Tackling our to do list - Annual Review 2015/16 - Wilko | Corporate
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Tackling our to do list Annual Review 2015/16
06 Wilko Annual Review 2015 Wilko Annual Review 2015 03
Contents
04 Who we are The place to come
to get stuff done
05 Our highlights
12
06
04
Lisa’s message
08 Meet the team – The holding board
10 Meet the team – The trading board
12 Strategy plan and customers Going global
with Wilko Asia
14 W’innovate
15
15
Wilko Asia
16 Quality, value and choice
17 Stay Low Price
18 New stores
19 Existing estate improvements
20
18
Wilko digital
21 Making the headlines
Here, there and everywhere –
22 Training and development more new stores throughout the UK
23 Doing our bit
24 Good causes
25
20
Paying our way
26 Governance and risk management
28 Financial review
Switched on to the digital
marketplace
04 Wilko Annual Review 2015
The place to 6/10
come to get households
now shop
Serving over
7 million
stuff done with Wilko customers per week
We’re a family business Here for life
run for families.
From kids to grandparents, families keep coming back to Wilko –
we’re here for the savvy shoppers, the hardworking families, who
want and deserve value, quality and convenience. Our customers
More investment,
with a plan to
know they can depend on us, they trust us – and when we’ve asked
them, some say they love us.
open more than
100
stores
over the next 5 years
Customer
satisfaction up
7%
year on year to 78%
06 Wilko Annual Review 2015
A great
place to own
Family owned private limited companies
invariably conduct their business privately.
Wilkos rarely discusses ownership save to
punctiliously, annually thank family shareholders
for their unswerving support.
Our family owners see their role as providing patient About our Boards to get done the jobs they have to do and those
(but challenging) capital and stable ownership from We made changes to our Boards, reflecting our new jobs are many and varied. We provide useful
which short, medium and long-term growth can group structure. products to help them, with great quality and at
be delivered with emphasis placed on the long great prices. SLP promises that these variety of
At holding board level during 2014 we welcomed
term. The adage that family companies plan in value products offer quality at its best at prices
Sean Toal as our Chief Operating Officer. Sean
generations is apt for Wilkos. Our owners challenge, that are low and will stay that way
joined us after a long and illustrious career at the
they are patient and they think long term (often in 15
Co-op. We welcomed back John Jackson for his • We talked more to our customers through
year cycles equating roughly to a generation
second stint for us as a Non-Executive Director. press and leaflets and radio. 2014 and 2015
of owners).
saw us start to apply the complicated analysis
During 2015 we said goodbye to Ian Ellis our long
Already an octogenarian, Wilkos is in its third that is econometrics to the ways we talk to our
standing Chief Financial Officer and welcomed
generation of family owners: from founding owners customers. We did this to find out the best ways
Aidan Connolly in his stead. Aidan has worked in
JK and Mary Wilkinson, through expansion under the to talk to our customers so that they really do hear
thank you
many structures and businesses across the globe,
A big
sibling partnership of Tony Wilkinson supported by what we say in a way that’s important to them
but joined us most recently from Worldpay.
his sister Barbara (expanding from 11 to 215) to the
• And we listened, getting closer to our customers
cousins’ confederation. April 2014 saw that change We recognised the need for a new trading board
by developing our customer insight so we learn
with Barbara Wilkinson, Karin Swann and Nicholas for Wilko Retail composed of some existing players
more and more about our customers and what
Wilkinson ceasing to hold shares, leaving Wilkos joined by some new ones. The existing players
they want from us every day We know we co
firmly in the hands of Tony Wilkinson and his family. are: Robin Lassiter (Retail Director), Frankie Adams uldn’t do any th
we have a lot ing at all withou
(Trading Director) and Cath Fox (Human Resources A great place to work of thank yous. t people so
And Wilkos became Wilko Group creating a classic
Director). The new directors are: Mark Hale (Supply We have fabulous team members and we are Thank you to ou
but simple holding company structure. The original r customers: th
Chain Director) and Ian Ayling (Marketing Director). thankful to them every day for everything they do week and the e 7 million visit
company: Wilkinson Hardware Stores Ltd taking the 150,000 visits ors to store per
for our customers and our business. We listened our business g to wilko.com p
name Wilko Retail Ltd as it rebranded all its activities A great place to shop rounded. er d ay who keep
better to our team members by reinstating our team
Wilko: fully embracing the name customers have Retailing in the saturated market that is the UK Thank you to ou
member engagement survey, which gave us a r team memb
used for decades; recognising the ranges outside doesn’t get any easier. This year, with our new group ers the 20,600
respectable 50.8% Net Promoter Score; which we’re daily work keep of you whose
hardware (though this remains at the heart of structure in place and under streamlined ownership, s Wilkos runnin
told is good for retail, but it’s not good enough for us. g and moving
activities); and embracing digital under wilko.com. we made positive steps forward, always with our Thank you to ou fo rwards.
