Recommended All-Share Merger. Dixons Retail plc (incorporated and registered in England and Wales with registered number )

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1 Proof 6: THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PART II OF THIS DOCUMENT, TOGETHER WITH THE REST OF THIS DOCUMENT, COMPRISES AN EXPLANATORY STATEMENT IN COMPLIANCE WITH THE COMPANIES ACT This document relates to an offer which, if implemented, will result in the cancellation of the listing of Dixons Shares on the Official List and of trading of Dixons Shares on the London Stock Exchange s main market for listed securities. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other independent professional adviser authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom or, if not, from another appropriately authorised independent financial adviser. If you sell, have sold or otherwise transferred all of your Dixons Shares, please send this document (but not the accompanying personalised Forms of Proxy) at once to the purchaser or transferee, or to the bank, stockbroker or other agent through whom the sale or transfer was effected for delivery to the purchaser or transferee. If you have sold or otherwise transferred part of your holding of Dixons Shares, please consult the bank, stockbroker or other agent through whom the sale or transfer was effected. The distribution of this document in jurisdictions other than the United Kingdom may be restricted by the laws of those jurisdictions and therefore persons into whose possession this document and any accompanying documents come should inform themselves about and observe any such restrictions. Any failure to comply with those restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, such documents should not be distributed in, forwarded to or transmitted in or into or from any Restricted Jurisdiction or any jurisdiction where offering the New Dixons Carphone Shares or making them available for subscription or purchase would breach any applicable law. The accompanying Forms of Proxy are personalised. If you have recently purchased or been transferred Dixons Shares, you should contact Dixons Registrars, Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU on the telephone number set out on page 5 of this document, to obtain replacements of these documents. Recommended All-Share Merger of Dixons Retail plc (incorporated and registered in England and Wales with registered number ) and Carphone Warehouse Group plc (to be renamed Dixons Carphone plc) (incorporated and registered in England and Wales with registered number ) to be effected by means of a Scheme of Arrangement under Part 26 of the Companies Act 2006 You should carefully read the whole of this document (including any documents incorporated into it by reference) and the accompanying Forms of Proxy. Your attention is drawn, in particular, to the letter from the Chairman of Dixons in Part I of this document which contains the unanimous recommendation of the Dixons Directors that you vote in favour of the Scheme at the Court Meeting and the Special Resolution at the General Meeting. A letter from Citigroup Global Markets explaining the Merger in greater detail and the action to be taken by you appears in Part II of this document. Notices of the Court Meeting and the General Meeting, both to be held at the offices of Linklaters LLP at One Silk Street, London EC2Y 8HQ on 17 July 2014, are set out at Parts IX and X of this document respectively. The Court Meeting will start at a.m. and the General Meeting at a.m. (or as soon thereafter as the Court Meeting has concluded or been adjourned). The action to be taken in respect of the Shareholder Meetings is set out on pages 7 and 8 of this document. Dixons Shareholders will find accompanying this document a BLUE Form of Proxy for use in connection with the Court Meeting and a YELLOW Form of Proxy for use in connection with the General Meeting. Whether or not you intend to attend the Shareholder Meetings in person, please complete and sign both the accompanying Forms of Proxy in accordance with the instructions printed on them and return them to Dixons Registrars, Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and, in any event, so as to be received at least 48 hours before the time appointed for the relevant Shareholder Meeting. A prepaid envelope is provided for this purpose for use in the UK only.

2 c110198pu010 Proof 6: _02:33 B/L Revision: 0 Operator BonP If the BLUE Form of Proxy for the Court Meeting is not returned by the specified time, it may be handed to Dixons Registrars, Capita Asset Services, or the Chairman of the Court Meeting before the start of the Court Meeting. However, in the case of the General Meeting, unless the YELLOW Form of Proxy is returned by the specified time, it will be invalid. If you hold your Dixons Shares in uncertificated form (i.e. in CREST) you may vote using the CREST proxy voting service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes to the Notice of General Meeting set out at the end of this document). Proxies submitted via CREST (under CREST participation ID RA10) must be received by Dixons Registrars, Capita Asset Services, at least 48 hours before the time appointed for the relevant Shareholder Meeting or, in the case of any adjournment, not later than 48 hours before the time fixed for the holding of the adjourned meeting. The completion and return of a Form of Proxy or the appointment of a proxy or proxies through CREST will not prevent you from attending and voting in person at either the Court Meeting or the General Meeting, or any adjournment thereof, if you so wish and are so entitled. As an alternative to completing and returning the Forms of Proxy, Dixons Shareholders may complete the proxy voting form online through Dixons Registrars, Capita Asset Services, website at Dixons Shareholders will need to enter their investor code, surname and postal code. Electronic proxies must be received no later than 48 hours before the time appointed for the relevant Shareholder Meeting. Important Notices Citigroup Global Markets, which is authorised and regulated in the United Kingdom by the FCA, is acting as lead financial adviser and corporate broker to Dixons and for no one else in connection with the Merger and this document and will not be responsible to anyone other than Dixons for providing the protections afforded to its clients or for providing advice in connection with the Merger or the contents of this document or any transaction, arrangement or matter referred to in this document. Barclays Bank PLC, acting through its Investment Bank, which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the FCA and the Prudential Regulation Authority, is acting as financial adviser and corporate broker to Dixons and for no one else in connection with the Merger and this document and will not be responsible to anyone other than Dixons for providing the protections afforded to its clients or for providing advice in connection with the Merger or the contents of this document or any transaction, arrangement or matter referred to in this document. Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFIN Federal Financial Supervisory Authority). Deutsche Bank AG, London Branch is further authorised in the United Kingdom by the Prudential Regulation Authority and is subject to limited regulation by the FCA and the Prudential Regulation Authority. Deutsche Bank is acting as lead financial adviser and corporate broker to Carphone and for no one else in connection with the Merger and this document and will not be responsible to anyone other than Carphone for providing the protections afforded to its clients or for providing advice in connection with the Merger or the contents of this document or any transaction, arrangement or matter referred to in this document. UBS Limited, which is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority in the United Kingdom, is acting as financial adviser and corporate broker to Carphone and for no one else in connection with the Merger and this document and will not be responsible to anyone other than Carphone for providing the protections afforded to its clients or for providing advice in connection with the Merger or the contents of this document or any transaction, arrangement or matter referred to in this document. You should read the rest of this document and consult an independent financial adviser. If you have any further questions, including in relation to the completion and return of the Forms of Proxy or submitting your votes or proxies electronically or via CREST, please call the Shareholder Helpline on (from within the UK) or on (if calling from outside the UK). Calls to the number are charged at 10 pence per minute from a BT landline. Lines are open from 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note that the Shareholder Helpline operators cannot provide advice on the merits of the Scheme or the Merger, nor give financial, tax, investment or legal advice. Applications will be made by Carphone to the UK Listing Authority for all the New Dixons Carphone Shares to be admitted to the premium listing segment of the Official List and to the London Stock Exchange for the New Dixons Carphone Shares to be admitted to trading on the London Stock Exchange s main market for listed securities. On the basis of current expectations as to the timing of regulatory approvals and Court availability, it is expected that Admission will become effective and unconditional dealings in the New Dixons Carphone Shares on the London Stock Exchange s main market will commence on 7 August Dixons Shareholders are also advised to read the Dixons Carphone Prospectus which contains information relating to the New Dixons Carphone Shares. The Dixons Carphone Prospectus will be available on Dixons website at and on Carphone s website at A hard copy of the 2

