Strategy visit - Rome13 & 14 March 2006

Kevin O’ByrneGroup Finance Director

Introduction

3

Agenda

• Introduction Kevin O’Byrne

• Profitable growth strategy Per BjØrgas

• PC World model in Europe Keith Jones

• UniEuro Corrado Colli

• International growth Kevin O’Byrne

Per BjØrgasManaging Director Electricals Division

Profitable Growth Strategy

5

Electricals division map

• 12 Countries• 12 Brands• 985 stores• 11m ft2

selling space• 22,300+

employees

Store numbers as at 12 November 2005

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Country Sales No. Market Brands£m Stores Position

Sweden 273 49 #1

Norway 477 96 #1

Finland 110 19 #1

Denmark 132 28 #3

Iceland 11 2 #1

Nordics

Sales for 52 weeks to 30 April 2005Store numbers as at 12 November 2005

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Southern EuropeCountry Sales No. Market Brands

£m Stores Position

Italy 584 104 #2

Greece 160 76 #1

Sales for 52 weeks to 30 April 2005Store numbers as at 12 November 2005

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Central EuropeCountry Sales No. Market Brands

£m Stores Position

Czech 54 7 #1

Hungary 52 6 #4

Poland N/A 1 N/A

Sales for 52 weeks to 30 April 2005Store numbers as at 12 November 2005

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UK & IrelandCountry Sales No. Market Brands

£m Stores Position

UK 2,580 577 #1

Ireland 80 20 #1

Sales for 52 weeks to 30 April 2005Store numbers as at 12 November 2005

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Divisional highlights

• Sales £4.51bn

• Operating profit £177m

• Operating margin Flat

• No. of stores 985

Financial information is for 52 weeks to 30 April 2005Store numbers as at 12 November 2005

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Electricals business model

• Range, Price and Service • Good - Better - Best for OEM• Multi brand offering• Diverse routes to market - Stores, Franchise, Internet• Simplicity and speed• Common infrastructure and systems• Great customer experience• After sales support

HAVE FUN MAKE MONEY BE THE BESTLOVE CUSTOMER SUPPORT COLLEAGUE KILL COMPETITION

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Strategy

GROWTH

SYNERGIES

• Upgrade existing store portfolio

• New stores

• New channels (internet, franchise)

• New categories

• New countries

• IT – Common systems

• Store design & development platform

• Supply chain centralised

• People

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Store strategy

5 0004 0003 0002 0001 000

Profit

Size (m2)

90 050095

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Multi channel strategy

Route Cost Net ROCEto market Margin

Own stores High Low Low

Internet Medium Medium Medium

Franchise Low High High

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Range extensions

COM-PUTING

CONSUMERELECTRONICS

SDA

MDACREDIT SUPPORT

AGREEMENTS

COMMUNI-CATIONS

ACCESSO-RIES

EXISTING CATEGORIES

RELATEDCATEGORIES

Stationery

B2B

FinancialServices

Housewares

Health &Fitness

OfficeSupplies

SeasonalCategories

Electronic Toys

Travel Goods

Lighting

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Local ownership & influence

• Range

• Price

• Stock

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Synergies

• IT

• SUPPLY CHAIN

• STORE DESIGN

• PEOPLE

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Datawarehouse

Approach to IT synergies

Hardware / Infrastructure

Back officesystems

• Intranet• Internet• Invoice • Finance• Etc

Supplychain

&Buying

Ware-housing POS

Now Next Later

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Buying

BUILD TRUST

SHARE INFO

AGREE COMMON SUPPLIER STRATEGY

AGREE COMMON RANGE (Brands & OEM)

AGGREGATE VOLUMES ACROSS AGREED RANGES

EUROPEAN BUYING

DSGiBUYING STRATEGY

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BuyingDecentralised versus centralised

Decentralised CentralisedElkjopNordics

SD&A costsProduction costs

+ Costs per unit -

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Supply chain - logistics• Regional

distribution• 5 Hub warehouses

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Supply chain goals

• From local to regional to European

• Integrated brand/OEM strategy

• Internal ’wholesale’ structure

• Factory to customer fulfilment

• European service model

• WEEE directive

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Store design and development

• One platform/chassis with same layout principle, specifications and POS templates

