Strategy Update 19 March 2010 John Browett Chief Executive Agenda

Strategy update 19 March 2010 John Browett Chief Executive Agenda

• Introduction • Focus on the customer • Store transformation update • Improving service support for customers • Winning on the internet • Financials • The Technology revolution • Summary

3 Renewal & Transformation plan

1. Focus on the customer

2. Focus the portfolio on winning positions

3. TfthbiTransform the business

4. Win in the internet market

5. Reduce costs

Target of 3-4% return on sales in the medium term

4 A leading European specialist electricals Group

Share of Country sales+ UK & I 48% Nordics 24% Italy 8% Greece 5% Spain 2% Czech & Slovakia 1% Turkey 1% e-commerce* 11%

OliOnline i n 26 Countries

+Share of group sales for the current financial year to 9 January 2010 * e-commerce is Pixmania and Dixons.co.uk only. Total internet sales including multichannel internet 5 sales represents approximately 17% of Group sales Nordics

• Excellent customer service • Total sales of c.£2.0bn* • Low cost operating model • Rollinggg out Megastores across all four countries • High sales densities • Multichannel opportunity • EBIT margin of 4-5%* • Double digit sales growth • Gaining market share

6 * Based on consensus expectations for year to 1 May 2010 Italy

• 97 stores, largely out of town • Good brand recognition • Considerably improved execution • Turnaround plan going well: – Closed 51 underperforming stores – Implementing PC City in UniEuro – Better stock control – Cost reduction – Refurbishment of the estate • New Megastore and refurbished stores ahead of plan

7 Other International

• Greece – Clear market leader and profitable – Major opportunity to grow sales by opening Megastores and refurbishing and resiting existing estate

• Czech Republic and Slovakia – Strong position in Czech with developing business in Slovakia – Reset cost base – Now opening new stores and refurbishing the estate – Growth as the economies recover

8 Other International

• Spain – PC City was profitable prior to recession – Reduced costs to weather the storm – Closed 11 stores, now operating 32 stores – Recovery programme on track

• Turkey – Successful launch with joint venture partner – On plan with 11 stores open – Promising opportunity in developing electricals market

9 Agenda

10 Deep mine of customer information to inform decisions

UK stores appeal to wide …with higher indexation to more customer base… affluent demographic*

250 33m customers 200

150

UK 24m All customer households 100 channels Database (91% UK coverage)

0 c.90% of spend Up to £20k £20k -£50k £50k - £75k £75k+ Currys PC World

Focus groups Exit interviews Colleague feedback

Research Contact and complaint analysis

11 * indexed weighting of income Group’s spend in Currys and PC World relative to general retail spend They’re interested in working out what’s right for me

• Five part selling model

– Continuous training programme Greet – Engage – Solution – Tailor – Complete – Over 20,000 colleagues through FIVES training

– 2, 000 managers through enhanced training programme

– Customer satisfaction and exit surveys now part of pay

GtGrassroots Mystery Greet Engage Solution Tailor Result Shopping

DSGi Score 80% 48% 87% 75% 84%

%pts var to +17% (14%) +20% +17% +28% competition

12 Based mystery shopping surveys of DSGi and competitor stores They’re interested in working out what’s right for me

• Over 4,000 colleagues trained in last 12 months

• 250 suppliers training workshops

• Super specialists in key categories

• Online training tools and interactive programmes

• Incentivisation to develop product knowledge

• Customer journey for the customer and colleague

13 Improving satisfaction measures

Dec-09

Jun-09

Jan-09

0% 20% 40% 60% 80% 100% ElltExcellent GdGood Average Poor

• Improving advocacy to friends and family – 80% of customers “likely” or “very likely” to recommend – 30% increase in customers stating “very likely” to recommend – As focus shifts increasinggyly to in-store exppgerience and colleague quality, opportunity to improve this further

14 It’s easy to shop and an exciting place to be

• Easier to navigate – Straight aisles – Uncluttered – Clear signage – Better adjacencies • All key products out for demonstration – Play tables – Products live and powered up – No counters/cabinets • Supplier branded areas – Specialist support from manufacturers • CtContemporary l lkook an dfld feel • Improved POS to help choice to suit need better