3 c110198pu010 Proof 6: _02:33 B/L Revision: 0 Operator BonP Dixons Carphone Prospectus can be requested by contacting Capita Asset Services, whose contact details are set out on page 5 of this document. The contents of this document are not to be construed as legal, business, financial or tax advice. If you are in any doubt about the contents of this document, you should consult your own legal adviser, financial adviser or tax adviser for legal, business, financial or tax advice. The statements contained in this document are made as at the date of this document, unless some other time is specified in relation to them, and service of this document shall not give rise to any implication that there has been no change in the facts set forth in this document since such date. Nothing contained in this document shall be deemed to be a forecast, projection or estimate of the future financial performance of Dixons or Carphone, except where otherwise stated. No person has been authorised to make any representations on behalf of Dixons or Carphone concerning the Merger or the Scheme which are inconsistent with the statements contained in this document and any such representations, if made, may not be relied upon as having been so authorised. Notice to Overseas Shareholders General The release, publication or distribution of this document in certain jurisdictions may be restricted by law and the availability of the Merger to Dixons Shareholders who are not resident in the UK may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the UK or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements. This document does not constitute, and may not be used for the purposes of, an offer to sell or an invitation or the solicitation of an offer to subscribe for or buy any New Dixons Carphone Shares by any person in any jurisdiction: (i) in which such offer or invitation is not authorised; (ii) in which the person making such offer or invitation is not qualified to do so; or (iii) in which, or to any person to whom, it is unlawful to make such offer, solicitation or invitation or would impose any unfulfilled registration, publication or approval requirements on Dixons, Carphone or any of their respective directors, officers, agents and advisers. No action has been taken nor will be taken in any jurisdiction by any such person that would permit a public offering of the New Dixons Carphone Shares in any jurisdiction where action for that purpose is required, nor has any such action been taken with respect to the possession or distribution of this document other than in any jurisdiction where action for that purpose is required. Neither Dixons, Carphone nor their respective directors, officers, agents or advisers accept any responsibility for any violation of any of these restrictions by any other person. Unless otherwise determined by Dixons or Carphone or required by the Code, and permitted by applicable law and regulation, the Merger will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Scheme by any such means from within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this document and all documents relating to the Merger are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this document and all documents relating to the Merger (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction. Notice to Dixons Shareholders in the US The New Dixons Carphone Shares have not been, and will not be, registered under the US Securities Act, or under the securities laws of any state or other jurisdiction of the United States. Accordingly, the New Dixons Carphone Shares may not be offered, sold, resold, delivered, distributed or otherwise transferred, directly or indirectly, in or into the United States absent registration under the US Securities Act or an exemption therefrom. The New Dixons Carphone Shares are expected to be issued in the United States in reliance upon the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) thereof. Dixons Shareholders (whether or not US persons) who are or will be affiliates (within the meaning of the US Securities Act) of Dixons or Carphone prior to, or of Dixons Carphone after, the Effective Date will be subject to certain US transfer restrictions relating to the New Dixons Carphone Shares received pursuant to the Scheme. For a description of these and certain further restrictions on offers, sales and transfers of the New Dixons Carphone Shares and the distribution of this document, see paragraph 23 of Part II of this document. Holders of Dixons ADSs should refer to paragraph 24 of Part II of this document. None of the securities referred to in this document have been approved or disapproved by the SEC, any state securities commission in the United States or any other US regulatory authority, nor have such authorities passed upon or determined the adequacy or accuracy of the information contained in this document. Any representation to the contrary is a criminal offence in the United States. The Merger relates to the shares of a UK company and is to be made by means of a scheme of arrangement provided for under the laws of England and Wales. A transaction effected by means of a 3

4 c110198pu010 Proof 6: _02:33 B/L Revision: 0 Operator BonP scheme of arrangement is not subject to the proxy solicitation or tender offer rules under the US Exchange Act. Accordingly, the Merger is subject to the disclosure requirements, rules and practices applicable in the United Kingdom to schemes of arrangement, which differ from the requirements of US proxy solicitation or tender offer rules. However, if Carphone exercises its right to implement the Merger by means of a Merger Offer, such Merger Offer will be made in compliance with all applicable laws and regulations, including Section 14(e) of the US Exchange Act and Regulation 14E thereunder. Such a Merger Offer would be made in the United States by Carphone and no one else. In addition to any such Merger Offer, Carphone, certain affiliated companies and the nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, shares in Dixons outside such Merger Offer during the period in which such Merger Offer would remain open for acceptance. If such purchases or arrangements to purchase were to be made they would be made outside of the United States and would comply with applicable law, including the US Exchange Act. Any information about such purchases will be disclosed as required in the UK, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website The financial information included in this document relating to Dixons has been prepared in accordance with IFRS and therefore may not be comparable to the financial information of US companies or companies whose financial statements are prepared in accordance with US generally accepted accounting principles ( US GAAP ). US GAAP differs in certain significant respects from IFRS. None of the financial information in this document has been audited in accordance with auditing standards generally accepted in the United States or the auditing standards of the Public Company Accounting Oversight Board (United States). Forward-looking statements This document (including the information incorporated by reference into this document) contains statements which are, or may be deemed to be, forward-looking statements which are prospective in nature. All statements other than statements of historical fact are forward-looking statements. They are based on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as plans, expects, is expected, is subject to, budget, scheduled, estimates, forecasts, intends, anticipates, believes, targets, aims, projects or words or terms of similar substance or the negative thereof, as well as variations of such words and phrases or statements that certain actions, events or results may, could, should, would, might or will be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Carphone s or Dixons operations and potential synergies resulting from the Merger; and (iii) the effects of global economic conditions on Carphone s or Dixons business. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors may cause the actual results, performance or achievements of Carphone, Dixons or the Combined Group to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important factors that could cause actual results, performance or achievements of Carphone, Dixons or the Combined Group to differ materially from the expectations of Carphone, Dixons or the Combined Group, as applicable, include, among other things, general business and economic conditions globally, industry trends, competition, changes in government and other regulations, including in relation to the environment, health and safety, taxation, labour relations and work stoppages, changes in political and economic stability, disruptions in business operations due to reorganisation activities (whether or not Carphone combines with Dixons), interest rate and currency fluctuations, the failure to satisfy any conditions for the Merger (including approvals or clearances from regulatory and other agencies and bodies) on a timely basis or at all, the inability of the Combined Group to realise successfully any anticipated synergy benefits when the Merger is implemented, the inability of the Combined Group to integrate successfully Carphone s and Dixons operations and programmes when the Merger is implemented, or the Combined Group incurring and/or experiencing unanticipated costs and/or delays or difficulties relating to the Merger when the Merger is implemented. Such forward-looking statements should therefore be construed in light of such factors. Neither Carphone nor Dixons, nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document (including the information incorporated by reference into this document) will actually occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Other than in accordance with its legal or regulatory obligations (including under the Listing Rules and the Disclosure and Transparency Rules of the FCA), neither Carphone nor Dixons is under any obligation and 4

