities which led to the conversion of certain Opencor stores to the Supercor Exprés format, thus enabling greater adaptation to local requirements, while taking advantage of the Group s synergies and achieving greater efficiency at each store. In line with strategy to achieve better use of the Group s resources, the convenience stores have strengthened their position as the collection point for customers purchasing goods online from the El Corte Inglés website. In 2012 new training courses were also provided for personnel in various areas, especially for shop managers. Conceived with shopping speed and efficiency in mind, in 2011 Supercor Exprés stores were introduced with an offering covering food and fresh products, household and perfumery products, as well as the press and, in certain cases, telephone recharging. Apart from leading brands, Supercor Exprés also offers numerous Group proprietary brands such as El Corte Inglés, Aliada, Veckia and Special Line. The chain s opening hours from 9 a.m. to midnight provide customers with the maximum flexibility in order to meet their consumer requirements. Supercor is a larger store format mainly offering fresh produce and a wide variety of products and brands able to satisfy any consumer demands. The quality of the fresh products offered, the presence of professionals behind the counter and the offering which includes around 21,000 different references set this chain apart. As in the case of Supercor Exprés, this store format benefitted from the new pricing strategy implemented by the Group in 2012 for food and mass consumption products, offering highly competitive prices for the same quality and service. 26

28 Opencor Revenue in 2012: millions of euros The Opencor chain of convenience stores is subject to legislation establishing opening hours of at least 18 hours a day with an offering ranging from food to gift and leisure articles, the press, etc. Where permitted under local legislation, the conversion of Opencor stores into Supercor Exprés format resulted in a decrease in the number of Opencor stores, which affected revenue and results. In addition, the lower level of business activity during the store conversions also had a detrimental impact on the volume of sales achieved by Supercor Exprés. Convenience Stores: 238 (*) AndaluSIa: 49 extremadura: 1 Aragón: 3 Galicia: 15 Asturias: 9 Balearic Islands: 2 Cantabria: 1 Canary Islands: 12 Castilla-La Mancha: 2 Madrid: 71 Castilla y León: 3 navarre: 1 CatalONIA: 29 Basque Country: 2 In this context, Supercor increased its sales per square metre, improved productivity and continued to save costs, which enabled it to close the year with revenue of EUR 423 million, up 5.1% on Opencor reduced its level of commercial activity due to the decrease in the number of establishments, as a result of which revenue amounted to EUR 244 million, down 27.7% on Valencia Autonomous Community: 35 (*) Data at 28 February RegiOn OF Murcia: 3 Supercor Exprés at C/ Condesa de Venaditos, 5 (Madrid). ECONOMIC INFORMATION Review by business line 27

29 Sfera Revenue in 2012: millions of euros Sfera In 2012 the Sfera fashion and accessories chain performed well, achieving revenue of EUR million, up 14.7% on Its contribution to the Group s consolidated revenue amounted to EUR 135 million. These figures confirm the change in strategy embarked upon in the two previous years which in 2012 helped the Group obtain net profit of EUR 10 million. Noteworthy among the measures undertaken to achieve this result is the improvement in goods management, which has improved margins and reduced surpluses. Sfera has maintained its sales policy of offering competitive prices, reduced operating costs and advanced with its strategy to define a global brand which encompasses the various product lines targeting women, men and children. Also a marked improvement was achieved in its collections, placing particular emphasis on the refinement of garment styling, launching new fashion collections and the ongoing quest for new trends and styles. Sfera continued with its store refurbishment plan which affected a total of 24 establishments and 57 corners in Noteworthy at international level was the growth in sales in Mexico, where Sfera currently has 14 stores and plans to open at least 6 more points of sale in At 2012 year-end the fashion and accessories chain comprised a total of 88 stores, 20 of which are outside Spain. Sfera is also found in all the El Corte Inglés stores. In terms of communication and advertising, Sfera strengthened its social network presence by providing permanent information on the new developments and collections at stores, in addition to announcements of exclusive promotional activities. Sfera stores in Spain and Portugal: 71 (*) In Spain: 68 AndaluSIa: 15 Galicia: 6 Aragón: 1 Balearic Islands: 1 Castilla-La Mancha: 4 Canary IslanDS: 2 Castilla y León: 7 Madrid: 15 CatalONIA: 3 melilla: 1 Valencia Autonomous Basque Country: 1 Community: 6 extremadura: 2 Region of Murcia: 4 In Portugal: 3 (*) Data at 28 February