15 I can get what I want…

BRANDS 4 3 1 2 4 5 SKUS 11 4 1 5 11 15 £850.00

£800. 00

£750.00

£700.00

£650. 00

£600.00

£550.00

£500.00

£450.00

£400.00

£350.00

£300.00

£250.00

CtitCompetitor 1 Ctit2Competitor 2 Ctit3Competitor 3 Ctit4Competitor 4 DSGi 09/10 DSGi 10/11

16 New formats increasing appeal to key customer segments

ATV change of new CurrysCurryygsDigital PC World formats vs control

Golden Families

Quality Seekers

Home Movers

Tech Fans

17 Change in average transaction value amongst key customer segments in the reformatted stores versus unreformatted stores Customer feedback

18 Agenda

19 Improvements in time for Peak

• Better ranges – particularly laptops • Better in store service driven by FIVES tiitraining & pro duc tkt know ldledge • Better merchandising bringing product to life • Better availability • Enhanced delivery offering • New TechGuys range • Benefit of brand campaign • Conversion up in line with new format stores • Estimated 3-5% LfL improvement to the base estate

20 Uplifts remain very encouraging

• Average gross profit uplifts* in total estate of 20% • Megastores and combined 2-in-1 stores continue to achieve over 50% uplift • Stores representing one third of UK sales reformatted so far • Benefit to UK like for likes of approximately 3% over Peak • Limited experience of second year performance – 1M1 Megas tore, 1 com bine d2d 2-in-1111, 11 Currys StSuperstores and 4 CurrysDigital – Average of 5 months in second year only • Early indications are that second year trading remains strong

21 * Gross profit uplift of new format stores completed over last 12 months for the 24 week period to 6 March 2010 compared to the control group. Focus on Megastores and 2-in-1’s

Completed as at Planned for 2010/11 Brand 12 March 10 financial year

Megastores 8 25

PCW/Currys 2-in-1 8 60

Currys & PC World Superstores 108 12

CurryygsDigital 15 3

Total* 139 100

Cumulative percent of sales 33% 66%

22 * Store transformation programme impacts 141 stores to date and 150 stores in total over the 2010/11 financial year Dual branded ‘2-in-1’ stores offer significant potential

• Provides access to the PC World brand in existing Currys markets • Exploits different customer offering – 18% overlap between Currys and PC World customers • Greater stock efficiency, with one consolidated range to display • Best of both worlds in colleague knowledge and selling skills – Clear branding of different expertise across the store • Tech Guys service centre in store • Opportunity to consolidate two stores in smaller catchments – Pragmatic approach to property – Long term reduction in costs • 15,000ft2 to 35,000ft2 – average rent of £18 - £25 per ft2

23 Megastores operate enhanced model

• Currys and 2-in-1 formats • 35,000 – 55,000ft2 – average rent of £22 - £28 per ft2 • c.£100m+ catchment • Range dominance – Many more branded supplier concessions – Premium executions (e.g. hifi studio, coffee area, live kitchen) • Business structure – Top calibre Store Director remunerated in line with store performance 8 – Department Managers with greater scope for product 10 specialists • Stock management key – Fast-paced, frequent replenishment 52 – Stock disciplines

• Up to 70 locations identified Completed Megastores Refit current stores Resite – Standalone Currys as well as combined 2-in-1’s – Majority within existing estate

24 Making the portfolio work - examples

Newbury Halifax Guildford Thurrock

Market size £35m £66m £180m £523m

Indexation White Goods: 1.09 White Goods: 1.01 White Goods: 1.08 White Goods: 1.04 (propensity to buy Brown Goods: 1.09 Brown Goods: 1.00 Brown Goods: 1.05 Brown Goods: 1.05 electricals) PC Goods: 1.10 PC Goods: 0.96 PC Goods: 1.12 PC Goods: 1.06

Existing stores Currys of 12,750ft2 Currys 21,000 ft2 Currys 12,000ft2 Currys 29,000 ft2 (selling space) No PCWorld PC World 12,750 ft2 PC World 15,000ft2 side PC World 23,000 ft2 On separate Retail Parks. by side On same retail park

Rationale Good demographic Two low turnover stores Large conurbation, good Very large conurbation No PC World present with good potential to exit demographic one location Good opportunity with existing property

Plan Create 18,000ft2 combined 21,000ft2 combined 2-in1 Combine into one Currys store resited to 2-in-1 within existing Currys store in existing Currys. 27,500ft2 2-in1 create 70,000ft2 using mezzanine Close PC World and market Superstore Megastore. the lease PC World refitted

