THINK RESPONSIBLY
CORPORATE CITIZENSHIP

THE BOARD VIEWS CORPORATE SOCIAL RESPONSIBILITY AS A SET OF VALUES TO BE EMBEDDED IN THE GROUP’S DAY-TO-DAY OPERATIONS AND ACTIVITIES.

DAVID LONGBOTTOM // Group Human Resources Director

The Group has made good progress on a wide range of Corporate Social Responsibility (CSR) matters. Our Being the Best principles require all employees to operate with integrity; give outstanding service to customers; respect colleagues; and continually seek ways to improve performance.

In its approach to Corporate Social Responsibility, the Group seeks to implement these principles
in an operationally and administratively efficient manner, maximising shareholder value whilst offering benefits to other stakeholders.

Structures
The Group operates a CSR Committee, chaired by the Company Secretary. Social, environmental, ethical and reputational issues are reviewed and where appropriate mitigating or corrective arrangements are implemented. The Committee monitors compliance with legislation, regulations and best practice, including environmental matters, health and safety, trading standards, employment, disability and community relations.

Accountability
The CSR Committee reports to the Group Board. The Group Human Resources Director is the Executive Director with Board responsibility for CSR matters, including specific responsibility for environment and health and safety. During the period, the Committee completed its initial review of the Group’s CSR position. The Group Board has considered the results of this systematic assessment of risks, opportunities and proposals for development.

Reporting
The Group does not publish a separate CSR statement or report. Such documents can only provide a snapshot of activity in a field that is continually changing. Instead, the matters described below provide a summary of the breadth of Group CSR activity and the issues which the Board considers to be most relevant to the Group’s operations. Further information is available on the corporate website, www.dixons-group-plc.co.uk where it is updated to reflect the Group’s most recent position and progress.

UNDERSTANDING STAKEHOLDERS
The Group has identified the main stakeholders in its business as investors, customers, employees and their families, business partners and suppliers, local communities, the environment, legislators
and enforcement authorities. The CSR Committee assesses the Group’s policy in relation to these stakeholders by examining the following information:

• standards, codes and other indicators, including voluntary and statutory reporting;
• measurement, audit or validation of CSR performance by external sources; and
• legislative, regulatory and best practice developments.

During the year the Group commissioned MBA students at the London Business School to examine the work of the Committee, assess the Group’s corporate responsibility position in relation to a range of indicators and develop proposals for improvement. The Group has already begun to address the matters raised in this study, further details of which may be found on the corporate website.

REPORTING PERFORMANCE
The Group participates in a limited number of surveys and questionnaires to benchmark performance and assess progress. These are chosen for their authority, comprehensiveness and reach among stakeholder groups. The Group publishes a summary of answers to frequently asked CSR questions on its website.

In the last Business in the Environment Index of Corporate Environmental Engagement, the Group’s score was 73 per cent (2002/03 74 per cent), having increased by eight percentage points in the previous year. The Group was a constituent member of the Dow Jones Sustainability Indexes and FTSE4Good during the period. It achieved ninth position – the highest score among non-food retailers – in The Times Corporate Profile series, a two-year assessment of FTSE 100 companies.

The Group has not previously used special indicators to assess CSR performance, preferring
to concentrate on interpreting existing performance measures in CSR terms. However, during the period, the CSR Committee developed proposals to gather and publish data in the year ahead, and establish reportable performance indicators. This reporting will be included in next year’s Annual Report and Accounts, with interim information available where possible on the corporate website. The indicators are:

The Board will review a performance assessment against these indicators annually. The CSR Committee will review their relevance periodically.

COMMUNITY
Charitable donations
During the period the Group donated £875,000 to The Dixons Foundation, a registered charitable trust. The Group encourages applications for support from community groups and small charities, particularly in areas where it has high concentrations of employees. More than 350 local organisations benefited from support during the period. The Foundation also supports larger scale initiatives, particularly in education, for example sponsoring the Chair in Entrepreneurship and Innovation at Edinburgh University and the Dixons City Technology College in Bradford.

Employees in the UK choose charities to support in an organised campaign under the banner “Charity of the Year”. The Group’s current campaign is called Action4Disability, a consortium of four charities: the Parkinson’s Disease Society, Headway (the Brain Injury Association), the Down’s Syndrome Association and Action For Blind People. The Group is on target to raise £450,000 from the campaign during the European Year of Disabled People.