• Play with colours to work with local brand

• Range and category mix to be locally adapted to create identity

• Buy jointly from 1-2 suppliers fittings & equipment

• Low cost mobile project & building teams

— Seat — Skoda— VW Golf— Audi A4

Chassis

VW-Group

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People

• Recruit from world class companies

• Spot internal talents

• Internal training without consultants

• Cross national exchange

• Performance culture

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European champions

Keith JonesManaging Director PC World Stores Group

PC World model in Europe

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Computing presentation

• PC World model

• Applying the model to Europe

• Driving future performance

• New technology in 2006

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PC World model • Destination stores - computing products and

services• Range - Branded OEM and exclusives• Price - Scale, European sourcing, efficient supply chain• Services - Service contracts and PC Clinic• Credit – Flexible payment

• Multi-Channel• B2C and B2B (PCW Business)• Stores and on-line - “Best of Both Worlds”

• Selling Model• Helping customers make right choices• Add value to every sale

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Typical laptop sale

Retail Price Margin

Toshiba L20-198 laptop £599.99 10-12%

Symantec internet security software £24.99Laptop bag £34.99Surge adaptor £19.99Portable data storage £29.99Blank DVDR disks £24.99

£734.94 15-20%

Credit - Easipay - Commission

PC Performance cover £9 per month spread over life of cover

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One team• More high quality people, better trained, available to

serve our customers

• Improved mix in teams (Age, Gender, Key time)

• Personal commission replaced by team rewards based on customer satisfaction and store performance

Delivers:• Higher levels of customer satisfaction• Greater colleague engagement• Better performance right across the balanced scorecard• Fits the changing demands of our market

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Multi - channel retailing

• Launched April 2005

• Response to changing customer behaviour

• All the convenience of the web plus instant access to products

• Supported by “Best of Both Worlds” advertising campaign

• Added value products and services at point of collection

• 94% of products now available for collect@store

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PC World – Next steps• Products

• Flat panel• DVD & satellite• Internet music• Connected home

• Services• Data recovery lab• Diary management & balanced healthchecks• Promotion of services for all brands

• Operations – Out of hours task management

• Formats – City centre, Press F1

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Computing division map

StoresUK 150Spain 26France 10Sweden 8Italy 6

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Divisional highlights

• Sales £1.92bn

• UK incl. PCWB £1.70bn

• Mainland Europe £218m

• Operating profit £108m

• Operating margin Flat• No of stores 200• Selling space 3m ft2

• Employees 7,600

Financial information is for 52 weeks to 30 April 2005Store numbers as at 1 March 2006

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Applying the model to Europe

• The PCW model has proved scaleable in Europe

• Destination PC specialist with strong awareness

• PC Performance and services

• Credit

• B2B Sales

• Driving margin through proactive sales

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Driving future performance

• Further opportunities to align models and drive profitability:• Store operational structure• Range expansion• B2B (PCWB model)• Develop European buying• OEM mix• Multi channel• Roll out of in store POS

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2006 - Year for new technologies

• First new operating system in 6 years - VISTA

• Minimum 512mb memory - upgrade/replacement

• New Office suite - Office 12

• New Intel platform - Viiv

• New consoles

• Media extender - streaming music and video

Corrado ColliManaging Director UniEuro

UniEuro

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Italian macro economic environment

• Population c.56million

• GDP €1.45 trillion

• GDP growth slowed to +0.1% in 2005 vs UK +2.3%

• Weakening consumer confidence

• Typical cycle pre-election

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Retail environment

• FOOD

• FURNITURE

• SPORT

• MIXED ELECTRICALS

• UniEuro (108), MediaWorld (60), FNAC (5) Darty (6)

• Euronics, Expert, Trony

• Carrefour (51), Auchan (42),

• Ipercoop, Esselunga

• IKEA (11), Conforama (22)

• Emmelunga, Semeraro

• Decathlon (35)

• Cisalfa, Sport Specialist

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• Italian electricals market is fourth largest in Europe• Worth approx €10bn*

• Very fragmented• Top 10 Retailers = 37% of Market (vs UK 59%, France 57%, Germany 50%)

• No 1 MediaMarkt has c.12% share

• No 2 UniEuro has c.9%

• Buying Groups have c. 30% share

• Strong presence of independent retailers

• Expensive to serve for suppliers• Expensive sales and distribution infrastructure