5 c110198pu010 Proof 6: _02:33 B/L Revision: 0 Operator BonP Dixons and Carphone each expressly disclaim any intention or obligation to update or revise any forwardlooking statements, whether as a result of new information, future events or otherwise. No statement in this document or incorporated by reference into this document is intended to constitute a profit forecast or profit estimate for any period, nor should any statement in this document or incorporated by reference into this document be interpreted to mean that earnings or earnings per ordinary share for Dixons or Carphone, as appropriate, for the current or future financial years will necessarily match or exceed the historical published earnings or earnings per ordinary share for Dixons or Carphone, as appropriate. Dealing disclosure requirements Under Rule 8.3(a) of the Code, any person who is interested in one per cent. or more of any class of relevant securities of Dixons or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) Dixons and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Code applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of Dixons or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure. Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of Dixons or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of Dixons or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) Dixons and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of Dixons or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3 of the Code. Opening Position Disclosures must also be made by Dixons and by any offeror and Dealing Disclosures must also be made by Dixons, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of the Code). Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel s website at including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel s Market Surveillance Unit on +44 (0) Publication and availability of this document A copy of this document will be available (subject to any applicable restrictions with respect to persons resident in Restricted Jurisdictions) on Dixons website at and Carphone s website at by no later than noon (London time) on the date following the publication of this document. For the avoidance of doubt, save as expressly referred to herein, the contents of those websites are not incorporated into and do not form part of this document. Electronic communications You may request a hard copy of this document, free of charge, by contacting Dixons Registrars, Capita Asset Services, on +44 (0) , or at Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU stating your name, your shareholder reference number (IVR) and the address to which the hard copy version should be sent to. You may also request that all future documents, announcements and information to be sent to you in relation to the Merger should be in hard copy form. Unless you have previously elected to receive hard copies of any such documents, announcements or information, hard copies shall not be sent unless specifically requested. Date: 26 June

6 c110198pu010 Proof 6: _02:33 B/L Revision: 0 Operator BonP TABLE OF CONTENTS Page ACTION TO BE TAKEN... 7 EXPECTED TIMETABLE OF PRINCIPAL EVENTS... 9 PART I LETTER FROM THE CHAIRMAN OF DIXONS RETAIL PLC PART II EXPLANATORY STATEMENT PART III THE SCHEME OF ARRANGEMENT PART IV CONDITIONS AND CERTAIN FURTHER TERMS OF THE SCHEME AND THE MERGER PART V FINANCIAL INFORMATION ON DIXONS AND CARPHONE PART VI UNITED KINGDOM TAXATION PART VII ADDITIONAL INFORMATION PART VIII DEFINITIONS PART IX NOTICE OF COURT MEETING PART X NOTICE OF GENERAL MEETING

7 c110198pu010 Proof 6: _02:33 B/L Revision: 0 Operator BonP ACTION TO BE TAKEN Voting at the Shareholder Meetings The Scheme will require approval at the meeting of Dixons Shareholders convened by order of the Court to be held at the offices of Linklaters LLP at One Silk Street, London EC2Y 8HQ. The Court Meeting will start at a.m. on 17 July Implementation of the Scheme also requires approval of Dixons Shareholders at the General Meeting to be held at the same venue at a.m. on 17 July 2014 (or as soon thereafter as the Court Meeting has concluded or been adjourned). Notices of the Shareholder Meetings are set out at Parts IX and X of this document. Please check that you have received the following with this document: * a BLUE Form of Proxy for use in respect of the Court Meeting on 17 July 2014; * a YELLOW Form of Proxy for use in respect of the General Meeting on 17 July 2014; and * a pre-paid envelope for use in the UK only. If you have not received all of these documents, please contact Dixons Registrars, Capita Asset Services, on the Shareholder Helpline referred to below. It is important that, for the Court Meeting in particular, as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of shareholder opinion. You are therefore strongly encouraged to complete, sign and return both your Forms of Proxy in accordance with the instructions thereon, or to appoint a proxy electronically or through CREST, as soon as possible. The Forms of Proxy must be received by Dixons Registrars, Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU by no later than the following times and dates: * BLUE Forms of Proxy for the Court Meeting by a.m. on 15 July 2014; and * YELLOW Forms of Proxy for the General Meeting by a.m. on 15 July * Alternatively, BLUE Forms of Proxy (but NOT YELLOW Forms of Proxy) may be handed to Dixons Registrars, Capita Asset Services, or the Chairman of the Court Meeting before the start of the Court Meeting on 17 July 2014 and will still be valid. In the case of the General Meeting, unless the YELLOW Form of Proxy is returned by the time and date mentioned above, it will be invalid. * As an alternative to completing and returning the Forms of Proxy, Dixons Shareholders may complete the proxy voting form online through Dixons Registrars, Capita Asset Services, website at Dixons Shareholders will need to enter their investor code, surname and postal code. Electronic proxies must be received no later than 48 hours before the time appointed for the relevant Shareholder Meeting. The completion and return of a Form of Proxy will not prevent you from attending and voting in person at the Court Meeting, the General Meeting or any adjournment thereof, if you so wish and are so entitled. Multiple proxy voting instructions As a registered Dixons Shareholder, you are entitled to appoint a proxy in respect of some or all of your Dixons Shares. You are also entitled to appoint more than one proxy. A space has been included on the Forms of Proxy to allow you to specify the number of Dixons Shares in respect of which that proxy is appointed. If you wish to appoint more than one proxy in respect of your shareholding, photocopy the Forms of Proxy or please contact Dixons Registrars by telephone on (from within the UK) or on (from outside the UK) for further Forms of Proxy. Calls to the number are charged at 10 pence per minute from a BT landline. Lines are open from 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Please note that calls may be monitored or recorded and the Registrars cannot provide advice on the merits of the Scheme or the Merger, nor give any financial, tax, investment or legal advice. Dixons Shareholders holding shares through CREST Dixons Shareholders who hold Dixons Shares through CREST and who wish to appoint a proxy or proxies for the Shareholder Meetings or any adjournment(s) by using the CREST electronic proxy 7