Supporting local communities
To improve local links and promote good community relationships, the Group has developed a new resource for local managers at stores and other Group sites. The Community Kit is an innovation unique to the Group, providing ideas for local action and support for community initiatives. Employees are encouraged to get involved in local projects and the Group has established an informal network of employee “community champions” in the UK to support activities and share information.

The Group has introduced community-related training options for personal and management development including volunteering, mentoring and skills-transfer opportunities ranging from working with young offenders to offering management advice to schools and other local organisations. During the period more than 100 employees volunteered to answer phones and accept donations at the Group’s call centres in Nottingham and Sheffield for the Red Nose Day appeal.

Partnership working
In the UK the Group has been instrumental in two new crime reduction programmes. Working with the Mobile Crime Action Forum (MICAF) and the Home Office, the Immobilise campaign has seen mobile phone-related crime – particularly street thefts – decline significantly, protecting customers and
staff, reducing costs and tackling disorder. During the period, the Group worked with the Home Office, Metropolitan Police and other retailers to pilot ShopWatch, a project to increase local police presence in shopping areas by supporting the training and deployment of Special Constables. The majority of the new recruits are Group employees.

The Group supports the work of CREATE, which trains disadvantaged people in domestic appliance repair and provides low-cost refurbished appliances to local communities. The Group donates end-of-life appliances for recycling and refurbishment. The Dixons Foundation this year contributed to a bursary fund to enable some of CREATE’s customers to receive free recycled appliances. The Group has established a working partnership with REMPLOY, a leading provider of employment opportunities for disabled people.

ENVIRONMENT
Integrating environmental concern
The Group is committed to achieving high standards of environmental management by integrating environmental policies into core business processes wherever possible. The Group does this by:

• increasing the understanding of environmental impact by measurement, analysis and comparison;
• raising awareness by pursuing dialogue with interested stakeholders; and
• reducing impacts through a proactive programme of environmental management.

During the period, the Group published formal policy statements on energy and waste management. These are available on the website, together with examples of programmes aimed at reinforcing them. As part of the Group’s move towards formal CSR indicators, environmental data will also be published on the website.

The Group continues to monitor developments in advance of the implementation, next year, of the Waste Electronic and Electrical Equipment Directive. The Group’s existing recycling arrangements are supported by customers and already deliver significant benefits to the environment by reducing the inappropriate disposal of many larger domestic electrical appliances. The Group is encouraging legislators to recognise these social and environmental benefits.

PACKAGE WASTE RECYCLING PER YEAR IN TONNES

Continuing innovation
The Group’s reduced-plastic carrier bags saved 262 tonnes of plastic last year. During the period, the Group introduced new 100 per cent recycled carrier bags, the first such product to be widely available from a branded retailer. The bags are made in the UK from post consumer plastic waste generated in the UK. Every tonne of bags made saves the equivalent of 1.8 tonnes of oil. The Group and its supplier Nelson Packaging won the Best Environmental Initiative category at the 2004 Plastics Industry Awards for the new bags.

The tables above give the Group’s UK performance against previously reported environmental indicators and show a reduction in packaging waste delivered in part by efforts to encourage suppliers to use less packaging.

EMPLOYMENT
An inclusive workplace
The Group seeks to provide equal opportunities to all its employees regardless of age, sex, colour, race, religion or ethnic origin. The Group’s flexible working arrangements attract and help retain the best people. An independent employee assistance programme offers free advice and support across
a range of practical, financial, legal and personal issues. Respect for People and Being the Best, the Group’s flagship values programmes, help create an environment free from harassment, bullying and discrimination, with strong team spirit and a common sense of purpose.

The Group seeks to engage all employees in both its short and long-term goals. This is achieved through management briefings, focus groups, audiovisual presentations, newsletters and intranets. The Group’s employee newspaper, Frontline, has been awarded the Plain English Campaign’s Crystal Mark for clarity. Employee feedback is obtained through surveys which shape the design of reward and training programmes and help the Group maintain appropriate employment policies.

The Chief Executive chairs the Dixons Group European Forum, a body of elected employee representatives. Group businesses operate local forums of elected representatives that provide
the framework for consultation.

Performance and reward
The Group maintains a strong focus on performance management to identify and develop high performers and help employees to be more effective in their roles. Bespoke training programmes equip employees with the skills needed to provide excellent customer service at all levels. The Group operates four levels of management training run in conjunction with leading academic institutions. Over 80 per cent of the first graduates of the Group’s Executive Development Programme have now been promoted. In the UK, the Group arranges language training classes for employees.

