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TU DISPOSITIVO ES MUY PEQUEÑO,
PRUEBA CON UNO MÁS GRANDE

Logotipo Supermercados Día Memoria Anual 2015
02 Consolidated directors´ report

2.2Development and business results

2.1. Main financial and non-financial indicators

In 2015, gross sales under banner grew by 12.2% to EUR10.5bn (+13.9% in local currency). This sales growth was partly due to the new integration of the El Arbol and Eroski stores that contributed EUR935.5m in the full year. Currency rates reflected a 1.7% negative impact on gross sales growth, namely due to the sharp depreciation of the Brazilian Real. Organic sales growth in 2015 reached 5.4%, of which 1.3% corresponded to same-store sales growth, a ratio that saw a strong and continued improvement throughout the year.

Adjusted EBITDA in 2015 grew by 4.2% to EUR610.1m (5.2% ex-currency), which implies only a 47bps margin decrease to 6.8%. This drop in margins is exclusively attributable to the integration of acquisitions in Spain. As for operating expenses, DIA continued to capture additional efficiencies in personnel, rents, energy and logistics costs, which came on top of the better commercial conditions achieved with the new joint purchase platforms created in Spain and Portugal during the year. With D&A growing slightly ahead of net sales due to the acquisitions, adjusted EBIT decreased by 1.1% in 2015 to EUR396.1m (-0.4% ex-currency).

Net financial expenses amounted to EUR56m in 2015, 37.6% higher than in the same period last year (+36.6% ex-currency). This rise is explained by the higher average volume of bearing net debt but particularly due to the hike in interest rates in Argentina and Brazil.

2015 RESULTS
(EURm) 2014 % 2015 % INC INC w/o FX
Gross sales under banner 9,399.9 10,546.7 12.2% 13.9%
Net sales 8,011.0 100.0% 8,925.5 100.0% 11.4% 13.2%
Cost of sales & other income (6,244.8) -78.0% (6,927.8) -77.6% 10.9% 12.9%
Gross profit 1,766.2 22.0% 1,997.7 22.4% 13.1% 14.3%
Labour costs (660.2) -8.2% (770.8) -8.6% 16.7% 17.7%
Other operating expenses (277.3) -3.5% (326.2) -3.7% 17.6% 19.8%
Real estate rents (243.4) -3.0% (290.6) -3.3% 19.4% 20.5%
OPEX (1,180.9) -14.7% (1,387.5) -15.5% 17.5% 18.8%
Adjusted EBITDA (1) 585.3 7.3% 610.1 6.8% 4.2% 5.2%
D&A (184.6) -2.3% (214.0) -2.4% 15.9% 17.4%
Adjusted EBIT (1) 400.7 5.0% 396.1 4.4% -1.1% -0.4%
Non-recurring items (76.8) -1.0% (122.0) -1.4% 58.9% 58.3%
EBIT 323.9 4.0% 274.1 3.1% -15.4% -14.3%
Net financial income/expenses (40.7) -0.5% (56.0) -0.6% 37.6% 36.6%
EBT 283.2 3.5% 218.1 2.4% -23.0% -21.6%
Income taxes (74.6) -0.9% 82.6 0.9% -210.8% -210.1%
Consolidated profit 208.6 2.6% 300.7 3.4% 44.1% 45.8%
Discontinuing operations (2) 120.6 1.5% (1.5) -0.0%
Net attributable profit 329.2 4.1% 299.2 3.4% -9.1% -8.1%
Underlying net profit 267.2 3.3% 254.1 2.8% -4.9% -3.8%

(1) Adjusted by non-recurring items
(2) France and Beijing

In 2015, non-recurring items amounted to EUR122.0m, of which EUR98.6m corresponded to cash items. Non-recurring expenses related to the integration of El Arbol and Eroski stores were totally in line with company plans, but DIA invested more in efficiency projects than expected, mainly the transition from COCO to COFO stores. In 2015, the number of COFO stores increased by 555 to 2,133, doubling the increase seen in 2014. The total amount of non-recurring items held in 2015 by DIA was more than offset by the recognition of an income of EUR140.4m namely related to deferred tax assets from losses carried forward that will be compensated in the next 3 to 5 years. Taking into account this non-recurring tax income, the adjusted amount of non-recurring items would be net income of EUR18.4m. In 2015, a total of EUR4.4m in accrued expenses related to the incentive plans were included in this line, which compares with EUR9.9m in the same period last year.