8 c110198pu010 Proof 6: _02:33 B/L Revision: 0 Operator BonP appointment service may do so by following the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a CREST Proxy Instruction ) must be properly authenticated in accordance with Euroclear s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instructions given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by Dixons Registrars (ID is RA10) at least 48 hours before the Court Meeting or General Meeting, as applicable (or, in the case of an adjournment of either Shareholder Meeting, at least 48 hours before such Shareholder Meeting). For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Applications Host) from which Dixons Registrars are able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. CREST members and, where applicable, their CREST sponsor or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. Dixons may treat as invalid a CREST Proxy Instruction in the circumstances set out in the Uncertificated Securities Regulations Shareholder Helpline ( if calling from outside the UK). If you have not received all of the relevant documents or have any questions relating to this document, either of the Shareholder Meetings, the completion and return of the Forms of Proxy or submitting your votes or proxies electronically or through CREST, please call the Shareholder Helpline, between 9.00 a.m. and 5.30 p.m. (London time) Monday to Friday. Calls to the number are charged at 10 pence per minute from a BT landline. Other network providers costs may vary. Calls to the Shareholder Helpline from outside the United Kingdom will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note that Shareholder Helpline operators cannot provide advice on the merits of the Scheme or the Merger nor give any financial, tax, investment or legal advice. 8

9 c110198pu010 Proof 6: _02:33 B/L Revision: 0 Operator BonP EXPECTED TIMETABLE OF PRINCIPAL EVENTS Event Time and/or date (1) Publication of this document 26 June 2014 Latest time for lodging BLUE Forms of Proxy for the Court Meeting a.m. on 15 July 2014 (2) Latest time for lodging YELLOW Forms of Proxy for the General Meeting a.m. on 15 July 2014 (3) Voting Record Time 6.00 p.m. on 15 July 2014 (4) Court Meeting a.m. on 17 July 2014 General Meeting a.m. on 17 July 2014 (5) Carphone General Meeting a.m. on 17 July 2014 Scheme Sanction Hearing to sanction the Scheme 4 August 2014 (6) Last day of dealings in, and for registration of transfers of, and disablement in CREST of, Dixons Shares 5 August 2014 (6) Scheme Record Time 6.00 p.m. on 5 August 2014 (6) Suspension of listing of, and dealings in, Dixons Shares By 8.00 a.m. on 6 August 2014 (6)(7) Reduction Hearing to confirm the Capital Reduction 6 August 2014 (6) Effective Date 6 August 2014 (6)(7) Delisting of Dixons Shares By 8.00 a.m. on 7 August 2014 (6)(7) New Dixons Carphone Shares listed and crediting of New Dixons Carphone Shares to CREST accounts By 8.00 a.m. on 7 August 2014 (6)(7) Commencement of dealings in New Dixons Carphone Shares on the London Stock Exchange 8.00 a.m. on 7 August 2014 (6)(7) CREST accounts credited By 8.00 a.m. on 7 August 2014 Despatch of definitive share certificates, where applicable By 20 August 2014 Long Stop Date 31 December 2014 (8) Notes: (1) All times shown in this document are London times unless otherwise stated. The dates and times given are indicative only and are based on Dixons current expectations and may be subject to change (including as a result of changes to the regulatory timetable). If any of the times and/or dates above change, the revised times and/or dates will be notified to Dixons Shareholders by announcement through a Regulatory Information Service. (2) The BLUE Form of Proxy for the Court Meeting may, alternatively, be handed to Dixons Registrars, Capita Asset Services, or the Chairman of the Court Meeting, at the start of the Court Meeting (or any adjournment thereof). However, if possible, Dixons Shareholders are requested to lodge the BLUE Forms of Proxy at least 48 hours before the time appointed for the Court Meeting. (3) The YELLOW Form of Proxy for the General Meeting must be lodged with Dixons Registrars, Capita Asset Services, by no later than a.m. on 15 July 2014 in order for it to be valid, or, if the General Meeting is adjourned, no later than 48 hours before the time fixed for the holding of the adjourned meeting. If the YELLOW Form of Proxy is not returned by such time, it will be invalid. (4) If either Shareholder Meeting is adjourned, the Voting Record Time for the adjourned Shareholder Meeting will be 6.00 p.m. on the date which is two days before the date set for the adjourned Shareholder Meeting. (5) To commence at the time fixed or, if later, immediately after the conclusion or adjournment of the Court Meeting. (6) These times and dates are indicative only and will depend, amongst other things, on the dates upon which the Conditions are satisfied or (where permitted) waived. (7) These times and dates are indicative only and will depend, amongst other things, on the date upon which the Court sanctions the Scheme and confirms the associated Capital Reduction. (8) This is the latest date by which the Merger may become Effective unless Dixons and Carphone agree, and (if required) the Court and the Panel allow, a later date. 9

10 c110198pu020 Proof 6: _02:34 B/L Revision: 0 Operator BonP PART I LETTER FROM THE CHAIRMAN OF DIXONS RETAIL PLC (Registered in England and Wales with company number ) Directors: John Allan CBE Independent Non-Executive Chairman Sebastian James Chief Executive Humphrey Singer Group Finance Director Katie Bickerstaffe Chief Executive UK & Ireland Tim How Senior Independent Non-Executive Director Jock Lennox Independent Non-Executive Director Dharmash Mistry Independent Non-Executive Director Prof. Dr. Utho Creusen Independent Non-Executive Director Andrea Gisle Joosen Independent Non-Executive Director Registered office: Dixons Retail plc Maylands Avenue Hemel Hempstead Hertfordshire HP2 7TG United Kingdom 26 June 2014 To Dixons Shareholders and, for information only, participants in the Dixons Share Schemes and persons with information rights in Dixons Dear Dixons Shareholder, RECOMMENDED ALL-SHARE MERGER OF DIXONS RETAIL PLC AND CARPHONE WAREHOUSE GROUP PLC 1 Introduction On 15 May 2014, the boards of Dixons and Carphone announced that they had agreed the terms of a recommended all-share merger of Dixons with Carphone to be implemented by way of a Court-sanctioned scheme of arrangement of Dixons under Part 26 of the Companies Act. I am writing to you to set out a summary of the terms of the Merger and to explain why your Board considers the terms of the Merger to be fair and reasonable and why it unanimously recommends that you vote in favour of the Scheme at the Court Meeting and in favour of the Special Resolution at the General Meeting, both of which will be held on 17 July 2014 at the offices of Linklaters LLP at One Silk Street, London EC2Y 8HQ. The Court Meeting will start at a.m. and the General Meeting will start at a.m. (or as soon thereafter as the Court Meeting has concluded or been adjourned). This letter also explains the actions you are now asked to take. Further details of the Scheme are set out in the Explanatory Statement in Part II of this document. 2 Summary of the terms of the Merger Under the terms of the Merger, which is subject to the Conditions and further terms set out in Part IV of this document, if the Merger becomes Effective, Dixons Shareholders will receive: For each Dixons Share of a New Dixons Carphone Share The Merger will result in each of the Dixons Shareholders and the Carphone Shareholders holding, in aggregate, 50 per cent. of Dixons Carphone on a fully diluted basis taking into account existing share options and award schemes for both companies. The New Dixons Carphone Shares issued to Dixons Shareholders pursuant to the Scheme will be issued credited as fully paid and will rank pari passu in all respects with existing Carphone Shares, including the right to receive dividends and other distributions declared, made or paid on Carphone Shares by reference to a record date falling after the Effective Date. The New Dixons Carphone Shares will be issued in registered form and will trade under the same ISIN number as the existing Carphone Shares. Fractions of New Dixons Carphone Shares will not be allotted or issued pursuant to the Merger and fractional entitlements will be rounded down to the nearest whole number of New Dixons Carphone Shares. As a result, Dixons Shareholders who hold six or fewer Dixons Shares will have their Dixons Shares cancelled, but will not receive any New Dixons 10

