Annual Review 2011 - The Nuance Group

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The Nuance Group Annual Review 2011 Our operations We also continued to support a number of special charitable initiatives in the region, earning the 2011 Caring Company Award from the Hong Kong Council of Social Service for the fifth consecutive year. This was made possible through the tremendous efforts of our team members who deserve congratulations for the way in which they are helping to make a difference in communities at home and overseas through their active involvement in worthwhile causes. In recognition of Nuance-Watson’s outstanding operations in the region, we were awarded a clutch of further accolades in 2011, including DFNI Global Travel Retailer of the Year, Airport Travel Retailer of the Year and DFNI Asia Pacific Travel Retailer of the Year, as well as also winning a number of category plaudits. As a company, we take real pride in delivering great service to our customers and are pleased that many of our team members were recognised for their efforts in 2011, picking up individual and team awards in the annual Hong Kong and Singapore Customer Service Excellence awards. India Locations Shops 1 4 Sales area (square metres) Team members 1,852 206 “ Over the past four years we have focused on building a solid platform to enable us to expand across the wider region. As demand for travel to and from India grows and disposable incomes rise and spread to a greater proportion of the population, we are ideally positioned to further grow our business in this dynamic market.” Carlo Bernasconi, CEO Retail Services & Distribution PSR growth +10% Since entering the Indian market in 2008, we have rapidly gained a solid understanding of the region. Whilst operations are still relatively modest, we believe there is great potential for further growth across the sub-continent, both from an airport retail and supply perspective. In 2011, the business returned a solid and profitable performance, achieving double-digit growth. Despite a national slowdown in the second half of the year, driven by events in the US economy, we nevertheless saw a modest increase in passenger numbers. We also passed a significant milestone during the year and have now served over one million customers since beginning operations in India. Our PSR rose by 15% over the previous year, due to a series of events-based point-ofsale promotions and marketing activities which positioned Bangalore Airport as a great value shopping destination, compared to other airports across the wider region. In fact, in December 2011 we recorded our highest ever monthly sales, which ensured we moved into 2012 with a great sense of optimism and achievement. Throughout the year, we continued to enhance our offering with a number of innovative promotions in association with key partners, including the market launches of Johnnie Walker Platinum and Smirnoff Gold. These initiatives generated positive results, and we have further partnerships planned for 2012. As a Group, our global expertise is reinforced by local knowledge and application. We have the skills to develop unique retail concepts that reflect individual airports, specific market segments and consumer profiles. We also make sure we constantly evolve and develop our retail offer to match the passenger profiles at any given location and provide exciting retail concepts for our customers. Previously, we introduced a number of exciting retail ‘firsts’ to India, such as the walk-in humidor and Lindt-trained Chocolatier concepts, both of which have been immensely popular with Indian travellers and have been responsible for a marked uplift in sales. In early 2012, we will continue this strategy with the launch of an exclusive Single Malt Boutique at Bangalore International Airport. Developed specifically to cater to the Indian whisky connoisseur, the new Boutique will feature more than 35 international brands, and will be supported by a programme of regular tasting events. First introduced in 2010, these events have proved very popular and have resulted in visible sales growth. 26
The Nuance Group Annual Review 2011 The rapid pace of development in the aviation infrastructure in India is expected to generate a significant increase in passenger numbers which will in turn give rise to further expansion and airport development. Accordingly, we are very optimistic about the future potential of our business in India and are working closely with a number of airport authorities to exploit all opportunities that come to market. Retail Services & Distribution Carlo Bernasconi, CEO Retail Services & Distribution Locations Employees Distribution services across the Nuance network 27 “ In 2011, our Retail Services & Distribution business has continued on its trend of positive growth, so it is clear that our ability to utilise our industry expertise and offer our customers a flexible tailor-made approach is succeeding. We remain committed to investing and developing this key business area and are confident that there is considerable capacity for further expansion in the years to come.” Our Retail Services & Distribution (RS&D) operation was formed in 2007 to offer independent travel retail operators and airlines a wide assortment of core category and selected specialty goods. By utilising the full strength of the Group, RS&D has successfully harnessed our best practice expertise in product assortment, category management, marketing and training for our clients, extending the benefits of our retail knowledge and innovation. RS&D continued to flourish in 2011, growing by 27% over the previous year, with an increase in EBIT of 44%. Over the past 12 months, we focused on a number of key areas, strengthening our partnerships and business 27 in Pakistan, Russia and Eastern Europe, and expanding across almost all channels – the exception being airline supply in the UK, which was the result of the difficult economic environment in this market. Over the year, we secured a number of new contracts, including the supply and management of the new Duty Free departure store at Karachi Airport, in partnership with Zainab UK. We also continued to focus on developing our in-flight sales channel. This was boosted by existing business with carriers such as Edelweiss Airline and the start of a number of new contracts, including Lufthansa Worldshop, to supply all core categories listed on board Swiss International Air Lines. In addition to this, we won a full concession contract with Hello Airline and a supply contract from Southend Airport. In India, our operation also began providing goods for in-flight sales on board IndiGo’s new international routes. Together, these contracts have helped generate solid growth of the business. Ocean Trading, our UK-based distribution company, built on last year’s impressive performance by once again achieving strong growth. In order to support expansion and to further increase supply chain quality, we have taken full operational responsibility of our UK distribution centre, which services more than 120 third party customers as well as our own UK retail operations. We also plan to set up a forward based logistics and added value platform in Riga, Latvia, to manage supply into Russia and the CIS states, gaining further competitive advantage in this strategically important region. Looking forward, a significant degree of planning and preparation has been undertaken in readiness for a number of key developments planned for the year ahead. These include further expansion in Pakistan, with the opening of an Arrivals store at Karachi Airport and a Departures store at Lahore Airport, as well as extended operations in the Middle East region with our partner Zainab UK. We recognise the growth potential in the Russian and CIS airport travel retail market and are actively looking to increase our existing distribution business, as well as sourcing appropriate retail development opportunities. We also anticipate providing distribution in the Asia region in close collaboration with our existing operations in Hong Kong, Singapore and Australia. Performance improvement +27% Financial statements Review of 2011 Overview
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Annual Review 2011 - The Nuance Group

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