Thanks to the exceptional tax income, consolidated net profit grew by 44.1% in 2015 to EUR300.7m, while net attributable profit declined by 9.1% in the same period, as in 2014 DIA accounted a EUR120.6m result from the discontinued operations of DIA France.

2015 NON-RECURRING ITEMS
(EURm) 2014 % 2015 % INC
Non-recurring expenses & revenues (59.7) -0.7% (98.6) -1.1% 65.2%
Impairment (5.5) -0.1% (11.0) -0.1% 99.4%
Gains & losses on disposal of assets (11.6) -0.1% (12.3) -0.1% 6.8%
Total non-recurring items (76.8) -1.0% (122.0) -1.4% 58.9%
Deferred tax asset 0.0 140.4
Adjusted non-recurring items (76.8) 18.4

Underlying net profit of 2015 declined by 4.9% to EUR254.1m, down 3.8% ex-currency. This fall in underlying net profit is explained by the integration of new businesses and the higher interest rates (and financial expenses) seen in Argentina and Brazil.

2015 UNDERLYING NET PROFIT
(EURm) 2014 2015 INC
Net attributable profit 329,2 299,2 -9,1%
Non-recurring items 76,8 122,0 58,9%
Other financials 5,8 2,4 -58,7%
Discontinued operations (120,6) 1,5 -101,2%
Taxes (24,1) (171,0) 610,8%
UNDERLYING NET PROFIT 267,2 254,1 -4,9%
WORKING CAPITAL & NET DEBT

DIA’s negative trade working capital fell from EUR895m to EUR735m in the period, which implies a 17.9% decrease. Around EUR87.8m of the EUR160.2m trade working capital deterioration seen in the last twelve months was due to currency depreciation and the integration of the purchasing functions of the El Arbol and Eroski acquisitions explain the remaining deterioration. As of today, the effect related to the integration of purchasing has already reversed, with a subsequent improvement in trade working capital and net debt.

TRADE WORKING CAPITAL
(EURm) 31 Dec 2014 31 Dec 2015 INC
Inventories 553.1 562.5 1.7%
Trade & other receivables 244.6 221.2 -9.6%
Trade & other payables (1,693.1) (1,518.8) -10.3%
Trade working capital (895.4) (735.2) -17.9%

At the end of December 2015, DIA’s net debt amounted to EUR1.13bn. The increase in net debt is namely due to the EUR197m acquisition and remodelling investment in the Eroski assets, the execution of the EUR200m share buyback plan and the decrease in negative working capital seen in the fiscal year 2015.

With this net debt value, the financial leverage ratio calculated over adjusted EBITDA increased from 0.9x to 1.9x, or 3.6x on a lease-adjusted basis, below the 4.0x that is generally required for an investment grade rating. In this regard, DIA remains fully committed to keeping its current S&P BBB- and Moody’s Baa3 corporate credit ratings and investment grade quality.

NET DEBT
(EURm) 31 Dec 2014 31 Dec 2015 INC
Long-term debt 532.5 921.0 72.9%
Short-term debt 199.9 374.3 87.2%
Total debt 732.4 1,295.2 76.8%
Cash, cash equivalents & other (199.1) (162.8) -18.2%
Net debt 533.4 1,132.4 112.3%
Net debt / Adjusted EBITDA 0.9x 1.9x
Lease Adj. Net debt / Adjusted EBITDAR (1) 2.6x 3.6x

(1) DIA Estimate according to Moody’s methodology

STORE COUNT AND CAPEX

At the end of December 2015, DIA operated 7,718 stores, with a net addition of 412 stores during the last twelve months, of which 267 net openings and 145 net number of stores integrated from Eroski. At the end of 2015, DIA operated 1,195 stores under the Clarel banner, 48 less than in the same period last year due to the closure of some unprofitable stores at the start of the year. With regards to the El Arbol and La Plaza banners, by the end of 2015 the total store count was 520, but during 2016 around 50 El Arbol stores will be closed down, and another 140 will be transferred to the DIA Market and Maxi formats.