We’re working hard to build a better relationship with r suppliers bot
Out of respect for our heritage the holding company customers in mind. The financials show that this without whom h branded and
our team members. we wouldn’t b own brand
is named after where it all started: Wilkinson delivered growth for us in sales and customers and and own brand e able to deliv
products at g er great brand
Hardware Stores Ltd. Within the Group, newer that growth has carried into profit. reat prices. ed
Thank you to ou
activities grow with Wilko Asia Ltd, our global sourcing This annual review covers our big activities during the r advisors who
and narrow. keep us firmly
business, and W’Innovate Ltd, our macro trend, new year. For me the highlights were many and varied: on the straight
product design and development business, both Lisa And as always
• We saw customers continue to shop differently thank you to ou
making strides forward during the year. patience, your r shareholder
across our high street, city centre, retail park and challenge, yo s for your
stable owners ur capital and
digital offers hip long-term,
• We got back into opening new stores in places
that we know customers want to shop
• We went back to our roots and worked hard on
creating Stay Low Prices or SLP. Wilkos is and has
always been focused on helping our customers
08 Wilko Strategic Review 2015 Wilko Strategic Review 2015 09
Steve Sinclair
Meet the team
Non-Executive Director
Steve joined the Wilko Board as a special advisor in 2009, and was asked
to join as a Non-Executive Director in 2011.
Steve has a degree in Architecture from UCL, an MBA from London Business
School, and a diploma in Finance and International Marketing from New York
Graduate School.
After 2 years with McKinsey, he worked as the Executive Assistant to the
The holding board
Chairman of Royal Worcester Plc, before joining the Board of Allied
international designers in 1985.
He set up his own design business with funding from 3i and sold out to WPP
after 7 years of successful trading. He was then asked by the CEO to take
up the role of Marketing Director in Boots and then subsequently moved as
Strategic Marketing Director to WH Smith.
Lisa Wilkinson He joined PwC as a Senior Director in consulting in 2007 and led the firm in
developing and leading the Customer Experience practice. In 2015 Steve was
Director promoted to head up the Sales and Marketing function for the UK and EMEA
firm with a budget of over £60m.
Lisa, granddaughter of the founder of Wilkinson; JK Wilkinson, became a Family
Non-Executive Director of Wilkinson in February 2004. She takes the view that her role
is to represent and maintain the values of the family in the Boardroom.
Lisa started her working life in the legal profession as a solicitor in private practice,
a career she enjoyed for over 10 years. Graduating from Leeds University in English Aidan Connolly
and History (joint Hons) and then converting to Law at Leicester Polytechnic, she
joined Eversheds in Nottingham before moving to Edge Ellison (now part of Hammonds Chief Financial Officer
Suddards Edge) in Birmingham and latterly working at DLA (now DLA Piper) in London.
Aidan Connolly joined the business as Chief Financial Officer in October 2015.
Throughout her legal career, Lisa specialised in Discrimination and Employment Law,
Aidan joined Wilko’s from Worldpay, which is the UK’s leading card acquirer and
instructed predominantly by large corporate commercial clients.
the fifth largest global payment services business. Aidan sits alongside Lisa and
While a practising solicitor, Lisa actively took an interest in the Wilkinson business, Sean on the Board and will focus on driving a positive and sustainable future for
including taking up the role as trustee to the company pension scheme and in 2004 our customers.
she chose to end her formal legal career to become a Director of Wilko.
Aidan’s extensive career has seen him as both Chief Financial Officer and Chief
Lisa is the daughter of Tony Wilkinson who led the second generation of the Wilkinson Executive for a number of public and private companies in the UK, Europe and
family. She too hopes that the fourth generation will continue the legacy of Wilkinson the USA. Aidan’s wide-ranging experience includes several spells in consumer
family ownership and will feel the same passion for this privately owned business. goods and retail: from businesses making, selling and fitting window blinds
(as the UK’s third largest blinds retailer); to selling high-end wallpaper and fabrics
via some of the UK’s top luxury brands; to creating and selling 6 million holidays
a year, mostly through the 700+ stores in MyTravel’s high street travel agency.
He has worked to make online sales quicker, safer and more enjoyable at
several of his previous companies.
Sean Toal Aidan originally trained as a Chartered Accountant and holds a law degree,
Chief Operating Officer specialising in tax in his early career.
Sean joined Wilko in July 2014 to take on the role of Chief Operating Officer.
Sean is a dedicated, results-driven retailer with a long record of success
and clear strategic thinking. Sean’s main focus is developing key operational
areas including retail, distribution and buying as we continue to drive the
John Jackson
business forward. Non-Executive Director
Sean began his early career in food retailing with Somerfield in 1986.
John Jackson has been a Non-Executive Director for 7 years.
After 15 years at Somerfield, Sean moved to United Co-operatives as
A qualified Chartered Certified Accountant, he is Chairman of the
General Manager – Retail Operations. In July 2007, United Co-operatives
Audit & Risk Committee. John was Managing Director of Bristol-Myers
merged with the Co-operative Group and Sean was appointed Director
Pharmaceuticals, CEO of Cheseborough Ponds, Managing Director
of Food Retail Operations for the Co-operative Group and played a
of The Body Shop International Plc and Virgin Group Board Director
key role in the successful integration of the two Co-operative Societies.
responsible for Retail & Leisure.
Sean also led the operational integration of Somerfield following the
acquisition in March 2009. In 2007 John joined Jamie Oliver Group as Group CEO. In 2014 John
also became Chairman of the Rick Stein Group. He is currently Senior
Sean was appointed Commercial Director in January 2010 and led
Non-Executive Director of Game Digital Plc, Non-Executive Director of
the combined Marketing and Trading teams up to his appointment
Playtech Plc, with previous Non-Executive roles including Thorntons Plc,
as Acting Chief Executive Officer in September 2011. In January 2012,
Luminar Plc and The Restaurant Group Plc.
Sean was promoted to the position of Chief Operating Officer for Food.