11 c110198pu020 Proof 6: _02:34 B/L Revision: 0 Operator BonP Carphone Shares (or any other consideration) pursuant to the Scheme unless they increase their holding of Dixons Shares prior to the Scheme Record Time. The Scheme requires that Dixons Shareholders vote in favour of the Scheme at the Court Meeting to be held at a.m. on 17 July 2014 and in favour of the Special Resolution at the General Meeting to be held at a.m. on 17 July 2014 (or as soon thereafter as the Court Meeting has concluded or been adjourned). The Scheme also requires the sanction of the Court. The Scheme will become Effective upon the delivery of the Reduction Court Order (and the Statement of Capital) to the Registrar of Companies (or, if the Court so orders, upon registration by the Registrar of Companies of the Reduction Court Order and the Statement of Capital). Further details of the Court Meeting, the General Meeting and the Court process are set out in paragraph 15 of this letter and in paragraph 14 of Part II of this document. Owing to its size, the Merger also requires the approval of Carphone Shareholders at the Carphone General Meeting to be held at a.m. on 17 July Subject to the satisfaction or waiver of the Conditions, it is expected that the Scheme will become Effective on 6 August 2014, with Admission becoming effective and dealings for normal settlement in the New Dixons Carphone Shares expected to commence at 8.00 a.m. on 7 August If the Scheme becomes Effective, it will be binding on all Dixons Shareholders irrespective of whether or not they attended or voted at the Shareholder Meetings (and, if they attended and voted, whether or not they voted in favour). The Scheme is described in further detail in paragraph 14 of Part II of this document. 3 Background to and reasons for recommending the Merger The consumer electronics and mobile phone retail landscapes have evolved significantly over the last few years. In particular, the growth of smartphones, tablets and speed of internet access both in and out of the home, together with an increasing number of connected devices, are altering the way people live their lives, communicate and use technology. This creates a significant new opportunity for retailers to provide a broader range of products, connectivity, services and solutions to customers. The Carphone Directors and the Dixons Directors believe that the winners within this evolving landscape will need to combine: * a broad range of products and connectivity solutions; * expert product knowledge backed up by independent, trusted advice; * a full range of support services; * multi-channel capabilities; and * a competitive pricing model. The directors of both Dixons and Carphone believe therefore that combining these two already strong businesses, with industry-leading management teams, will provide the opportunity to create a new retailer for the new digital age. This is underpinned by four principal drivers: (i) The markets in which Carphone and Dixons operate are converging Technology developments, in particular, hardware innovation, internet connectivity speeds, content evolution and cloud-based storage, have been advancing rapidly. This has been particularly prevalent following the advent of the smartphone and has been supported by increasing consumer adoption rates. This has led to greater convergence of both smart connected devices and the wider markets in which both Dixons and Carphone operate. These trends are the key building blocks for the so-called Internet of Things, extending connectivity of devices, systems and services so that they interact with themselves, with users and with their environment creating significant new service opportunities as customers seek help and support in the connected world. In light of the convergence of their respective markets, Carphone and Dixons have become highly complementary businesses. Carphone is one of Europe s largest independent retailers of mobile phones, which are central to how this technology will operate and be controlled, and Dixons is one of Europe s largest retailers of electrical goods with a product range which includes many of the devices that make up the Internet of Things. The Carphone Board and the Dixons Board both believe that the current market propositions, together with a 11

12 c110198pu020 Proof 6: _02:34 B/L Revision: 0 Operator BonP comprehensive service and support infrastructure, create the opportunity both for a compelling end-to-end proposition and for developing a long-term relationship with the Combined Group s customers. (ii) (iii) (iv) The Combined Group will have improved scale and reach The improved scale and reach in Dixons Carphone s multi-channel offerings are expected to benefit customers, suppliers and network operators alike. The increased scale from combining Dixons and Carphone will enable the Combined Group to invest more efficiently in systems, employees and training in order to have better conversations with customers about their needs in a multi-channel world. These conversations are increasingly viewed as a critical differentiator not only by customers but also by suppliers seeking to communicate their new technologies effectively, and the Merger is expected to enhance further the Combined Group s relevance to its suppliers and network partners. The complementary store footprint in the UK will also enable the Combined Group to offer customers increased points of presence for services such as Click&Collect or Pay&Collect. Significant synergies arise from the Merger The boards of Carphone and Dixons believe that the Merger will deliver significant value to their shareholders through a combination of enhanced commercial opportunities as well as operating efficiencies. The Carphone Board and the Dixons Board both believe that synergies arising from the Merger will be at least 80 million and expect these to be delivered in full in the financial year 2017/18. In addition to these recurring synergies, further significant additional value from growth opportunities is expected, as outlined under Synergies and integration in paragraph 5 below. The Merger will provide a stronger platform to create global opportunities for growth through the provision of services to consumers and businesses Carphone and Dixons have already taken steps to develop their services platform and believe that the Merger will enhance opportunities to develop this further for consumers and businesses. Carphone has already established contracts with blue chip businesses such as Aviva, British Gas and Royal Bank of Scotland to provide services and support, and has opened 33 Samsung stores in seven countries and established a partnership with the Media Saturn Group in the Netherlands. Dixons has started to provide services such as delivering white goods on behalf of suppliers sold by third parties and is exploring the possibilities for utilising its sourcing operations in Hong Kong for the benefit of other electrical retailers internationally. The Carphone Board and the Dixons Board both believe that the Merger will enable the Combined Group to leverage the strong platforms, capabilities, experiences and skills of both businesses to offer corporate and end-user customers a significantly enhanced and broader range of profitable services. 4 Strategy of the Combined Group The Merger will enable Dixons Carphone to provide customers with an integrated offering across a broad range of technology, connectivity and services beyond the point of sale, enhancing the lifetime value of the Combined Group s customers and improving the offering to existing and new service partners. The Carphone Board and the Dixons Board both believe that this will provide the opportunity to increase the value of the core combined retail operation, the Combined Group s service proposition and its business capability. The directors of Carphone and Dixons believe that, in addition to the strategy of delivering the synergies identified in paragraph 5 below, there are three significant additional growth opportunities that have been identified and will be central to the overall strategy of the Combined Group: (i) Generating incremental value by providing a seamless multi-channel offering throughout the retail operation, across a comprehensive range of products and connectivity services to benefit customers and business partners The directors of Carphone and Dixons believe that they have the opportunity to create enhanced revenue opportunities, in addition to developing an integrated mobile retailing proposition, from an improved customer offering across multiple electrical categories, enabled 12