The number of franchised stores is continuing to grow steadily. In 2015, the total number of franchised DIA banner stores (COFO and FOFO) grew by 607, from 3,059 to 3,666 and the weight of franchised stores increased from 54.4% to 61.1% in group terms. During the last twelve months, the penetration rate of the franchised model has firmly grown in Iberia and Emerging Markets, reaching 56.7% in Iberia (from 51.1% in 2014) and 68.8% in Emerging Markets (from 60.9%).

NUMBER OF STORES
31 December 2014 31 December 2015
IBERIA COCO Franchise TOTAL % COCO Franchise TOTAL % INC
DIA Market 1,152 1,845 2,997 55.3% 991 2,093 3,084 55.4% 87
DIA Maxi 675 63 738 13.6% 673 90 763 13.7% 25
DIA banner stores 1,827 1,908 3,735 69.0% 1,664 2,183 3,847 69.2% 112
% of DIA banner stores 48.9% 51.1% 100.0% 43.3% 56.7% 100.0%
El Arbol / La Plaza 437 0 437 8.1% 520 0 520 9.3% 83
Clarel 1,217 26 1,243 23.0% 1,164 31 1,195 21.5% -48
Total IBERIA stores 3,481 1,934 5,415 100.0% 3,348 2,214 5,562 100.0% 147
% of IBERIA stores 64.3% 35.7% 100.0% 60.2% 39.8% 100.0%
EMERGING MARKETS COCO Franchise TOTAL % COCO Franchise TOTAL % INC
DIA Market 559 1,086 1,645 87.0% 524 1,391 1,915 88.8% 270
DIA Maxi 181 65 246 13.0% 149 92 241 11.2% -5
Total EM stores 740 1,151 1,891 100.0% 673 1,483 2,156 100.0% 265
% of EM stores 39.1% 60.9% 100.0% 31.2% 68.8% 100.0%
DIA GROUP COCO Franchise TOTAL % COCO Franchise TOTAL % INC
DIA Market 1,711 2,931 4,642 63.5% 1,515 3,484 4,999 64.8% 357
DIA Maxi 856 128 984 13.5% 822 182 1,004 13.0% 20
DIA banner stores 2,567 3,059 5,626 77.0% 2,337 3,666 6,003 77.8% 377
% of DIA banner stores 45.6% 54.4% 100.0% 38.9% 61.1% 100.0%
El Arbol / La Plaza 437 0 437 6.0% 520 0 520 6.7% 83
Clarel 1,217 26 1,243 17.0% 1,164 31 1,195 15.5% -48
TOTAL DIA GROUP 4,221 3,085 7,306 100.0% 4,021 3,697 7,718 100.0% 412
% of stores 57.8% 42.2% 100.0% 52.1% 47.9% 100.0%

In 2015, capex ex-acquisitions amounted to EUR366.3m, a touch higher than the average capex seen in recent years. The final capital expenditure for 2015 was above the initially guided EUR330m to EUR340m range, namely due to the higher than initially expected number of openings the company carried out in Emerging Markets, especially in Argentina.

In addition to this recurrent expenditure, DIA made an exceptional investment of EUR197.0m almost entirely related to the acquisition of assets from Eroski, of which EUR140.5m was directly related to the purchase of the assets and EUR54m to the remodelling of the stores, and EUR2.5m to the acquisition of Mobile Dreams SL, owner of the market place www.Oportunidades.DIA.es.

Adjusted by both factors, capex increased by EUR21.4m, 6.2% higher than in the same period last year. Total capex allocated to Brazil and Argentina (markets that represented more than 95% of emerging-market capex) grew by 29.6% in local currency in 2015. Expenditure on openings (ex-Eroski asset deal) increased by 19.1% to EUR165.9m in 2015, representing 45% of the total capex of the year. Investment in remodelling and maintenance fell slightly by 2.6% to EUR200.3m.