10 Wilko Strategic Review 2015 Wilko Strategic Review 2015 11
The trading board
Robin Lassiter Cath Fox
Retail Director HR & Talent Director
Robin is the Retail Director for Wilko, and has held a number of senior roles at Cath joined Wilko’s in 1990 and has 26 years of HR experience with Wilko’s.
Wilko since 2006, including Multichannel and Business Transformation as well Cath leads the HR and Talent teams to deliver effective solutions to meet
as Retail Operations. Robin is responsible for all of the 381 stores, our online our strategic business objectives.
business and Central Operations in Worksop. Cath’s background in HR covers areas such as strategic planning, cultural
Robin has worked in the UK and the US, including a long period at Sainsbury’s change management and participation in corporate governance.
covering a number of Commercial, Operations and Online roles. Cath also has overseas experience working on a secondment basis as Head
Robin is a Non-Executive Director of Enactus UK and sits on the BITC East of HR for Wilko Asia, and has undertaken other commercial secondments
Midlands Advisory Board and the Healthy High Streets Steering Committee. including a project management role for the stationery major category
review. These experiences have given Cath valuable knowledge and an
understanding of the retail end to end general commercial process.
Mark Hale Ian Ayling
Supply Chain Director Strategic Marketing Director
Mark joined Wilko in March 2015 to take on the role of Supply Chain Director. Ian joined Wilko as Strategic Marketing Director in October 2015. He started his career in FMCG
Mark’s key focus is on driving efficiencies across the operation while developing marketing and managed a variety of well known British brands, from Pot Noodle to Mr. Kipling
the Supply Chain to support the strategy of the business. – eventually operating as Marketing Director for Rank Hovis McDougall’s cake division.
Mark began his early career in heavy chemical companies ICI and Shell In 2005 Ian joined Dunnhumby to lead the marketing and customer development programme
before moving to the Co-operative Group in 1992. At the Co-operative he with Tesco. Then in 2011 he joined the Co-op as Customer Change Director to rebuild and
worked in numerous roles across four of the businesses – Food, Travel, grow their food business as a convenience retailer.
Pharmacy and Funerals. Mark held a number of Director roles before Ian has also joined our Board of Directors for W’innovate, our product design and
becoming the Supply Chain Director for the Food business. development company.
Mark has a masters degree in ‘Managing IT in business’ which he obtained
through a part learning programme with Salford University.
Additional support to the Wilko Group
Frankie Adams Haroon Rasool
Trading Director Wilko Asia Managing Director
Haroon started his career in pharmaceutical research as an auditor and
Frankie joined Wilko in 2009 to head up FMCG trading and was subsequently
quickly progressed onto heading up technical for an international food
promoted to Trading Director a year later.
manufacturer. He joined Sainsbury’s in 2002 where he held various roles
Frankie has a degree from Oxford University and a masters degree from culminating in heading up Quality in Asia. Haroon was a key leader in
Bath University and began his career with Nestle UK on the graduate scheme. establishing Sainsbury’s Global Sourcing Division in Hong Kong in 2005.
After 6 years at Nestle, Frankie moved to Asda where he successfully led
Haroon holds a PGCE from the University of Cambridge, MSc in Food Science
several different buying areas.
from the University of Leeds and BSc (Hons) in Biotechnology from University
Since he has been at Wilko, Frankie has led a major review programme College London.
across all our ranges and products, driven commercial results with passion
Haroon joined Wilko Asia in August 2008 to lead Global Sourcing Quality
and focus and created a strong emphasis on cross-functional working to
& Social Compliance. Haroon is the co-founder of Wilko Asia and has been
deliver excellent results.
integral in establishing our global sourcing operations. Haroon was appointed
Managing Director of Wilko Asia in March 2015.
12 Wilko Strategic Review 2015 Customer
satisfaction up
7% year on
year to
Helping our 78%
customers get
their to dos done
We understand our customers “We’re here to help
because we’re just like them –
we’re keen gardeners, pet families to run, repair, Team member
lovers, eager bakers and handy friendliness
decorators. We have busy lives
maintain, improve improved by 1%
and families, so we understand and live in their year on year to
78%
the importance of good quality
products at the right price.
homes and gardens.”
6/10
Lisa Wilkinson Director
Part of the family
We consider our customers part of the Wilko family and we know
what matters to them when they shop with us. With busy families
households
and lots of to dos we need to keep ahead of our competition
and truly understand the needs of our customers all year round.
Whether it’s looking for value in January, refreshing the home
in March and April, garden and outdoor furniture throughout the
summer, getting the kids back to school and college in September
to looking for inspiration at Christmas – we’ve got the stuff our
customers need to get the job done.
shop with
Wilko
Team member
helpfulness
improved by 2%
year on year to
79%
14 Wilko Operational Review 2015 Wilko Operational Review 2015 15
W’innovate Going gl bal
with Wilko Asia
Thoughtful creativity – designing and
making purposeful products that make
everyday life easier or better
We’re a design consultancy that specialises in own brand, domestic,
consumer-led products. Our ethos is that well designed products
shouldn’t cost the earth and should be available to the masses – From its offices in Hong Kong and Delhi, Wilko Asia is responsible
everyday products for everyday people. To do this we have to be
both commercially savvy and resourceful in our design approach. for sourcing products from China, South East Asia and the Indian
We take time to understand the needs of the end user, considering
how, when and where the products will be put to use.
subcontinent. Its 57 team members work hard to ensure we can
From our ideology of having graduate designers at the heart of our
offer our customers the best products at the right price.
business, to the methods we use to approach design, right through
to the ideas that we create, we make small but continual changes to
Quality assured
improve our design process and the products we produce.