13 c110198pu020 Proof 6: _02:34 B/L Revision: 0 Operator BonP by a true multi-channel approach, including a wider and more convenient combined footprint for customers. In the UK, Ireland and the Nordics customers will be able to shop in store, online or using a combination of both through Click&Collect or Pay&Collect through the Combined Group s extensive store network. In store, the Combined Group will cross-fertilise existing technologies and capabilities from Dixons and Carphone to allow simplified and improved customer journeys for multiple connected products, enabling the Combined Group s business partners to see their products and services presented to customers in a compelling manner enhanced by the customer s interaction with Dixons Carphone s highly trained staff. The Carphone Board and the Dixons Board believe that the incremental capabilities and improved offerings coupled with ever-increasing data speeds and a broadening range of connected electrical devices will enhance revenue streams for the Combined Group and its business partners, suppliers and network operators alike. (ii) (iii) Driving significant revenue growth through incremental service offerings whilst providing customers with a best in class and comprehensive service proposition both in store and beyond the point of sale The Carphone Board and the Dixons Board believe that by building on the respective businesses well-established service offerings of Geek Squad and Knowhow, the Combined Group will be well placed to extend Dixons Carphone s existing service offering even further across the entire range of connected and electricals products. Through an end-to-end service proposition including product set-up, delivery, ongoing peace of mind product support and insurance, as well as repairs, accessories and recycling, the Combined Group can extend the relationship with customers to provide them with the full service offering they may need anytime, anywhere and drive significant incremental lifetime value opportunities and recurring revenue streams for the Combined Group. Delivering substantial value enhancement by leveraging existing capabilities and providing Connected World Services to global business partners The Combined Group will aim to leverage its core systems, services and product expertise for the benefit of both third party customers and suppliers. Carphone and Dixons have a shared vision for the future opportunity that exists to exploit their respective expertise in building additional services revenue streams. The Combined Group s focus will be on both existing and new markets. Although this business is relatively small, the Carphone Board and the Dixons Board believe that this can evolve on a global basis, with relatively low capital expenditure, and drive four additional revenue streams over time: (a) (b) (c) Connected retailing Dixons Carphone intends to offer a full range of propositions for multi-channel retailing for connected products and services. Opportunities include specific consultancy services such as sales processes, store design and customer fulfilment and loyalty, all the way through to full scale partnerships for retailers, networks and manufacturers. Services and support The Carphone Board and the Dixons Board intend to deliver technical support solutions for connected devices using existing logistics infrastructure, insurance expertise (including administration and claims management), repairs, after-sales and technical support capabilities. Multi-channel platform The Combined Group intends to provide its technology platforms and managed services to support complex transactions, connections to service providers and customer relationship management. For example, the Combined Group intends to be able to offer an end-to-end turn-key software and training solution for partner retailers who wish to navigate the complexities of hardware and networks and deliver a comprehensive mobile and connectivity offer for their customers. 13

14 c110198pu020 Proof 6: _02:34 B/L Revision: 0 Operator BonP (d) Global partnerships Opportunities will include leveraging the Combined Group s scale and commercial relationships, enabling partner retailers not only to source hardware, own brand consumer electrical products and accessories but also to provide network operator services. The Carphone Board and the Dixons Board believe that the relationships, resources and combined skills of Dixons Carphone will enable the development of a much stronger business platform than were each company to pursue this strategy individually. 5 Synergies and integration The Carphone Directors and the Dixons Directors, having reviewed and analysed the potential benefits of the Merger, based on their experience of operating in the consumer electrical and mobile retail sectors, and taking into account the factors they can influence, believe that the Combined Group will be able to achieve integrated mobile retailing and procurement synergies, together with cost savings, of at least 80 million on a recurring basis, which are expected to be delivered in full in the financial year 2017/18. These estimated synergies reflect both the beneficial elements and relevant costs of achieving them. The boards of Carphone and Dixons expect Dixons Carphone to deliver these synergies progressively, achieving almost half of them in the financial year 2015/16. Approximately half of the identified synergies are expected to come from integrated mobile retailing and procurement savings. Integrated mobile retailing synergies arise in the UK, Ireland and the Nordics, and relate to the creation of an integrated mobile offering in Dixons shops, to promote a seamless customer journey across all technology categories, underpinned by the use of Carphone s expertise in mobile. It is expected that the deployment of an integrated mobile offering will commence as soon as is practicable after Completion, with a progressive roll-out, which is expected to be largely completed by the end of the financial year 2016/17. Alongside the integrated mobile retailing programme, it is expected that the Combined Group s scale will enable procurement benefits, across a number of cost categories, which are again expected to be delivered progressively. The remainder of the identified synergies relate primarily to the integration and rationalisation of certain operational and support functions across the UK and the Nordics. These synergies comprise the elimination of duplication across such functions, and the integration of head offices and removal of duplicated rent and other infrastructure costs. These synergies are expected to be delivered progressively through periods to the end of the financial year 2016/17. In addition to these quantified synergies, the Carphone Directors and the Dixons Directors believe that further value will be created through additional growth opportunities including: (i) (ii) (iii) enhanced revenue opportunities from an improved customer offering across electrical, mobiles and connectivity, enabled by a true multi-channel approach, including a wider and more convenient combined footprint for customers; developing a world class service proposition for customers; and enhancement of the existing Connected World Services opportunities for both existing and new business partners around the globe. It is expected that there will be significant job creation through the rollout of the Dixons Carphone integrated retail offering, resulting in an increase of approximately four per cent. of the Combined Group s full-time equivalent employees. This is expected to be substantially complete by the end of This increase will be partially offset as a result of the rationalisation of certain operational and support functions resulting, in these functions, in a decrease of approximately two per cent. of the Combined Group s full-time equivalent employees. Any changes related to the rationalisation are unlikely to take effect prior to 2015 and are anticipated to be implemented gradually over the three years after Completion. Taken together with the job creation opportunities, it is expected there will be a net increase of approximately two per cent. of the Combined Group s full-time equivalent employees as a result of the Merger. The integration of the businesses will clearly require some roles to change but, with more new roles being created than those that are lost, it is hoped that there will be opportunities for many of the people involved. Specific roles have not yet been identified, outcomes will depend on integration planning and will, of course, be subject to consultation with the Combined Group s employees. 14