The Group operates a number of share schemes that encourage employees’ direct contribution to achievement of Group and divisional goals and reward individual and collective success. Details are contained in the Remuneration Report. Sharesave schemes in which there are approximately 5,000 participants are operated in the UK and Ireland. More than 12,000 employees throughout the Group participate in discretionary share option schemes.

The Group’s PC ServiceCall business in Nottingham beat international competition to be named Best Place to Work in IT by Computer Weekly magazine. The award reflects the Group’s focus on high performance workplaces.

Disability issues and customer service
The Group is a member of the Employers’ Forum on Disability and maintains its strong focus on disability issues. The Group has conducted store and website accessibility audits and mystery shopping, refreshed its training procedures, constructed an intranet-based learning resource
for employees and is well advanced in preparations for the implementation of further provisions of the Disability Discrimination Act in October 2004.

The Group is pleased to have achieved Positive About Disability status, represented by the “two ticks” symbol. The Link store in Leeds won a National DeafBlind Friendly Award during the year.

Any part of the Annual Report and Accounts, or any other document from the corporate website, is available in alternative formats on request to disability@dixons.co.uk or by telephoning 01727 204474 or minicom 01727 206753.

HEALTH AND SAFETY
Policy and procedures
The Group Human Resources Director is responsible for health and safety at Board level. The Board has approved a new health and safety policy statement. The Group has established a comprehensive health and safety training plan for UK personnel and is taking a fresh look at risk assessments for its stores. The Group has introduced new performance management tools, including more regular reporting of data to senior management and improved focus on risk assessment and legislative compliance. Locally, procedures are reviewed regularly in health and safety forums and by operations managers. The Group is on course to bring overseas procedures in line with the high standards achieved in the UK. A copy of the Group health and safety report is published on the website.

Additional support
The Group offers an employee assistance programme, operates a formal stress recognition and management policy and a rehabilitation programme for employees injured at work. The management of occupational road risk features prominently in the Group’s strategy for reducing motor vehicle accidents. Store-based employees receive guidance on handling potentially violent situations and avoiding confrontation.

The safety of customers, suppliers and other visitors is treated with equal importance. Stores
are required to carry out weekly health and safety checks to identify and make good shortcomings.

A quality assurance programme exists for all products. Close relationships with suppliers promote effective product testing and regular inspections of manufacturing facilities. The Group operates robust product recall procedures which, despite considerable growth in unit sales, are still called upon less than once a year on average.

The Group’s performance on health and safety is shown in the data table. The Group regrets to report that one of its employees died in tragic circumstances. Ian Jones, based at the Group’s distribution centre at Erith, was killed by criminals who stole his delivery vehicle. The Group has closely supported his family and colleagues as well as offering every possible assistance to the authorities investigating his death.

ETHICAL STANDARDS
Supply chain management
The Group has continued to audit own-brand suppliers in Asia against its ethical procurement standards, although progress this year was slowed by the SARS outbreak. One supplier was de-listed during the year for non-compliance. The Group has begun assessing the extent to which branded suppliers meet the criteria adopted for own-brand products and good progress has been made to date in securing agreements on acceptable standards.

Trading standards
During the period, the Group in the UK has consulted widely with enforcement authorities to identify, address and rectify issues relating to trading standards performance. Our Building Bridges programme to develop better links, has created valuable dialogue with various local authorities and national bodies. Outcomes to date include better procedures for handling queries from enforcement authorities, new mystery shopping exercises, and better information sharing on standards issues.

Payment of suppliers
It is the Group’s policy to agree terms of payment with its suppliers. Payments are made in accordance with these terms provided that the supplier has complied with all relevant contractual obligations. Trade creditors at 1 May 2004 represented 35 days of annual purchases made during the period (3 May 2003 38 days).

Conduct
All senior managers must certify annually their compliance with the Group’s internal statement of ethical conduct. The Group’s policies on gifts and inducements conform with the highest standards of business practice and avoid real or potential conflicts of interest or conflict with legal requirements in the markets where it operates. The Group has rewritten its policy on “whistle-blowing” to include a facility for employees to contact an independent body to register concerns. The Group acknowledges with gratitude the assistance of the charity Public Concern at Work in developing this policy.

Disclosure
The Group does not generally respond to untargeted surveys and questionnaires about CSR related issues. The information provided here, on the website, and elsewhere within this Report and Accounts addresses many common CSR questions. The Group will however consider reasonable requests for further information. These should be directed to the Company Secretary.

DAVID LONGBOTTOM
Group Human Resources Director