Quality is a top priority for the team. Using over 300 factories
throughout Asia, they now ship over 4,000 different products
The team
to the UK – each of which has been rigorously sampled and
Talent is our most valuable asset. We recruit commercially savvy
tested to make sure they meet our exacting high standards.
individuals with all levels of experience.
We also have an altruistic agenda to provide opportunities for Playing fair with everyone
recently qualified designers. We demonstrate our commitment to this As part of an ethically ran family business, Wilko Asia has
through our sponsorship of New Designers each year. It allows us to undertaken a social compliance initiative throughout all
meet the next generation of commercial designers and keeps us up its suppliers to ensure the products they supply are sourced
to date with emerging talent and the quality of projects that degrees and produced ethically. Our suppliers and their factories
are producing. are regularly assessed by independent auditors to ensure
their ongoing compliance.
57
team
members We source
from over
300
Victoria Bradley
Design Manager, W’innovate
“In 2013, I recruited a team, created a strategy and a business plan and set Over
4,000
off to develop the concept of W’innovate. We knew 3 things from the outset.
We wanted to offer design services. We wanted to create a graduate centre factories across Asia
of excellence. We wanted to potentially become a product brand. All of this I
believe in, it excites me greatly and we’re on a journey.
We’ve grown the team from 3 to 10 designers and have taken the number of
products we’ve designed from 0 to over 2,000 lines. different products
The final piece that gives this start up company the edge of infinite potential is
the strength, backing and infrastructure of belonging to large company.”
16 Wilko Operational Review 2015 Wilko Operational Review 2015 17
Quality, value Hello Stay
and choice Low Price
At the heart of everything we do is In March 2015, we launched Our ‘Stay Low Price’ focuses on stuff our customers need at prices
that’ll stay low all year round. We keep an eye locally to make sure
helping our customers get their to our new value proposition we bring customers the best prices and are always competitive,
our prices will beat or at least match our competitors.
dos done and making sure they have ‘Stay Low Price’ – a multi-million As part of the launch, we extended our range from 250 to over
4,000 products and we made our promotional offers stronger and
everything they need to run, repair, pound investment in thousands more focused for our customers – with 50 of our offers being market
maintain, improve and live in their Ove leading! We also focused on making sure our pricing was simple and
prod r 1,000 of everyday low prices to drive easy to understand and that the products were easy to find in store.
homes and gardens. Hom ucts in o our competitive edge in an
e an ur
Here are some key facts about stay low price:
rang d Kitche aggressive marketplace. • Stay low price means our prices will stay low for
To achieve this we need to make sure we always supply them with the right
a cu es hav n
12 months. Guaranteed
products at the right price. That’s why as well as providing the right range
ratin stomer 5 e
• 4,000 lines of our customers’ most important to do products
of products, we also constantly strive to improve their quality and value
were introduced in 2015
for money.
g on s
wilko tar • Our stay low prices will match or beat our competitors
.com
“Does the job! What a fab little
Just some of the improvements toaster this is. Not too small,
we’ve made to our Home and fits perfectly in my kitchen”
Garden range…
• We’ve increased the thread count
to 144 on all our printed duvets
• Added depth and strength to our
woven storage baskets
• Improved the design of our
stainless steel bathroom cabinet –
making it less likely to scratch
• We’ve improved the spec of our
plastic handled cutlery
• Wilko Ultra kitchen towel now
outperforms the brand leader
for strength
• Increased the size of garden bulbs
to give better plant yield
• Our Wilko Tomato Feed now
matches the performance
of the leading brand
18 Wilko Operational Review 2015 Wilko Operational Review 2015 19
Putting our stores
where our customers
Evolving our
want to shop existing estate
Our 8 new stores in all different shapes and sizes. We ensure
we check out what our customers want and
sure that every store’s product range, use of
language and photography is appropriate
As well as opening 8 new stores Last year we revamped, resized and refitted 87 of our existing
stores – helping to stimulate sales and drive brand loyalty, to
generated an need wherever we lay down our space to
ensure we get the right product and range
for the customers who live and work locally.
this year, we’ve also put a enhance our customers’ shopping experience. Improved fixtures,
better adjacencies, local relevance and optimal use of space
We’re really excited about the opportunities
additional £6.6 million, in store for our customers’ needs. We also
ensure our stores are accessible for everyone
that opening more stores in London great deal of time and effort into have all been used to make our customers’ shopping experience
the best it can possibly be.
generates for Wilko. We’re delighted to bring
serving nearly – whether that’s creating or checking the
availability of public transport links and
our value, quality and ranges to our capital keeping all our existing stores up And we’re not done – we’ll keep constantly evolving and improving
and we’re looking at the many interesting our stores, looking for new and better ways to help our customers
750,000 customers. parking spaces.
locations that London has to offer. to date and in line with our high get their to dos done.
A capital idea
And we’re still at the heart of the high street brand standards.
Expanding our space For decades, we’ve been right at the heart
Although we’re now opening stores beyond
In recent years we’ve noticed that although of retail in the UK. So it makes sense that
the traditional high street, it’s here where we
our customers love our local high street we’d have stores in our capital city.