30 Óptica Revenue in 2012: millions of euros Óptica 2000 Óptica 2000, the chain of stores specialising in vision and hearing products, achieved revenue of EUR 77 million in 2012, a reduction of 2.7% on Óptica 2000 obtained net profit of EUR 4.6 million, down 11.4% on In 2012 Óptica 2000 s actions were mainly focused on areas such as goods management, the renewal of products, the incorporation of new models and the implementation of cutting-edge technologies at new points of sale. Progress was made in the management of stock with a view to achieving greater product turnover and offering the most innovative models and the latest fashion designs. The basic product line has also been renewed to offer even lower prices and to increase monofocal and highrange progressive lens quality. At 2012 year-end, Óptica 2000 had 109 establishments. Óptica 2000 Stores: 109 (*) In Spain: 107 AndaluSIa: 23 extremadura: 1 Aragón: 4 Galicia: 4 ASTURIAS: 3 Balearic Islands: 2 CANTABRIA: 1 Canary Islands: 3 Castilla-La Mancha: 3 Madrid: 19 Castilla y León: 5 NAVARRE: 1 CatalONIA: 20 Basque Country : 4 Valencia Autonomous Community: 10 In Portugal: 2 (*) Data at 28 February RegiOn OF Murcia: 4 Certain of the Group s own-brands, such as Gloria Ortiz and Emidio Tucci, launched new frame models in line with the latest fashion trends. In 2013 Óptica 2000 will launch its new IT system which will permit more efficient access to information and the optimisation of patient s medical and healthcare data, as well as enhancing the possibilities offered by access to a comprehensive catalogue of ophthalmic lenses designed to meet the individual needs of each patient. Training remains one of the priorities of the chain, which offers both online and on-site courses, the latter developed in cooperation with the manufacturers. There are also cooperation agreements with the Universidad Politécnica de Catalunya and the Universidad of Tarrasa. Other relevant agreements include those reached with reputable ophthalmic centres such as the Clínica Baviera and the Clínica Barraquer. Optometry and audiology clinics A new system has been implemented in prescription clinics for presenting optotypes which involve the use of polarised LED screens, offering both greater transparency in eye tests and enhanced patient comfort. Óptica 2000 installed new topography models at six stores permitting precise corneal analysis. These instruments and the related services offered not only place Óptica 2000 at the cutting edge of technology but also set us apart from our competitors. In addition, mention should be made of tympanometer installed in 38 of the stores providing audiology services. This instrument makes it possible to measure the resistance to the transmission of sound from the outer to the inner ear. ECONOMIC INFORMATION Review by business line 29