• Stock issues

Competitive environment

* DSGi estimate of the markets in which UniEuro operates Jan - Dec ‘05

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Market shareMASS

MERCHANTS15%

INDEPENDENTS6%

BUYING GROUPS

30%

SPECIALISTS32%

CHAINS17%

VERY FRAGMENTED MARKET

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Specialist

Generalist

UniEuro price perception

High LowPrice perception

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UniEuro in figures• Sales

• Stores

• Employees

• €854m

• 104 owned• Turnover: €65m at Roma 1 to €2m Bra• Average size = 1,800m2

• Trezzano at 5,800m2 to Caserta 1 at 250m2

• 2,700 FTE

• Franchise • 122 UniEuro City

Sales for 52 weeks to 30 April 2005Store numbers as at 12 November 2005

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Sales by category

Computing19%MDA

16%

TLC12%

SDA8%

Vision29%

Houseware products3%

Built in2%

Air conditioning2%

Customer support agreements

2% Other services1%

Audio6%

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Distribution

Business model

Property

Management

The restructuring journey

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• Good mix of talents

• Different experiences/backgrounds

• Strong commitment

• Average age

• Big opportunity

• Share the same values

Management

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Management

Corrado Colli MD

Andrea Cipolloni

SALES & OPERATIONS

DIRECTOR

Julian Smith

FINANCE DIRECTOR

John Mewett

COMMERCIAL DIRECTOR

Luigi La Vista

LOGISTICS DIRECTOR

A. Castiglione

BUSINESS DEVELOPMENT

DIRECTOR

Gabriele Belsito

HUMAN RESOURCES DIRECTOR

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• Market challenges

• Flat market

• Highly promotional

• Price erosion

• Margin pressure

• Market still fragmented

Business model - challenges

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• Strong control of the business

• Centralised buying

• Big share of voice in advertising

• Very strong promoted price

• Product information support with better specifications

• Staff trained to sell higher specifications

• Store Manager accountable for store P&L

Business model

51

Distribution - Old

52

25

55

Distribution - New

53

Rome 1

Rome 2

Property

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Year New Stores Closures

2002/03 20 5

2003/04 5 0

2004/05 7 1

2005/06 10 2

Property

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Format

European Buying

Strategy

Customer service

agreement

Management team / Sales organisation

Improvements achieved & opportunities

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• 40% new store managers (May – December 2005)

• Both internal and external recruitment

Sales organisationSales & Operations

Director

Regional Manager 1 Regional Manager 2 Regional Manager 3

Area Quality Managers

Area Quality Managers

Area Quality Managers

New Openings Manager

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• UniEuro business model• Best cost of product• Range structure

• Suppliers needs• Cut local costs (commercial & logistic)

• What only UniEuro can offer• Centralised buying model for 104 stores + franchises• Stock management and range project• Efficient distribution model• Low/zero credit risk

European buying strategy

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Format

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• WHEN• May 2004

• HOW• by category

• Positive feedback from customers

• Differentiation from the mass merchants

• FINANCIAL PENETRATION FY 05/06

W1 0.4% W43 3.0%W20 1.7%

Customer support agreements

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GROUPBuyingFinanceScale

NORDICDistributionFranchising

PC WORLDPC culture

Buying power

CENTRAL EUROPEStore format

UKCustomer service

agreementsManagers

Building the model

61

Summary

• New business model

• New management

• Improved price, range and services

• Benefits of DSGi group

• Scope for market share growth

Kevin O’ByrneGroup Finance Director

International growth

63

International growth

• Choosing new markets

• Acquisition or organic start-up

• Acquisition criteria

• Organic start up

• Challenges

• International growth

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Choosing new markets

• Size of opportunity

• Opportunity for future group synergies

• Competitive environment

• Business environment

65

Market development

Developed Less DevelopedRetail model

66

Organic start-up

Year -0 : Research market

Year 1/2 : Open up to ten stores

Year 2+ : Delivery• consistent performance• positive store contribution

Year 4+ : Aggressive store opening programme

Year 5+ : Critical mass drives profitability

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Acquisition criteria

Operational Financial• Strategic fit• Management to

implement• Financial

rationale

• Value creation• Discounted cash

payback• Earnings

enhancement• Postive controllable

earnings

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Challenges

Acquisition Organic• Sharing best

practice• Gaining

synergies• Cultural fit• Different

systems and processes

• Lack of scale• Property pipeline• Balance of group and

local management• Implementing

business model consistently

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International growth

• Strong base and scale• Strong growth potential from both formats

• Own stores

• Franchising

• Internet

• New markets

70

International growth

• Building unique position• Efficient supply chain• Common buying• Service support infrastructure• Cost synergies• Multi-national management• Flexible market entry strategy

Strategy visit - Rome13 & 14 March 2006