CAPEX
BY SEGMENT (EURm) 2014 % 2015 % INC
Iberia 200.5 58.1% 185.0 50.5% -7.7%
Emerging Markets 144.4 41.9% 181.3 49.5% 25.5%
CAPEX ex-acquisitions 344.9 100.0% 366.3 100.0% 6.2%
Capex related to acquisitions 0.0 197.0
TOTAL CAPEX 344.9 563.3 63.3%
BY CONCEPT (EURm) 2014 % 2015 % INC
Openings 139.3 40.4% 165.9 45.3% 19.1%
Remodelling & Ongoing 205.6 59.6% 200.3 54.7% -2.6%
CAPEX ex-acquisitions 344.9 100.0% 366.3 100.0% 6.2%
Capex related to acquisitions 0.0 197.0
TOTAL CAPEX 344.9 563.3 63.3%
BUSINESS REVIEW BY GEOGRAPHY

In Iberia, gross sales under banner increased by 10.5% in 2015 to EUR6.74bn, of which EUR935.5m (13.9% of Iberian sales) came from the new acquisitions in Spain. Clarel contributed EUR327.6m to gross sales in 2015 (4.9% of Iberian sales).

The solid recovery in like-for-like sales growth in Q3 2015 improved further in Q4 2015. Same-store sales slid by 1.4% in the last quarter of 2015 with a negative calendar effect of 0.5% and a still significant cannibalisation impact from the new integration of El Arbol and Eroski stores. Adjusting both negative effects for reported like-for-like sales growth, clean same-store sales growth in Q4 2015 would have been +0.2%. In total, in the last two quarters of 2015 like-for-like sales growth improved by almost 4 percentage points. This significant change in comparable sales was partly explained by the better price scenario (slight inflation instead of deflation), though volume was the main reason behind the recovery. This improvement was supported by the remodeling of the DIA Maxi stores, and a better performance from the DIA Market format.

In 2015, adjusted EBITDA amounted to EUR501m in Iberia, 0.4% higher than in 2014, with a 6.7% decline in Q4 2015 to EUR143.1m. In 2015, adjusted EBITDA margins fell by 85bps to 8.7%, a smaller decline than initially projected by the company. This was only possible thanks to the better-than-expected performance of the newly acquired stores, the resilience of the DIA format and the ongoing efforts to reduce operating costs. In Spain, total labour costs, energy costs and comparable rents continued in 2015 with its decline in absolute value. In relative terms the cumulated improvement captured in the 2011-15 period of these three relevant cost topics are translated into 90 pb lower operating cost to net sales ratio.

In Spain, the improvements in the commercial proposition are bearing fruit. Thanks to the high growth of volumes and commercial platform agreed with Eroski, DIA’s price leadership has been strengthening without any material impact on margins. Additionally, after testing the first DIA online platform in Madrid over the last years, in 2015 it started to extend the service to Barcelona and Malaga and the DIA plans are to cover the largest cities in Spain in a short-term period. Online customers are very happy with the service, as reflected by the outstanding comparable growth rates and big size of the average ticket.

In Portugal, conditions remain highly competitive, and DIA is still losing some sales volumes. We have continued to work on improving our commercial proposition, and the remodelling of the Minipreço proximity and destination stores is generating an even better sales uplift than in Spain. DIA has also implemented a set of pricing initiatives to recover a significant price gap versus competitors. This policy has had a negative impact on the country’s operating margins, albeit partly offset by the better terms achieved under CINDIA, the joint negotiating platform with Intermarché in Portugal.

IBERIA
(EURm) 2014 2015 INC
Gross sales under banner 6,095.5 6,738.4 10.5%
of which El Arbol / Eroski 133.5 935.5 600.7%
Net sales 5,221.6 5,754.7 10.2%
Adjusted EBITDA (1) 498.9 501.0 0.4%
Adjusted EBITDA margin 9.6% 8.7% -85 bps
Adjusted EBIT (1) 353.7 336.3 -4.9%
Adjusted EBIT margin 6.8% 5.8% -93 bps

(1) Adjusted for non-recurring items

In Emerging Markets, gross sales under banner reached EUR3.81bn in full-year 2015, 15.2% higher in euros and 20.0% more than in 2014 in local currency. Accordingly, the shift in foreign currencies against the euro had a detrimental effect on gross sales under banner of 4.8% in 2015. In spite of the negative translation effect of depreciation, in 2015 emerging markets accounted for 36.1% of DIA’s total consolidated gross sales under banner.

In Q4 2015, comparable sales growth was clearly better than in the last two quarters in all the countries of the emerging markets unit. Like-for-like sales growth amounted to 9.3% in Q4 2015, while the figure for 2015 was 9.6%, lower than the 2014 rates due to the sharp decline in inflation seen in Argentina.