31 Viajes El Corte Inglés Group Revenues in 2012: 2, millions of euros Viajes El Corte Inglés Group In 2012, the Spanish and foreign companies that compose the Viajes El Corte Inglés Group generated revenue amounting to EUR 2,238 million, down 7.7% on Net profit stood at EUR 41 million. The effect of the economic crisis on consumption has had a very significant impact on domestic tourism, giving rise to a dramatic decrease in activity in both domestic and foreign travel. This led to a temporary change in our working hours in January in line with the trend observed in the industry. The management model of Viajes El Corte Inglés is based on personalised attention aimed at meeting the individual business and holiday travel needs of each customer,. For this purpose, it offers a carefully selected, extensive range of tourist products and services which enables the ongoing creation of value for all customers. Viajes El Corte Inglés is the exclusive distributor of the products of its wholesaler Tourmundial, which prepares a holiday product tailored to the market s needs. As a retailer, Viajes El Corte Inglés offers the end customer both its extensive network of offices and all the typical products and services of a travel agency with the guarantee and quality that characterise the Group. The Business Division, the leading agency in corporate customer services, specialises in both large companies and SMEs. The Company s aim is to provide its customers with the best services, reducing their travel costs based on the advice of our agents and the consulting department. Businesses are also provided with global services and information from an integrated perspective and, to this end, we have entered into various international cooperation agreements. Viajes El Corte Inglés is also specialised in the planning and organisation of congresses, conventions and incentive trips through a team of professionals specialised in integral event management, including the planning, organisation and implementation of institutional, corporate, sporting and cultural events. The most recent events in which Viajes El Corte Inglés participated include the 2012 UEFA European Championship hosted by Poland and Ukraine, the 2012 UEFA Europa League Final held in Bucharest, the 2012 World Handball Championships hosted by various Spanish cities and the World Junior Championships in Athletics held in Barcelona. Also noteworthy were the 2nd National Conference of Executives held in Valencia and the International Union of Biochemistry and Molecular Biology congress which took place in Seville. Viajes El Corte Inglés also has alternative sales channels through which it provides customers with a broad range of services. These channels include remote sales, both tele-sales and online sales through its website, which allow the Company to offer a balanced service distribution system tailored to our customers needs. The promotional initiatives undertaken by Viajes El Corte Inglés aim to encourage customers to make 30

32 advance holiday reservations for specific product or seasonal campaigns such as the Semana del Crucero (Cruise Week), Crucilandia (Cruiseland), Nieve (Snow), A Viajar Verano (summer deals) or Mes del Circuito(Circuit Tour Month). Also worth mentioning are its campaigns offering specific products such as Viajes para Mayores de 55 años (Holidays for the over 55s) and Turismo Social (Social Tourism), complemented by the sale of IMSERSO package holidays through Viajes El Corte Inglés. An extensive office network Viajes El Corte Inglés has an extensive office network both in Spain and abroad. In 2012, 15 new branch offices were opened, including one in Panamá, the first in this country. At 2012 yearend, there were a total of 506 branch offices in Spain and 93 abroad. In addition, in cooperation with important operators, the Company undertakes campaigns to promote family tourism in theme parks such as Disneyland Resort Paris, PortAventura, the City of Arts and Sciences and Walt Disney World Resort Florida. Viajes El Corte Inglés branch office in Santiago de Chile. ECONOMIC INFORMATION Review by business line 31

33 Informática El Corte Inglés Group Revenue in 2012: millions of euros Informática El Corte Inglés Group: Informática El Corte Inglés, Investrónica and Telecor The information and communications technology area of the El Corte Inglés Group comprises Informática El Corte Inglés, Investrónica and Telecor. In 2012 aggregate revenue of EUR 700 million was obtained, down 4.4%. Profit amounted to EUR 38 million, down 9.7% on Informática El Corte Inglés Informática El Corte Inglés is characterised for adapting its proposals for the information technology industry to the ever-changing market, offering its services to both public bodies and private companies. In 2012 it has strengthened its cloud computing service offering and integrated workstation management. In this regard, of particular note is the initiative to migrate 46,000 users of an autonomous community which have ceased to use installed office technology software in favour of cloud services. management systems, inter alia, to the cloud. These projects represent an important advance in the company s cooperation and communication systems. In the finance industry, the Group has implemented systems for the digitisation of documentary archives of important entities located in Spain and abroad. In 2012 a Mobility Centre of Excellence was created to unite the offering of applications and experience in mobile technology. Informática El Corte Inglés has launched a new business portal to improve communication with its customers located in Spain and abroad, and it organised the VI Document and Workflow Technology Forum in Madrid where customers share their experiences and manufacturers present the latest innovations. Other noteworthy projects include the management of the workstation support of another autonomous community and the software maintenance of an important European Union agency. A smart city project in Latin America should also be noted, which involves the launch of an integrated security and emergency solution to anticipate and manage any kind of incident, including weatherrelated catastrophes. In addition, numerous projects were developed for various Spanish multinationals which made it possible to upload business cooperation, videoconference, telepresence, warehousing, incident and request 32