15 c110198pu020 Proof 6: _02:34 B/L Revision: 0 Operator BonP The realisation of the identified synergies is expected to result in one-off exceptional costs of approximately million, principally in relation to the rationalisation of certain operational and support functions where there is duplication, in the UK and Nordics regions. It is expected that such costs will largely be incurred by the end of the financial year 2015/16. Incremental capital expenditure of approximately million is also expected during the period to the end of the financial year 2017/18, principally resulting from the creation of an integrated retail offering in Dixons shops, together with implementation of common IT platforms across parts of the Carphone and Dixons businesses. Aside from these identified integration costs and the planned incremental capital expenditure, no material dis-synergies are expected in connection with the Merger. The identified synergies will accrue as a direct result of the Merger and would not be achieved on a standalone basis. Carphone and Dixons are establishing a full integration team, bringing together the best relevant capabilities of both businesses, to ensure that the synergies of the Merger are maximised. The Carphone Board and the Dixons Board are confident that the integration of Carphone and Dixons can be achieved without undue disruption to the underlying operations of either business. As at the date of this document, an integration plan is being developed. As soon as practicable following the Effective Date, the Combined Group will aim to have fully validated its initial synergy assumptions, agreed the target operating model of the Combined Group and completed the detailed integration plan across the Combined Group s business. The integration plan, once finalised, will set out the scope of the integration process and quantified objectives, proposed organisation structures and processes to be reviewed and subsequently implemented, together with an overall integration programme and stakeholder communication and consultation timetable. Finalisation of the integration plan will be subject to engagement with appropriate stakeholders, including employee representative bodies. These statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. For the purposes of Rule 28 of the Code, these statements of estimated cost savings and synergies are the responsibility of the Carphone Directors, in Carphone s capacity as offeror under the terms of the Merger. These statements are not intended as a profit forecast and should not be interpreted as such. The Dixons Directors and the Carphone Directors have confirmed that there have been no material changes to these statements which were set out in Appendix IV of the Announcement and which remain valid. Deloitte LLP and Deutsche Bank have also confirmed to Carphone that the reports they produced in connection with these statements continue to apply. 6 Management, employees and locations of business The Dixons Carphone Board will be drawn equally from the boards of both companies and will comprise 14 directors, including nine Non-Executive Directors. As from Completion, Sir Charles Dunstone, Chairman of Carphone, will become the Chairman of Dixons Carphone. John Allan, Chairman of Dixons, and Roger Taylor, Deputy Chairman of Carphone, will become Co-Deputy Chairmen and John Allan will also become Senior Independent Director; Sebastian James, CEO of Dixons, will become CEO; Andrew Harrison, CEO of Carphone, will become Deputy CEO; Humphrey Singer, CFO of Dixons, will become CFO; Katie Bickerstaffe, CEO of UK & Ireland Dixons, and Graham Stapleton, CEO of UK & Ireland Carphone, will join the Dixons Carphone Board as Executive Directors and retain their current responsibilities. In addition, the Dixons Carphone Board will comprise six other Non-Executive Directors. John Gildersleeve, Baroness Morgan of Huyton and Gerry Murphy will be the Non-Executive Directors appointed from Carphone. Tim How, Jock Lennox and Andrea Gisle Joosen will be the Non-Executive Directors appointed from Dixons. Dharmash Mistry and Prof. Dr. Utho Creusen will step down from the Dixons Board upon the Scheme becoming Effective and will not join the Dixons Carphone Board. Each of the Dixons Directors who will not join the Dixons Carphone Board is fully supportive of the rationale for the Merger and of its terms and conditions. 15

16 c110198pu020 Proof 6: _02:34 B/L Revision: 0 Operator BonP Nigel Langstaff and John Allwood will step down from the Carphone Board upon the Scheme becoming Effective. Each of the Carphone Directors stepping down from the Carphone Board is fully supportive of the rationale for the Merger and of its terms and conditions. The boards of Carphone and Dixons recognise that in order to achieve the expected benefits of the Merger, operational and administrative restructuring will be required following Completion. The Combined Group will in due course consolidate its head office functions within one principal location. Dixons and Carphone are currently working on assessing the solution which best suits the future business needs of the Combined Group. Carphone has given assurances that following Completion the existing employment rights of Dixons and Carphone s employees will be fully safeguarded. Dixons pension scheme The principal pension scheme operated by the Dixons Group is the DSG Retirement and Employee Security Scheme, which provides both defined benefit and money purchase benefits. The defined benefit section was closed to new entrants on 1 September 2002 and to future accrual for existing members on 30 April The last triennial actuarial valuation of the scheme was carried out as at 31 March 2010 and showed a funding deficit of 239 million. A recovery plan based on this valuation was agreed between Dixons and the scheme trustees which is expected to make good this deficit by paying additional annual contributions which commenced in the financial year ended 30 April 2011 with contributions of 12 million, rising to 20 million in the financial year ended 30 April 2013 and the financial year ended 30 April Contributions will rise to 25 million in the financial year ending 30 April 2015 and will then rise approximately annually thereafter to 35 million by the financial year ending 30 April The next triennial valuation as at 31 March 2013 is still underway and its results are expected in the first half of the financial year ending 30 April Any deficit existing as at this date may influence whether further special contributions are required in the future. Carphone and Dixons intend that, following implementation of the Scheme, Dixons will continue to comply with all of its pensions obligations, including its commitment to make employer contributions. It is not expected that the defined benefit section of the DSG Retirement and Employee Security Scheme will be reopened to new entrants or future accrual for existing members. 7 Irrevocable undertakings In aggregate, Carphone and Dixons have received irrevocable undertakings from: (a) those of the Dixons Directors and certain members of their families who hold or are beneficially entitled to Dixons Shares to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the General Meeting, in respect of an aggregate of 2,149,695 Dixons Shares, representing, in aggregate, approximately 0.06 per cent. of Dixons ordinary share capital in issue on 25 June 2014 (being the latest practicable date prior to the publication of this document); and (b) those of the Carphone Directors and certain members of their families who hold or are beneficially entitled to Carphone Shares to vote in favour of the resolutions to be proposed at the Carphone General Meeting to approve the Merger and related matters, in respect of an aggregate of 153,679,774 Carphone Shares, representing, in aggregate, approximately 26.7 per cent. of Carphone s ordinary share capital in issue on 25 June 2014 (being the latest practicable date prior to the publication of this document). 8 Lock-in commitments Each of the proposed members of the Dixons Carphone Board has given a binding undertaking not to dispose of any of his or her beneficial holdings in shares of Dixons Carphone (or any interest therein), which he or she holds on Admission or subsequently acquires during the lock-in period, subject to limited exceptions. Certain other Carphone Group and Dixons Group senior executives have given similar commitments. All of the proposed members of the Dixons Carphone Board have given this undertaking for a period of 24 months following Completion, with the exception of Katie Bickerstaffe and Graham Stapleton who have given this undertaking for a period of 12 months, in line with undertakings received from other senior executives. 16