11 revamps
began and it’s here that we intend to stay.
stores, they want the option to drop into Wilko
So far we have 7 stores in the capital – Our customers love the fact they can ‘pop
when they’re out shopping on a retail park.
at Tottenham Hale, Kensington High Street, down to Wilko’ and get everything they need
We’re putting our stores where our customers Tooting, Fulham, Stratford, Wood Green and for their homes and gardens, all under
want to shop, on high streets and retail parks – most recently – Hammersmith. We make one roof.
Our 8 new
stores
generated
CYBER AY
BL ACK MOND
FRIDAY
Order &
Collect
Order by
collect 2pm,
from 2pm
tomorrow
£6.6 million
381
OUR
in additional
sales serving
nearly 750,000
STORES SERVE additional
7
MILLION
CUSTOMERS customers
EVERY WEEK20 Wilko Operational Review 2015 Wilko Operational Review 2015 21
We get We love talking, it connects us to our
Our customers
customers. And when we’re not talking
through the radio, press, Facebook and
people Twitter, we’re helping our customers on
shop with us 24/7 –
our Wilko life blog too.
talking 140,000
10,000
online and in store facebook
followers
60,000 Twitter
followers
Instagram followers
Our online business is Order and collect
Making the
As part of our 5 year strategy plan, we’re constantly looking for ways
to improve our convenience to make it easier for customers to shop
growing fast and has never
85%
with us. One way we’re doing this is by focusing on our order and
collect service and our wilko.com service which not only makes us
been more important to more convenient to shop with but also provides customers with
an increased range and choice of products at great value!
headlines
us in delivering convenience Bringing it to life
Not only do we work hard to make sure our customers’ online
for our customers. It’s an shopping experience is as simple and enjoyable as possible,
we also put a great deal of effort into providing them with of shoppers surveyed
all the help and inspiration they need. Our blog aims to give
said they loved us
area we’re really excited our customers up-to-the-minute advice on how to do everything
from unblocking a plughole to creating their perfect look for less.
And it’s not just our customers who
to invest in! If it needs doing, our online team can help them do it.
love us, in 2015 we also received
ce is a m azing,’ I beam
some great media coverage too… “‘This pla ckout girl as
m ilin g ch e
at the s
Top of the shops Super brand news
e ring s u p my items”
We did well in a recent
satisfaction survey run by
We appeared alongside
treasured names like Marks &
sh
ail
, The Daily M
consumer champions Which? Spencer in a list of alternative Alice Smellie
They asked 1,000s of customers super brands published by retail
IMRG rated
which of the big high street data consultancy Ikano Insight.
stores had the best service and It recognised brands with the
warmest welcome – and we best understanding of their
wilko.com within the came in the top 20, beating big
names like Tesco and Ikea.
customers, long-term loyalty
and engagement. As seen on TV
When people talk to us and about
“Leading” websites us on social media, it drives traffic
We also had great feedback on
the moneysavingexpert.com
The place to be seen
An article in the Daily Mail
– the best for
bathroom paint
Top 28/500
to wilko.com. In 2015, website, with 85% of shoppers
asked saying they loved us
describes us as the latest go-to ‘Shop well for less’ on
brand for middle class shoppers BBC1, featured 5 well
nearly 56 million visits to – again beating brands like
Morrisons and Homebase.
looking for a good deal.
Comparing the quality of our
known paint brands
and put them to the
our website came via social media* products and service with the
in their 2015 likes of John Lewis and House of
Fraser – but with far better value
test. In a blind test a
customer picked our
annual report for money. Wilko Bathroom paint
as the best for quality,
coverage and colour.
We saw an 80%
sales uplift after the
programme aired.
*Information correct as of 31/01/1622 Wilko Operational Review 2015 Wilko Operational Review 2015 23
Training and Doing our bit
development locally and
globally
In October 2015, we ran our annual engagement survey, “I understand
asking team members what it’s like to work at Wilko. how my work
contributes to To save energy,
18,492 team members took part, that’s
88%
the success we’ll move all lighting
of Wilko.” to LED in due course,
74%
25% has already
been completed
Being a fair, responsible
and ethical retailer.
Since 1930 we’ve been selling products at a fair and honest
price to millions of people. In that time we have always
taken responsibility for our actions and have committed
to minimising any negative impact on people and the
environment. We have a strict Corporate Responsibility We do
of our team
Strategy, which is embedded in every team member. not test any of our
products or their
ingredients on animals
We’re ensuring,
Within our distribution centres with regular audits,
intelligent systems switch off power
Our net promoter score was
that none of our
50.8%
to rooms that aren’t being used products are
manufactured in
factories that
Our team members are crucial to making the customer shopping have unsafe or
experience memorable and repeatable – so it’s reassuring that our unacceptable
team members have scored this question highly. working
On average
We’re working with The practices
Woodland Trust to use
sustainable sources of
66%
timber in all our wood
and paper products
Well above average for our sector
“I understand who my
customer is and what Our transport policy has received
I need to do to put my
5-star Ecostar accreditation
customer first.” 83%
of responses were positive24 Wilko Operational Review 2015 Wilko Operational Review 2015 25
Helping the Paying
peop e our way UK taxes paid
around us We continue to make a significant
contribution in terms of taxes/levies
paid, primarily in the UK but also
£134m
through our sourcing operations Collected by Wilko
Helping good causes and doing our Bags of money for good causes
in Hong Kong and India. During on behalf of HMRC
£29m
In the first six months of the Government’s 5p carrier bag
bit for charity is a key part of our business. charge, we sold over 18 million bags and raised £133,461
for charities based across England, Wales and Scotland.