25 Summary

• Continuing good results from refits

• Learnings rolled out resulting in improvements to underlying business

• Focus on higher return 2-in-1 stores and Megastores – Bringing PC World to more markets

• 60 existing locations available for Megastore format

• 100 locations provide opportunity for 2-in-1 stores where PC World does not exist

• Pragmatic approach to consolidation in smaller catchments

• Long term goal to move from 664 stores to c.500 stores – Solutions already in place for 127 locations

26 Agenda

27 Improving the service support for customers

• Market leading next day delivery – 3 hour time slots 0700 to 2200 – 60,,y000 weekly home delivery yp drops – Free delivery option – Follow-me-home in Megastores – Free recyygcling • 95% Right first time delivery and improving • Single national network in place – lowest cost in UK – Delivery & installation done at the same time • Service centre training – 4, 200 t rai ni ng d ays in las t 3 mon ths • Process simplification – Improved cycle times – Cost reduction

28 Improving the service support for customers

● 62 New ranges launched this year Products ● E.g. Data Vault, supercharge PC, TechFriend support ● Better merchandising with products

● Rationalise spares locations 100 Repair times Repairs and ● New repair centre and laboratory 80 2008/09 2009/10 Returns designed and under construction 60 e indexed m ● Improve processes m 40

Repair ti 20 ● Rationalise Tech Guys hubs 0 Field ● Integrate delivery and installation TV Laptop operations ● Introduction of PDA’ s reduces costs and enables live customer feedback

Call costs ● Contact Centre now in-house 100 Contact “Save our customers” under way 2008/09 ● 80 ed 2009/10 Centre ● Simplified interactive voice routing xx 60 ● Root cause analysis of calls 40

Call cost inde 20 Operational ● Cost efficiencies 0 efficiencies ● Improved cycle times Service Technical

29 They make things work and keep them working…

30 Agenda

31 Customers and suppliers want multichannel retailers

Customers Suppliers

• Online research tool • Enables ranggpye display

• Convenience • In store experience • Touch, feel & look of products in store important for choice • Demonstration of prod ucts

• Collect@store • Sell up to higher value/quality • Reassurance and service • Colleague training • Well-known brand • Availability and pricing • Solution selling • After sales options eg Delivery, • Advertising installation, repair

32 DSGi has strong internet presence

• C.£1.4bn of sales on line

• Leading technology in house

63% 27% 7% – E-merchant platform • Multiple features & benefits – Bundling and attachments • Strong growth rates from all – Navigation pure internet operations – Optimised for search engines and shopbots

+23% +17% +83% +24% +51% +235% +14% • Licensing of technology • PIX place PIXmania UK Nordics Italy Spain Greece CE – 3,000 reseller members – Category extensions

33 Bar chart shows share of Group internet sales excluding collect@store sales in the UK and DSGi business UK sites launched on e-merchant platform

34 UK sites launched on e-merchant platform

• Easier navigation

• Key deals

• Deal by category

• Popular brands

• Package deals and attachments

35 Internet is a growing opportunity

• Multichannel approach gives customers choice • Pure play complements multichannel operations • Large multichannel operator can exploit scale benefits – Buying and sourcing benefits – So lu tion selli ng – hig her a ttac hmen ts o f accessor ies an d essen tia ls – Value added services and help – Higher basket and ATV in store • DSGi can leverage scale efficiencies – Lower cost of operation – Shared supply chain • Grow online sales as internet mix increases – Same online share as offline

36 Nicholas Cadbury Group CFO Agenda

38 Reduce costs and working capital

• On target for £50m savings Simppylify this year

• Further £150m targeted over Better next 3 years • Opportunity to reduce stock Easier further • Stock turn improving, Cheaper up 10% so far • Continuous process improvement

39 Fundamental restructuring of costs

Organisational Design Process re-engineering

Head

Admin Step 1 Step 2 Step 3

Team1 Team 2 Team 3

• Aligning operations with business • Clearly defined and balanced strategy processes • Remove duplication and layers • Lean Six Sigma methodology used • Clarify accountabilities • Re engineering processes

• For example: • For example: • Integrating Currys & PC World • Call handling commercial teams • Delivery & Installation • Integrating service and retail • Stock processing in store teams • Off shoring back office • One marketing function administration • Advertising efficiency