In 2015, adjusted EBITDA amounted to EUR109.1m, 26.4% higher than in 2014 (33% ex-currency), which was reflected in a 35bps margin improvement to 3.4%. There was a positive operating margin trend in all countries, due to the ambitious efficiency plan implemented in Brazil, the dynamic organic growth achieved in Argentina and the steady improvement in the Shanghai operations.

EMERGING MARKETS
(EURm) 2014 2015 INC INC w/o FX
Gross sales under banner 3,304.5 3,808.3 15.2% 20.0%
Net sales 2,789.4 3,170.8 13.7% 18.8%
Adjusted EBITDA (1) 86.4 109.1 26.4% 33.0%
Adjusted EBITDA margin 3.1% 3.4% 35 bps
Adjusted EBIT (1) 46.9 59.8 27.3% 33.8%
Adjusted EBIT margin 1.7% 1.9% 20 bps

(1) Adjusted for non-recurring items

GLOSSARY

/ Gross sales under banner: total turnover value obtained in stores, including indirect taxes (sales receipt value) in all the company’s stores, both owned and franchised.

/ Net sales: sum of the net sales generated in our integrated stores and sales to franchises.

/ Organic sales growth: growth rate of gross sales under banner at constant currency that includes comparable growth and organic expansion and excludes the contribution of sales from acquisitions made over the last twelve months.

/ LFL sales growth under banner: growth rate of gross sales under banner at constant currency of all DIA stores that have been operating for more than thirteen months.

/ Adjusted EBITDA: operating profit after adding back restructuring costs, impairments, re-estimation of useful life and gains/losses arisen on the disposal of assets and depreciation and amortization of fixed assets.

/ Adjusted EBIT: operating profit after adding back restructuring costs, impairment and re-estimation of useful life and gains/losses arisen on the disposal of assets.

/ Underlying net profit: net income calculated on net profit attributable to the parent company, excluding non-recurring items (restructuring costs, impairment and
re-estimation of useful life, gain/losses on disposal of assets, tax litigations, exceptional financial expenses and equity derivatives), discontinued operations and the corresponding tax impact.

/ Reported EPS: fraction of the company’s profit calculated as net attributable profit divided by the weighted average number of shares.

/ Underlying EPS: fraction of the company’s profit calculated as underlying net profit divided by the weighted average number of shares.

2.2. Questions related to environment and personnel

2.2.1. Environment

In 2015, DIA strengthened its commitment to the environment and the responsible use of natural resources, with the review, adaptation and subsequent approval in December 2015 of a new Environmental Policy, with the aim of being aligned with the Good Governance recommendations made by the Spanish stock market commission (CNMV) in February 2015.

This rule includes the general operating principles, as well as the responsibilities and how to integrate the protection of the environment into the company’s management and planning, integrating sustainable guidelines. As with the rest of the policies that have also been developed and approved, DIA plans to make them public on its corporate website in early 2016.

During 2015, DIA formalised the environmental diagnostic procedure of its logistic platforms internationally and systematised the environmental diagnostics procedure in its logistics platform in Spain, carrying out environmental audits at its 18 warehouses.

Accordingly, DIA has started the environmental diagnostic of its logistic platforms outside Spain and has carried out the first environmental diagnostic of the offices of the Group’s headquarters.

DIA Group comprehensively reviewed its facilities and activities, applying an environmental diagnosis procedure whereby it can assess its situation regarding waste management, emissions and waste control, resource consumption (water, energy), and existing measures to minimize its environmental impact.

In terms of its carbon footprint, the availability of a proprietary analytic tool for its calculation in the installations and activities of the company (developed in 2014) allowed DIA to systematize the monitoring of its emissions during 2015. This analytic tool allows the company to monitor its carbon footprint and evaluate the efficacy of various measures in relation to emission reduction.

Based on the framework defined in 2014, in 2015 DIA finished drafting the procedures that form the basis of the Environment Management System.

During the first few months of 2016, DIA will adapt and implement these procedures internationally.

  • Carbon disclosure project

DIA Group’s commitment to reduce its carbon footprint has meant that in recent years the company has worked in this area, promoting various initiatives to reduce its emissions and has developed a proprietary analytic tool that allows it to calculate the carbon footprint of its facilities and activities in all of its regions and operations.

