3 November 2017

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Agenda

• Introduction• Unique & Unified Offer• Digital

Our ambition: to become the leading home improvement

company

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Our purpose

We believe everyone should have a home they feel good about, so our purpose is to make home improvement accessible for everyone.

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Seven actions

We will address customer needs

We will design a seamless customer process

We will create a unique and leading offer with an integrated supply chain

We will create a leading customer experience in our stores

We will become a truly sustainable company

We will work as one

We will be low cost always

threeone

two

fivefour

six

seven

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Reaffirming our 5(1) year transformation targets

Unified & Unique Offer

£350m

Digital£50m

Operational Efficiency

£100m

£500m EBIT uplift, driving

improved ROCE

£800M aggregate costs to achievec.£600M capital return over the first 3(2) years

(1) FY 20/21(2) First 3 years to end of FY 18/19

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Clear long term roadmap: a reminder Year 3 FY 18/19

Year 4 FY 19/20

Year 5 FY 20/21

Unified & Unique offer

New OSC organisation

‘Cut the tail’

Retail best practices

Screwfix UK & Europe retail expansion

Retail expansion (excluding Screwfix)

E-commerce

B&Q store closures

GNFR

Further operational efficiency initiatives

Unified IT platform roll out

Unified & Unique Offer

Digital

Operational Efficiency

Retail Operations

Store of the future

Year 1 FY 16/17

Year 0 FY 15/16

Customer journeys

Year 2 FY 17/18

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Key messages: where we are

1. Implementing a unified & unique offer based on customer needs, now at 19%(1)

unified COGS (2)

3. Starting to control our end to end process

2. Reorganising as ONE, adapting as we progress

4. Sourcing in a very different way

(1) Consistent with H1 2017/18 guidance(2) Cost of Goods Sold

5. Gearing up for next year, negotiations well advanced

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Sourcing: we are leveraging our £7bn buying scale like never before (1/2)

1.Leverage Group

volumes

Re-designing products to reduce cost

whilst improving quality

3.Designto

cost

2. Bundle volumes by segments

across categories

Source by component e.g. plastic OR by

process e.g. die casting

Fewer Global SKUs &

suppliers = bigger volumes

per SKU

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Sourcing: we are leveraging our £7bn buying scale like never before (2/2)

4. End to end value

chain

Real engine for growth =

higher volumes

Identifying savings along the chain e.g.

packaging

5. Co-build unique ranges

All underpins £350m target

≈ 5% CPR(1) on company buying

scale of £7bn

(1) Cost Price Reduction

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And we are starting to deliver the benefits

Customer benefits

New products

More affordable

prices

Higher quality

Business benefits

Simpler ranges, better merchandising

Higher sales CPR Improved

processes

Early evidence of

delivery

U&U(2) H1 sales growth, pre-disruption

(1) Profit uplift by FY 20/21(2) Unified & unique(3) On cumulative unified & unique ranges by end FY 17/18

CPR in line with

expectations

£350m(1) = broadly equivalent to 5%

CPR on £7bn buying scale

Fewer SKUs & suppliers

Positive customer & colleague feedback

c.80% reduction of

SKUs & suppliers(3)

H1 gross margins up 30bps pre-clearance

Unified IT platform

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Unified IT platforms – 4 aims

1Enable us to

meet changing customer

shopping habits

2Easier for

stores to serve customers & carry out their

daily tasks

3Establish unified &

integrated processes &

systems across the Group

4Build a flexible & future proof

systems architecture

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Unified IT platform - roll out methodology

Rolled out end to end as

a complete system suite

Reduce dual running time as much as

possible

Rigorous control of any changes to

system (except legal &

financial)

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Unified IT platform – revised roll out plans

2017/18 2018/192016/17

France

Iberia & Romania

France

Poland

Russia

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Unified IT platform was built with flexible architecture across 3 layers

Core systems

Services, integration & API

Web technologies External APIs(1)

APIs & Services

Customer & colleagues

(1) Application Programming Interface

Digital

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NEEDS & TRIGGERS

INSPIRE & VISUALISE

PLAN & EVALUATE

PURCHASE & FULFIL

BUILD & INSTALL

USE & ENJOY

MAINTAIN & IMPROVE

Our Digital strategy

IN-STORE SELLING

DIGITAL MARKETING

MOBILECONTENT DIGITAL ANALYTICS

SEARCH CLICK &COLLECT

CHECKOUT

Seamless customer journeys

Core E-Commerce: as good as the best

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Core E-Commerce priorities

SIMPLIFYINGCHECKOUT

ENRICH CONTENT

DIGITALMARKETING

BETTER SEARCH

BECOMINGMOBILE FIRST

DIGITAL ANALYTICS

CLICK AND COLLECT

IN-STORE ORDERING

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Customer journeys

NEEDS & TRIGGERS

INSPIRE & VISUALISE

PLAN & EVALUATE

PURCHASE & FULFIL

BUILD & INSTALL

USE & ENJOY

MAINTAIN & IMPROVE

Seamless customer journeys

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What is an end to end customer journey?

PURCHASE

Choice

Tiles, white goods, taps, showers, accessories

INSPIRATIONEMOTIONAL

FUNCTIONAL

HOW TO DO IT?

Bathroom Project: 7 months cycle

38% of projects NEVER complete

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The end to end journey has a hierarchy

PRODUCTPurchase lightbulb, purchase tile,

purchase bbq, etc.

REMIND

Needs & Triggers

Inspire & Visualise

Plan & Evaluate

Purchase & Fulfil

Build & Install

Use & Enjoy

Maintain & Improve

MOTIVATE ENABLE EXTEND

MISSIONInstall new lighting, tile bathroom, lay

new decking, etc.

PROJECTRedecorate living room, remodel bathroom, garden redesign, etc.

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There is a traffic opportunity at every stage in the journey

Why are end to end journeys important?

Needs & Triggers

Inspire & Visualise

Plan & Evaluate

Purchase & Fulfil

Build & Install

Use & Enjoy

Maintain & Improve

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TRA

FFIC

+

-

Needs & Triggers

Inspire & Visualise

Plan & Evaluate

Purchase & Fulfil

Build & Install

Use & Enjoy

Maintain & Improve

We are only currently addressing part of the journey

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Seamless customer journeys will address entire end to end journey

TRA

FFIC

+

-

Needs & Triggers

Inspire & Visualise

Plan & Evaluate

Purchase & Fulfil

Build & Install

Use & Enjoy

Maintain & Improve

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We will get that coverage through a series of steps

INSPIRATION

VISUALISATION

GUIDES

PRODUCTS

HELP

Inspire new projects

Assist with product purchase

Always on help and advice

Full end-to-end coverage

Guide through the project

Digital store and colleague

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Digital methodology

DEPLOY to any channel

(Web, mobile, app, store & colleague)

Identify the customer PROBLEM

Create aHYPOTHESIS

Continuous measuring

andLEARNING

BUILD a service

(Prototype, MVP (1), MMP(2) )

Continuous iteration informed fromcustomer feedback

(1) Minimum Viable Product(2) Minimum Marketable Product

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DEPLOYSCALE & HONE

VENTURESPEC & PLAN

MVPHACK & LEARN

MMPEXPLORE & SOLVE

Finding the FormulaProviding FeedbackEstablishing Hypothesis

Applying to the business

Evolution from ideation through to launch

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Customer journeys – digital build in progress

MMPMVP

Inspire new projects Guide through the project