2015/16 we paid or recorded
This year team members across the Helping Hands
charges of over £134m in taxes/
business nominated 25 local charities As part of our Helping Hands fund, Wilko gave £300 to
each store to help their local community. That’s a total
levies in the UK alone.
they were passionate about or had a donation of £76,200 to local charities and community
groups in need of support. 19 stores near the Bristol area We believe in acting responsibly and pay our fair share of taxes in
connection with – and after a lot of hard each jurisdiction in which we operate. We don’t and never will use
Overseas tax paid
pooled their Helping Hands budget together and paid
£m
for over 250 senior citizens to have a day at the cinema questionable structures to evade taxes.
work (and fun) ended up raising over £1 to watch Dad’s Army.
million for our 25 regional chosen charities. We also give team members one day per year
to volunteer in their local community – that’s over
half a million hours!
regional
25
Total tax remitted
Final amount raise
d
charities
£164m
over £1m26 Wilko Operational Review 2015 Wilko Operational Review 2015 27
Governance and
risk management
As a private company we are not required to demonstrate compliance Risk identification and management
ARC carries responsibility for risk management and internal This consists of Trading Directors who are required to present
with the UK corporate governance code or to disclose our corporate control. Meeting five times a year, ARC maintains a strategic risk
register covering a wide range of business risks; the register is a
risk reports and mitigation plans for their department. ARC also
approves the annual internal audit plan and receives key internal
governance arrangements. The code represents best practice and we dynamic document and is formally reviewed at least annually. audit findings at each ARC meeting.
ARC is supported in the management and monitoring of business Principal strategic risks identified are as follows:
are moving towards compliance with most of its elements. Though not risks by the Risk Executive Committee (REC).
fully compliant, we believe we have robust governance in place and
wish to be open and transparent with stakeholders about our approach Risk Mitigation
to effective control and stewardship. IT resilience and infrastructure – under-investment, outdated The Board has approved significant investment in this area.
technology, increasing data volumes stretching capacity and additional IT transformation plan has been delivered to board with
Overall control of the Group is through the Holding Board: Summary of Key Boards and Committees IT support for the strategic projects all present risks. monthly updates, and focuses on addressing priority risks.
Recruitment of additional resources needed to deliver the
• The Holding Board delegates authority in specific areas to other Holding Board plan is already under way.
sub-committees Holding Board is a unitary board chaired by Lisa Wilkinson, Family
• Audit and Risk Management – Audit and Risk Committee Director. Other Directors are Sean Toal, Chief Operating Officer (COO),
Business strategy – ability to absorb change – as we continue Work is ongoing on the re-sequencing of the strategic
Aidan Connolly, Chief Financial Officer (CFO), John Jackson and
• Remuneration and nominations – Remuneration and our strategic programme, considerations are currently being given to our project portfolio and this involves driving an understanding
Steve Sinclair (non-executive directors). It provides oversight and
Nominations Committee ability to absorb change over the next 12 months. of the implications of significant planned IT change to the
challenge to the Trading Board over its day to day running of the
• Executive management of subsidiary trading businesses – Trading wider business.
business. It also is the ultimate level of approval for significant
board and other executive boards for W’innovate and Wilko Asia strategic changes, particularly those affecting the Wilko brand and
Managing the talent pool – the strategic objectives will only be A number of key activities are already under way including:
The current arrangements are under review, in the future we will move adherence to shareholders’ principles. Holding Board delegates
achieved if executed well by team members. Without alignment of •R
elaunch of internal future executive development
to a more transparent structure. authority in specific areas to the following committees.
values and skill-sets to the strategy there is a risk of non-delivery. programmes
• Business objectives cascade
Audit and Risk Holding board Remuneration •N
ew retail talent strategy including graduates
Committee (ARC) Wilkinson Hardware Stores Limited and Nominations and apprentices
Meets 4 weekly • Engagement survey actions
ARC’s objective is to RNC’s objective is to
establish formal, robust and WHSL board meets 13 times a year/4 weekly establish formal, robust
Digital strategy – a digital mindset needs to be embedded across A clear Digital strategy is being finalised to emphasise the
transparent arrangements arrangements to create,
all areas of the business. We need to be responsive to changes in importance throughout the business.
to apply the corporate recommend changes
technology and customer behaviours to achieve our goals.
reporting, risk management to, and oversee the Weekly meetings between the core digital team and integrated
and internal control application of remuneration departments are already in place with particular emphasis on IT,
principles and to maintain and nominations policies. as a key enabler of delivery of the Digital strategy.
ARC* RNC*
an appropriate relationship RNC is given authority to
with the Company’s oversee and review Health and safety culture – during 2015, for the first time in the Group’s We will invest in our culture, communications and leadership
auditors. The committee remuneration arrangements history, we were prosecuted and pleaded guilty to a health and safety to ensure that health and safety is always front of mind. We have
is chaired by John Jackson Trading board for the group, recommend offence. We received a fine, reduced by 33% as a result of the risk approved a substantial increase in resources to support this.
and attended by Lisa Wilko Retail Limited new positions and structural improvements we have made since the accident. The health and safety
Wilkinson and Steve Sinclair. changes required to support of our employees and customers is a paramount consideration.