During 2015, DIA took the step of publicly sharing information about its emissions of greenhouse gases and its measure to mitigate them, answering the CDP-climate change questionnaire.

CDP (the Carbon Disclosure Project) is an independent non-profit organization that has the world’s largest database of corporate information about climate change, including more than 800 socially responsible investors who manage combined assets worth EUR90bn worldwide.

Through an annual survey of the most important listed companies, the CDP compiles information on risks and opportunities related to climate change, and evaluates companies’ degree of transparency from an environmental standpoint, and its degree of efficiency in terms of risk management related to its business impact.

DIA group was awarded the Best Newcomer Award Spain 2015, which the Carbon Disclosure Project (CDP) gives to companies that score the highest number of points of all the companies joining the index in a given year. This index specialises in measuring large companies’ strategies and actions related to sustainability and climate change.

  • BPMS

In recent years, DIA has worked on developing and implementing an online process management system (BPMS – Business Process Management Suite) that includes various blocks related to the development of private-label products (quality, packaging, commercial aspects, etc.).

This system allows DIA to gradually digitalize its documents, with the aim of drastically cutting the amount of paper used in these processes.

During 2015, the DIA Group continued to work on systematic work projects that it has developed in recent years, with the aim of maintaining and improving the sustainable environmental management of its activities and facilities.

  • Ecodesign applied to packaging

The optimization of the packaging of products ready for sale using ecodesign techniques has allowed DIA to make quantitative and qualitative improvements at this level.

These resource optimization techniques have allowed DIA gets to reduce the size and weight of cardboard sheets (without affecting to the logistic function of the packaging) and simplify the styles and finishes, allowing DIA to eliminate the use of varnishes and reduce the amount of ink used in their packaging.

In the same way, DIA managed to reduce its environmental impact, as the use of single-material packaging allows it to optimise the re-use or recycling of materials and boost the use of cardboard instead of plastic.

In addition, DIA is also working on ensuring that the size of its packaging is aligned with the logistics optimisation, allowing for more efficient transport and thus a reduction in emissions.

Some of these packaging optimization initiatives are included in the biennial plans relating to container and packaging prevention presented to the Ecoembes organization, which audits and validates the measures adopted and the quantitative improvements made.

  • Efficient waste management

During 2012, integrated waste management was in a testing phase in a warehouse, and in 2013 it was implemented across all of DIA’s warehouses in Spain, before being rolled out across Europe during 2014-15.

Once it was rolled out across the board, the process of separating valued fractions allowed the increase of the fractions of waste used for recycling or valuation, and the decrease in the fraction of waste sent to landfill.

2.2.2. Personnel

WORKFORCE

At the end of 2015, DIA Group had 45.724 employees across the five countries in which it operated, and this workforce increased compared to 2014 due to the growth of the business mainly in Spain with the incorporation of El Arbol Supermarkets and a large number of stores from the Eroski-Caprabo Group as well as the creation of La Plaza de DIA, new banner for the company. In Latam, the workforce has been adapted to the current business. In China, DIA maintains its efficiency objective for the Shanghai structure to make the business unit as competitive as possible. Portugal is especially significant in this regard due to the increase in the workforce with the aim of guaranteeing the stability of the Clarel banner and of new supermarkets with fresh products.

DIA’s management teams continue to stand out due to their high degree of stability and commitment, which has a significant influence on operational efficiency. This group is growing very moderately, in accordance with the group’s philosophy.

The selection and training teams for base and functional personnel have continued to do an excellent job recruiting and developing the workforce across all countries. Of note is the effort made in America, where the company has to deal with an increase in the workforce in the context of a very dynamic labour market, especially in Brazil.

A key element of success, such as the stability of the workforce, is the selection and training system for base and functional personnel, which allows DIA to attract and retain the best professionals. The selection and training of store employees is performed by qualified professionals in the store-schools, where, following a tough selection process, training is provided for store work in a very practical way. Furthermore, the training process in the logistics centres is mainly focused on the efficient use of machinery and tools, as well as to guarantee occupational risk prevention for workers.

54% of career opportunities that arise at the company’s headquarters are filled internally through the publication of vacancies on the DIA Portal, thus promoting vertical and horizontal development, maximizing profiles with a greater global and transversal view of the company.