40 Re-engineering processes - examples

Better Easier Cheaper

RdReduce st oc k Has enabled products being Colleagues focused on the high more accessible to customers, priority areas & given right tools £6m loss e.g. on play tables to reduce stock loss

Customer issues being Bring contact Colleagues now find it easier to escalated quickly for resolution centres do their jobs, as the information £12m Root causes being analysed to they need is to hand in-house avoid repeat problems

Combine Customers get flexible choice Colleagues have less drive time services field of appointments, with multi- between appointments, & £18m forces skilled colleagues broader career options

Improved in store processes Improvements Availability has improved as a Less storage & handling £1m + to distribution result of cutting lead time required Less forecasting

41 Improving stock

• Stock turn increased by 10% Stock improvements over 6 months old

100 • Agggyed stock significantly 90 reduced 80 70 • Increased availability 60

d stock levels d stock 50 ee 40 • Improved processes to Index 30 manage range changes 20 10 • IdtlitifIncreased centralisation of 0 stock holding Oct 08 Oct 09 over 1 year 6 to 12 months • Automated replenishment in place

• Further opportunities identified

42 Group Capital expenditure

2009/10 2010/11 Underlying £50m £65m New formats £120m £150m Total £170m £215m

• Expected payback of 3-4 years • Higher SKU count + Hig her s toc k turn = Neutral working capital

43 Jeremy Fennell Category Director - Computing Agenda

45 Hardware development has accelerated

Laptops • Thinner/lighter Televisions • Faster • LCD/Plasma • Longer battery life • LED • Colour/design • 3DTV • Better design Netbooks • New category • Viewing on the move White goods • Digital controls Networking • Energy efficienc y • New technologies • More WiFi • More devices

46 Content development is accelerating

100m videos

120m views in Dec 09 135,000 apps

Facebook as a country... 1. CCahina 2. India 3. X 4. United States 5. Indonesia 6. Brazil Easy sharing 400m users

My usage of devices is becoming more personal and more frequent 47 My devices know me…

PERSONAL Who I am... Wha t I lik e... Who I like…

LOCATION Where I am... What is near me... Who is near me...

WHAT I DO Where I shop... Where I eat... How I get there... Who I see... What I want....!!! I use multiple devices each

48 fit for purpose The technology revolution

Existing technology is being New usage is driving new updated more frequently to products and new sales respond to usage trends

Netbooks TVs iPad Networking Tablets Laptops E-readers PC (all-in-one)

Connectivity AlitiApplications

49 How the Connected World works

On the move At home Everywhere 3G subscription Broadband subscription No subscription

Laptop iPad PC Tablet Smartphone TV E-reader Home Network Netbook Handheld consoles “I want a connection for “I want an al ways onl “I d ’t ton t f ’t want to pay for convenience, high bandwidth connection to be available constant connection. I want for media rich content and for voice and e-mail to dip in/dip out when it multiple user access” suits me, cost effectively” contact” Subsidised hardware Hardware choice

50 PC and Mobile are Converging

As telecom and PC hardware manufacturers Desktop compete for markets… 1976 Laptop 1988

th Netbook The 5 2007 Screen

Smart Phone 2000 …customers primary PDA consideration is GSM Mobile 1996 1991 hardware choice Pager 1956

51 51 Market clearly sits with electrical retailers

Leading retailer of consumer computing and vision products in the UK

A leading retailer of connectivity options for customers in the UK

Broadband Connections Digital Content

52 52 Summary

• Technology cycle is stronger than ever Hardware Content

• Technology is part of peoples lives

• Content is increasinggyply personalisin g usa ge

• Multiple devices for multiple uses

• New pro dtidducts, wider ranges, ftfaster rep lacemen tlt cycles

• Supplier relationships enable DSGi to have the widest range to meet customers needs

DSGi is b est pl aced t o expl oit these trends 53 John Browett Chief Executive Summary

• Delivering Renewal & Transformation plan

• New format stores performing well

• Focus on Megastores and combined 2-in-1 stores

• In store and after sales services improving

• Multi-channel is major opportunity

• Costs down and stock turn up

• Excitingggyppy technology trends supported by increased replacement cycles

• On track to achieve 3-4% return on sales

55 Strategy update 19 March 2010