Meets weekly
The COO, CFO, Head strategic aims. RNC
(Week 4 meeting Change Board)
of Finance and Internal members consist of the Crisis management – in the event of a disaster scenario There is a core crisis team in place. External specialists have
audit manager assist the non-executive Directors and we need to ensure business continuity. Plans that encompass robust been engaged to support effectiveness of crisis process through
committee in carrying out Family Director assisted by crisis and incident management, mitigation and communication scenario testing.
W’innovate Limited Wilko Asia Limited
its objectives. executive members CFO, responses are currently being prepared to address such situations.
Product design & Sourcing company COO, rewards and pensions
development company Full board meets twice manager and HR Director.
Full W’innovate board a year in Hong Kong Summary Long-term viability
meets once/Q W’innovate Directors: LW, FA, HR, The governance structures provide effective lines of leadership With a robust governance framework and a strong strategic plan
Showcase in other months David Wei and accountability for the ongoing management and stewardship which is driving improvement in key performance indicators we
Directors: LW, FA, CU, IA
of the group. Non-executive directors and the Family Director are confident that the group has a strong future and is viable.
hold executive directors to account through the Board and
*LW, SS and JJ are members of ARC and RNC its committees.28 Wilko Operational Review 2015 Wilko Operational Review 2015 29
Financial review Taxation
The tax charge of £6.9m this year represents an effective tax rate of
26.3%, predominantly due to depreciation being higher than capital
Return On Capital Employed (ROCE)
ROCE for 2016 increased to 13.0% against last year’s 1.7% reflecting
improved utilisation of existing assets driven by the increased
allowances as a result of fixed asset spends which do not qualify profitability in the current year.
for capital allowances. The tax does include a charge of £0.2m in
respect of earlier years (2015: £0.8m credit). Pension
In addition to the defined contribution schemes provided by the
Cash Flow and Net Debt Group, the business also operates a defined benefit scheme which
Liquidity remains very strong with cash and cash equivalents was closed to future accrual post 31 July 2013. The estimate of the
Improved trading in the financial year resulted in turnover increasing to £1,464m (2015 – £1,445m) increasing £27.3m to £96.0m at the end of 2016. Operating activities deficit on the scheme at the end of the year is £14.2m pre taxation
generated an inflow of £75.4m, predominantly as a result of £56.8m (2015: £33.8m deficit). The reduction in deficit is mainly due to
driven by additional customer footfall, new stores and like for like growth. Combined with better
EBITDA (2015: £39.1m). Investing activities contributed to an outflow of increases in corporate bond yields over the year leading to a rise
margin control that saw gross profit percent increase to 40.3% (2015: 40.0%), overall gross profit £23.4m, largely due to spend on capital additions of £24.3m, whilst in the discount rate from 3.2% to 3.75% p.a. Mortality assumptions
rose to £590.1m (2015: £578.4m). Operating expenses fell £9.1m to £566.5m (2015: £575.6m), financing activities generated an outflow of £24.7m. £22.1m of this have been updated to take account of latest scheme specific
was early repayment of the loan taken out in 2015. The £96.0m cash research. These factors caused a large decrease in liabilities which
culminating in an operating profit increase of £20.7m to £23.6m (2015: £2.9m). balance and zero debt means the Group has access to significant was only partially offset by a rise in long-term inflation expectations.
resources to deliver its strategic priorities in the coming year. The Group made additional contributions of £1.2m during the year
Profit on ordinary activities before movements on derivative financial instruments and tax for the to the defined benefit scheme and has committed to make a similar
year was £22.8m compared to £2.5m last year. Capital spending contribution in 2016/17.
Capital additions for the year rose to £24.3m (2015: £13.3m),
predominantly as a result of new stores and relocations in 2016.
Key Performance Indicators Operating Margin
Spending of £24.3m on a proportional basis remains low for the
Alongside absolute profit and debt measures, the business uses Operating profit increased by £20.7m year on year to £23.6m (2015:
size of our group and under investment in the business has been
several key performance indicators (KPIs) to measure progress. £2.9m). This consisted of an increase in gross profit of £11.7m and
highlighted as a key strategic risk by the board – particularly in our
a reduction in operating expenses of £9.1m. The £11.7m gross profit
IT infrastructure.
increase was driven by £8.0m as a result of the additional sales and
KPI 2016 2015 £3.7m through trading rate improvement to 40.3% (2015: 40.0%).
A key trading initiative this year was the launch of our Stay Low Pricing
Total revenue campaign, in which we committed to selling 4,000 lines at the lowest
1.4% (1.3%)
growth / (decline) price on the high street. This generated 14% volume growth and
3% sales increase for the lines changed as part of the campaign. Consolidated profit and loss account
Like for like revenue Rate dilution from the Stay Low Pricing campaign was offset by
0.6% (2.0%)
growth / (decline) improved discount management and sourcing effectiveness.