As a result of the company’s growth due to the acquisition of Eroski and Caprabo stores in the central and southern regions of Spain, training plans for cashiers, store management and perishables section management took place for about 3,000 employees in around three months to incorporate them into the various store formats.

Likewise, during October 2015, DIA’s IT systems were deployed at the El Arbol stores, with over 3,000 employees trained in a month.

COMPANY-EMPLOYEE RELATIONS

2015 has been the year of the consolidation of measures that emerged from The Working Environment Survey for all levels and for all the professional groups, strengthening internal online communication initiatives through the Portal for store and warehouse employees in Spain with more than 200 publications and about 7,000 subscribers. In Argentina, there is a monthly newsletter with both informative content and links to internal vacancies and e-learning. In China, results from The Working Environment Survey and future plans were communicated. Regarding internal communication, the monthly magazine is still being published, and meetings with the store managers and warehouse teams have taken place to improve workplace efficiency and team management.

The countries in which DIA Group operates are implementing a series of meetings between directors and team managers related directly to customer support to stimulate a culture of customer focus and improve customer service procedures in stores. Accordingly, in China the company has implemented initiatives to hold meetings between directors and high-performance store managers to set up a direct line of communication with the stores.

In Argentina, communication spaces with the directors have been institutionalized, with the implementation of sales and logistics meetings. The Human Resources department has worked hard on the commitment of all areas on the big objective of improving the shopping experience.

Likewise, internal communication tools have been intensified with a bimonthly publication, specific for warehouse employees, taking into account logistics information and focusing on the impact of work at stores and how it affects customers. In China, meetings between warehouse team managers are taking place to work on good practices and to solve common problems.

A site for “Warehouse leaders” has also been set up. This is a new place to consult key logistics/business indicators aimed at Supervisors, Shift Managers and Store Managers in Argentina.

HEALTH AND SAFETY AT WORK

Aware of the importance of health and safety for its workforce and within the framework of a responsible Human Resources policy, DIA has encouraged all its employees to participate in several initiatives with the aim of benefiting from healthier lifestyles.

In Brazil, the EAP (Employee Program) has been launched, which provides 24-hour support to intervene in critical situations, improving physical and emotional health and productivity at work.

Aware of the importance of maintaining appropriate conditions to prevent risks, DIA scrupulously complies with the current legislation. Regarding information on workplace accidents, the percentage of hours of work leave related to accidents is 0.39%, a low percentage considering the characteristics of the work in stores and warehouses, and the percentage of hours of work leave for sickness is 3.88%, which can also be considered as a very reasonable rate, both of which are lower than in the previous year.

Our goal during 2015 has again been to achieve a safe and healthy work environment in all areas of the company: offices, stores and warehouses. The Joint Prevention Service is working on reducing the loss ratio and improving worker safety in all of its activities.

In warehouses and stores, there is specific training in occupational risk prevention, and all employees are trained in the use of the specific machinery that they use in their jobs.

This concern for the welfare of our employees implies, for office staff, information and awareness about health and safety in the workplace, which in Spain has led to the creation of a “healthy week”.

This year, DIA has taken steps to increase awareness of information security, an increasing risk given the high level of technological connectivity with which professionals work in large companies today.

EDUCATION AND TRAINING

DIA Group provides practical occupational and high-quality training for employees applying for jobs in stores to prepare them for the managing of a sales terminal (cash register), based on DIA’s values, the basic concepts of product placement, customer service and teamwork.

In 2015, in Spain and Portugal (due to the extension of the business to supermarkets), it became necessary to train employees working in the fresh product sections: butchers, specialist butchers and fishmongers. These employees have been trained in their trades, with an emphasis on the workplace risks and providing them with preventive measures to observe when carrying out their daily functions.

In DIA’s offices, there are two main types of training, language training (mainly English) being the main one, in addition to Spanish, Chinese and French, which are important for negotiations with international suppliers, and for internal communication globally.

The second main type of training is technical, which is given to a large proportion of the workforce, focusing on specific workplace knowledge and with a significant focus on IT tools, which support the company’s internal processes, rendering them more efficient.

During 2015 we have promoted e-learning language training (English) and time management training to improve productivity. In addition, we launched a Welcome Manual for the head office. Through an interactive application, employees can find out more about our company, the new office facilities, work tools, the company’s rules and the values, etc.