34 Certificates and acknowledgements Informática El Corte Inglés software developers were awarded the Capability Maturity Model Integration (CMMI) Level 5 maturity certificate, which is the highest possible level and has only been awarded to eleven other companies in Spain. Informática El Corte Inglés guarantees its customers good IT governance practices in accordance with the guiding principles provided under ISO It also guarantees the security of credit card payments with its ConexFlow solution, which obtained international Payment Application Data Security Standard (PA-DSS) certification in IT developers have recognised the role played by Informática El Corte Inglés as a distribution channel for and integrator of their solutions with numerous mentions and awards, the most noteworthy of which included the Advanced Data Center Architecture Specialisation awarded by Cisco, Hitachi s Enterprise Storage Solutions Partner award, and its recognition as Best Performance Reseller by Fujitsu. Informática El Corte Inglés also received the award for the Best Document Management Solution from the magazine Byte TI for its Invesdoc Gallery Suite. ECONOMIC INFORMATION Review by business line 33

35 Investrónica In 2012 Investrónica entered the ultrabook business with is new range Inves Duna Slim with Windows 8. This category of laptops is designed to offer improved performance and enhance user mobility. The Invesgenia division has been working on a new engineering project to develop intelligent lockers for public spaces equipped with a sturdy security system ideally suited for shopping or crowded areas. New Ultrabook by Inves Duna Slim. 34

36 As for the intelligent signage business line, Inves has presented a new videowall solution (screens combined to form a single image) of unparalleled quality specifically designed to circulate advertising messages. At Venditalia 2012, Europe s main vending trade fair, Inves presented a new concept in intelligent automatic vending machines, Inves Ventia, providing solutions which include both the sale of high-end products and services such as the rental of e-goods (films, software, music, e-books, etc.) Telecor Telecor, the Group company specialising in the marketing of telecommunications products and services, has made a considerable effort to adapt to changes in this sector. The most significant changes include the withdrawal of handset subsidies by mobile phone operators; portability within 24 hours; the launch of convergent fixed and mobile telephone and ADSL offers; the mainstreaming of virtual mobile operators; and the increase in the number of unlocked handsets. The chain has points of sale in certain Group shopping centres, as well as its own Telecor establishments and various distribution channels. Telecor s telecommunications offering is a multioperator, applying at all times impartiality and independence criteria vis-à-vis the operators and manufacturers with which it works. Telecor has agreements with all the mobile, virtual and landline operators in Spain. ECONOMIC INFORMATION Review by business line 35

37 Insurance Group Revenue in 2012: millions of euros Insurance Group: Centro de Seguros y Servicios, and Seguros El Corte Inglés The El Corte Inglés Group operates in the Spanish and Portuguese insurance industries through two companies: Centro de Seguros y Servicios (insurance broker) and Seguros El Corte Inglés (insurance company which operates in the life and accident insurance lines and manages pension funds). The aggregate revenue in 2012 totalled EUR 155 million, 7.4% more than in Its contribution to consolidated profit was EUR 37 million, up 7.3% on Centro de Seguros y Servicios In 2012 Centro de Seguros y Servicios continued to expand, opening five new branches to take the total number of centres to 105, most of which are located in El Corte Inglés department stores. It also continued to extend its offering of insurance policies, including most notably new insurance policies in the automotive, life and healthcare lines, in cooperation with some of the most prestigious insurance companies. Centro de Seguros y Servicios also began to market exclusive insurance policies for El Corte Inglés customers. The insurance broker website was completely overhauled to promote to Group s multichannel service ( converting it into a real online centre for insurance sales, advisory services and assistance. New customer communication channels were also launched via Facebook and Twitter and the telephone sale and customer service activity was enhanced, most notably with the launch of accident insurance designed specifically for this channel. In fulfilment of our commitment to quality and service, after-sales services were reinforced for theft, damage, extension of cover lines of insurance for goods sold in our shopping centres. El Corte Inglés Seguros Correduría website. 36