In terms of category performance the biggest areas of profit
EBITDA £m £56.8m £39.1m growth came from DIY, Cleaners and Christmas. 2016 2015
The £9.1m overhead savings materialised across a number £’000 £’000
Customer growth / of different areas. Team member costs reduced by £1.9m (after
0.8% (2.3%) paying team member bonus) following the headcount restructure Turnover 1,464,475 1,444,563
(decline)
that commenced at the back end of 2015 for our head office, supply
Operating return chain and retail departments. Marketing spend reduced in Q1 and Cost of sales (874,350) (866,114)
1.6% 0.2%
(“pence in the £”) Q2 as a result of not repeating the TV advertising that took place in
2015. Additional marketing investment was however injected into the Gross profit 590,125 578,449
Return on Capital Christmas campaign in Q4, helping drive the strongest quarter
13% 1.7%
Employed* of comparative sales growth all year at 1.7%. Other savings year Operating expenses (566,487) (575,574)
on year were generated in transport, contract maintenance, card
*Calculated as EBIT** / (Shareholder Equity + Debt finance) handling and utilities. The utilities saving were the result of significant Operating profit 23,638 2,875
**EBIT is also before movements on unrealised gains / losses capital investment in LED lighting across a quarter of the estate
on financial instruments in 2015. Plans are in place to extend LED lighting to the remainder Interest receivable and similar income 909 393
of the estate over the next two years. Within the year we embarked
Revenue on a five year strategic programme encompassing projects across
Interest payable and similar charges (1,796) (743)
Improved trading performance resulted in turnover growth of £19.9m IT, Supply Chain, Marketing, Customer Experience and Product.
year on year, with key metrics across the board all contributing. £4.1m of additional spend was attributable to these projects in year.
Profit on ordinary activities before movements on
Like for like store performance was an improvement, posting a growth 22,751 2,525
of 0.6% in 2016 compared to a 2.0% decline in 2015. We increased Finance Income and Costs derivative financial instruments
our estate from 373 stores to 381 and wilko.com sales increased 13.8% Net finance costs of £0.9m increased by £0.5m year on year.
increasing our overall basket spend for the year too. This compares We operated with more cash in the bank throughout 2016, generating Unrealised gain on derivative financial instruments 3,204 19,954
favourably with the overall market trend for non-food online sales, additional interest receivable of £0.5m. Due to the high liquidity
which showed growth of 12.7% during the same time. However, the position we repaid the outstanding balance on the £25m loan in full Profit on ordinary activities before taxation 25,955 22,479
percentage of online sales as a proportion of total sales is significantly in January 2016. Additional repayments prior to repaying the loan in
lower than the non-food market average of 18.5% meaning we need full contributed an additional £0.2m of bank interest paid. The interest
Tax on profit on ordinary activities (6,841) (6,613)
to continue to focus on growth in this area. charge on the net pension liability also increased by £0.9m year on
year to £1.1m in 2016 (2015: £0.2m).
Profit on ordinary activities after taxation 19,114 15,86630 Wilko Annual Review 2015 Wilko Annual Review 2015 31
Financial review Consolidated balance sheet
2016 2015
£’000 £’000
Fixed assets
Tangible assets 147,626 157,428
Current assets
Consolidated cash flow statement Stocks
Debtors
150,349
51,209
153,302
56,408
Cash at bank and in hand 96,012 68,690
2016 2015
297,570 278,400
£’000 £’000
Creditors: amounts falling (210,572) (197,104)
Cash flow from operating activities due within one year
Operating profit 23,638 2,875
Current pension service costs 7 8 Net current assets 86,998 81,296
Pension administration costs (1,250) (1,250)
Depreciation of tangible fixed assets 33,183 36,190 Total assets less current liabilities 234,624 238,724
Loss/(gain) on disposal of tangible fixed assets 885 (365)
Decrease/(increase) in stocks 2,953 (13,211) Creditors: amounts falling (31,723) (48,500)
Decrease in debtors 205 8,606 due after one year
Increase in creditors and provisions 17,728 6,434
Taxation (1,990) (6,771) Provisions for liabilities (6,328) (6,302)
Net cash inflow from operating activities 73,359 32,516 Net assets excluding pension liability 196,573 183,922
Cash flows from investing activities
Pension liability (14,175) (33,829)
Interest received 909 393
Purchase of tangible fixed assets (24,343) (13,343)
Net assets including pension liability 182,398 150,093
Disposal of tangible fixed assets 75 395
Cash transferred pursuant to Demerger – (39,504)
Capital and reserves
Called up share capital 19 19
Net cash flows from investing activities (23,359) (52,059)
Other reserves 171 171
Cash flows from financing activities Profit and loss account 182,208 149,903
Dividends paid (1,874) –
New bank loans raised – 24,750 Shareholders’ funds 182,398 150,093
Interest paid (733) (537)
Repayments of borrowings (22,071) (2,679) Continuing operations
None of the Group’s activities were acquired or discontinued during the current or previous period.
Net cash flows from finance activities (24,678) 21,534
Company Secretary Auditors The figures and financial information for the financial period 2015/16
Mary Edgerton PKF Cooper Parry Group and comparatives do not constitute the statutory financial statements
Net increase in cash and cash equivalents 27,322 1,991 Limited for those periods. The financial statements for the financial period ended 1st
Registered Office Sky View February 2016. This includes the auditors report which was unqualified and neither
Cash and cash equivalents at beginning of year 68,690 66,699 JK House Argosy Road drew attention to any matters by way of emphasis nor contained a statement
Roebuck Way East Midlands Airport under section 498 (2) or (3) of the Companies Act 2006.
Cash and cash equivalents at end of year 96,012 68,690 Manton Wood Castle Donington
Worksop On 11 June 2014 our trading company Wilkinson Hardware Stores Limited changed
Derby
Nottinghamshire its name to Wilko Retail Limited (still company number 0365335) and our new
DE74 2SA
S80 3EG holding company (company number 08856837) changed its name to Wilkinson
Bankers Hardware Stores Limited. Wilko Retail Limited remains a wholly owned subsidiary
Registered number 08856837 Lloyds Bank PLC of the renamed holding company Wilkinson Hardware Stores Limited (company
(England and Wales) number 08856837).You can also read