In June 2015, the first International Program of the Director Development of DIA (IPDD) was completed. This program is aimed at Directors with potential across the DIA Group, and in October 2015 the second program started, with a new group of Directors. Both the first and second programs involved 20 people from different areas and countries of the company. This executive training is given in an in-company format by a business school of international prestige. This initiative is considered to be a key tool in the development of our management potential.

In Argentina, we included a Trainer Operator in each warehouse, whose role is to welcome, accompany and train new employees, thus standardising this operation. This trainer uses the Logistics Operator Manual and an institutional video that explains warehouse processes (from the receipt of the goods to the delivery of the order).

DIVERSITY AND EQUAL OPPORTUNITIES

In 2015, Brazil continued with its policy of hiring disabled people, which guarantees the fulfilment of quotas, and therefore the development of equal opportunities of knowledge and occupational growth inside the company. In our operations in Brazil, DIA currently employs 291 disabled people, working in warehouses, stores and headquarters.

In Spain, for the fourth consecutive year, DIA celebrated on 3 December 2015 the International Day of disabled people, contributing to the integration of the people with various disabilities. DIA works closely with various Foundations and Associations, particularly the ONCE Foundation with which DIA signed a collaboration agreement in 2012 for the integration of people with different disabilities in our company through practices, direct hiring or indirect hiring of goods and services by the Special Employment Centres (companies that have a minimum of 70% of disabled people in their workforce).

DIA Group is committed to equal work opportunities, with a balanced presence of female employees, accounting for 66% of total employees. In management positions, women account for 37% of the workforce at group level, and in some countries like Spain and China, this proportion has reached more than 48%.

The distribution of employees by country in 2014 was as follows:

Distribucion por genero

he distribution by occupational category was as follows:

Distribucion categoria profesionales

On 14 July, DIA Spain became a member of the initiative “Companies for a society free of gender violence” promoted by the Department of Health, Social Services and Equality, with the signing of the Agreement of Collaboration in matters of greater awareness of gender violence.


On 25 November, on the Day against gender violence, there were several activities to increase the awareness of DIA employees, such as: the printing and distribution on DIA’s plastic store bags of the Department of Health slogan “There is way out of gender violence”, the distribution of more than 14,500 badges among the workforce at the headquarters and in the Clarel and DIA store networks, which employees wore during the week from 23 to 29 November. There was also a campaign called “There is way out of social networks”, which was on the Employee Portal and Intranet.

PERFORMANCE AND REMUNERATION

The DIA Group has performance evaluation mechanisms for 100% of its employees. Store and warehouse employees are evaluated based on performance, workplace productivity and personal objectives. Office employees have objectives focused on personal performance and aligned with the company’s objectives.

During 2015, the DIA Group initiated a process of review and change of performance evaluation systems with the aim of increasing the identification and acknowledgment of talent across the organization, to improve the tool as an instrument for the occupational development of employees and to increase the weight of the DIA Group’s values in employees’ daily decision-making and the behaviour.

The company continued to develop system its talent management system for the key positions of the organization, with a special emphasis on the development of horizontal careers, coaching and the role of the boss as developer of people. It also implemented a cutting-edge technological solution in the market to support the process and to make it more accessible and productive for users.

The remuneration policy is established by Group Management, in accordance with the market, inflation, trade union agreements and collective bargaining.

DIA’s remuneration policy is based on the followings principles:

  • Moderation and adaptation to the trends and references in matters of remuneration followed in companies of similar sizes and activity of a local way, aligning them with the best practices in the market.

  • Reward of the quality, dedication, responsibility, knowledge of the business and commitment to the Company of employees in key positions and leading the organization.

  • Close links between the company’s remuneration and results, so that the weight of variable remuneration is adapted to effectively reward the attainment of objectives as well as the contribution of value to the Company and its shareholders.

  • Internal equity and external competitiveness.

Creditos

Edita:
DIA, S.A.
Parque empresarial de las Rozas - Edif. TRIPARK
C/ Jacinto Benavente 2 A 28232 Las Rozas. Madrid - España

Realización y coordinación:
DEVA | Comunicación financiera y sostenibilidad

Diseño:
STROCEN.COM | New Corporate Design

Desarrollo web:
efe6 <Rebuilding ideas/>

Translation:
Tara O’Donoghue

Fotografía:
Jesús Umbría / DIA