17 c110198pu020 Proof 6: _02:34 B/L Revision: 0 Operator BonP 9 Dixons Share Schemes Further details of the arrangements proposed to be implemented in relation to the Dixons Share Schemes in connection with the Merger, together with certain other matters relating to the retention and incentivisation of key management and employees, are set out in paragraph 22 of Part II of this document. 10 Delisting of Dixons Shares and re-registration as a private limited company The attention of Dixons Shareholders is drawn to paragraph 18 of Part II of this document in relation to Carphone s intentions with regard to the cancellation of the listing and the admission to trading on LSE of the Dixons Shares and the re-registration of Dixons as a private limited company. 11 Risk Factors Dixons Shareholders should consider fully and carefully the risk factors associated with the Combined Group and the Merger. Your attention is drawn to the Risk Factors section of the Dixons Carphone Prospectus, which contains further information on Carphone, Dixons and the New Dixons Carphone Shares. The Dixons Carphone Prospectus will be available on Dixons website at and on Carphone s website at and a hard copy of the Dixons Carphone Prospectus can be requested by contacting Capita Asset Services, whose contact details are set out on page 5 of this document. 12 Taxation Dixons Shareholders should read Part VI of this document, which provides a summary of certain UK tax consequences of the Scheme relevant to Dixons Shareholders who are resident (or, in the case of individuals, domiciled and resident) in the UK for tax purposes. If you are in any doubt about your tax position, or are subject to taxation in any jurisdiction other than the UK, you are strongly advised to consult an appropriate independent professional adviser. If the Scheme becomes Effective, holders of Dixons ADSs who are residents of the United States for tax purposes and receive cash upon their surrender of Dixons ADSs will generally recognise gain or loss for US federal income tax purposes. Such holders should consult their independent professional advisers as to the US federal income tax consequences of the Scheme. 13 US and other Overseas Shareholders US Dixons Shareholders and other Overseas Shareholders should refer to paragraph 23 of Part II of this document. 14 Dixons ADSs Holders of Dixons ADSs should refer to paragraph 24 of Part II of this document. 15 Shareholder Meetings The Scheme requires the approval of Dixons Shareholders by the passing of a resolution at the Court Meeting to be held on 17 July The resolution must be approved by a majority in number of those Dixons Shareholders who are present and vote, either in person or by proxy, and who represent not less than 75 per cent. in value of the Dixons Shares voted by such Dixons Shareholders. Implementation of the Scheme will also require the passing of the Special Resolution (requiring the approval of Dixons Shareholders representing at least 75 per cent. of the votes cast either in person or by proxy) at the General Meeting, which will be held immediately after the Court Meeting. Following the Shareholder Meetings, the Scheme and the related Capital Reduction must be sanctioned and confirmed by the Court and will only become Effective upon delivery of the Reduction Court Order to the Registrar of Companies (or, if the Court so orders, upon registration by the Registrar of Companies of the Reduction Court Order and the Statement of Capital). Upon the Scheme becoming Effective, it will be binding on all Dixons Shareholders irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting (and, if they attended and voted, whether or not they voted in favour). 17

18 c110198pu020 Proof 6: _02:34 B/L Revision: 0 Operator BonP Your attention is drawn to paragraph 15 of Part II of this document which contains further information with respect to the Shareholder Meetings. It is important that, for the Court Meeting in particular, as many votes as possible are cast so that the Court may be satisfied that there is a fair representation of shareholder opinion. You are therefore strongly urged to complete, sign and return the Forms of Proxy, or to appoint a proxy electronically or through CREST, as soon as possible. Dixons Shareholders should note that given the expected timetable for the Merger, Dixons is not currently intending to convene an AGM prior to completion of the Merger. In the event that the Merger does not complete, or is not implemented in accordance with the expected timetable, Dixons may convene and notify shareholders of an AGM in due course. 16 Action to be taken Notices convening the Court Meeting and the General Meeting are set out in Parts IX and X, respectively, of this document. You will find accompanying this document a BLUE Form of Proxy for use at the Court Meeting and a YELLOW Form of Proxy for use at the General Meeting. Whether or not you intend to be present at either Shareholder Meeting, you are requested to complete, sign and return both the accompanying Form of Proxy for the Court Meeting (BLUE) and the accompanying Form of Proxy for the General Meeting (YELLOW) in accordance with the instructions printed on the respective forms. If you hold your Dixons Shares in uncertificated form, you may vote using the CREST proxy voting service in accordance with the procedures set out in the CREST Manual (please also refer to the notes to the Notices of the Court Meeting and the General Meeting set out in Parts IX and X respectively of this document). You may appoint a proxy electronically by logging on to the website of Capita Asset Services at and entering your investor code, surname and post code. Full details of the procedure to be followed to appoint a proxy electronically are given on the website. Further information is also included in the instructions included on the Forms of Proxy. If you have any further questions about this document, the Court Meeting, the General Meeting or the Merger, including in relation to the completion and return of the Forms of Proxy or submitting your votes or proxies electronically or through CREST, please call the Shareholder Helpline on (from within the UK) or on (if calling from outside the UK). Calls to the number are charged at 10 pence per minute from a BT landline. Lines are open from 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note that the Shareholder Helpline operators cannot provide advice on the merits of the Scheme or the Merger, nor give any financial, tax, investment or legal advice. Your attention is drawn to pages 7 and 8 of this document which set out in detail the action you should take in relation to the Merger and the Scheme. 17 Further information You are advised to read the whole of this document and the Dixons Carphone Prospectus, which contains further information on Carphone, Dixons and the New Dixons Carphone Shares, and not just rely on the summary information contained in this letter. The Dixons Carphone Prospectus will be available on Dixons website at and on Carphone s website at and a hard copy of the Dixons Carphone Prospectus can be requested by contacting Capita Asset Services, whose contact details are set out on page 5 of this document. Your attention is drawn in particular to the information contained in Part II (Explanatory Statement), Part III (The Scheme of Arrangement), Part IV (Conditions and Certain Further Terms of the Scheme and the Merger), Part V (Financial Information on Dixons and Carphone), Part VI (United Kingdom Taxation) and Part VII (Additional Information) of this document, and to the expected timetable of principal events set out on page 9 of this document. Your attention is further drawn to the Dixons Carphone Prospectus and, in particular, to the information contained in the Summary, the Risk Factors, Part II (Information on the Carphone Group), Part III (Information on the Dixons Group), Part IV (Operating and Financial Review of the 18

19 c110198pu020 Proof 6: _02:34 B/L Revision: 0 Operator BonP Carphone Group) and Part V (Operating and Financial Review of the Dixons Group) of the Dixons Carphone Prospectus. The audited consolidated accounts of the Dixons Group for the financial year ended 30 April 2014 are set out in Section A of Part III of the Carphone Circular, a copy of which will be available on Dixons website at and on Carphone s website at and a hard copy of which can be requested by contacting Capita Asset Services, whose contact details are set out on page 5 of this document. 18 Recommendation The Dixons Directors, who have been so advised by Citigroup Global Markets, consider the terms of the Merger to be fair and reasonable. In providing its advice, Citigroup Global Markets has taken into account the commercial assessments of the Dixons Directors. The Dixons Directors consider that the Merger is in the best interests of the Dixons Shareholders as a whole, and accordingly, the Dixons Directors unanimously recommend Dixons Shareholders to vote in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting, as the Dixons Directors who hold or are beneficially entitled to Dixons Shares have irrevocably undertaken to do in respect of their own Dixons Shares, representing in aggregate approximately 0.06 per cent. of Dixons share capital in issue on 25 June 2014 (being the latest practicable date prior to the publication of this document). Yours faithfully, John Allan CBE Chairman Dixons Retail plc 19

20 c110198pu020 Proof 6: _02:34 B/L Revision: 0 Operator BonP Citigroup Global Markets Limited 33 Canada Square Canary Wharf London E14 5LB 26 June 2014 PART II EXPLANATORY STATEMENT (in compliance with section 897 of the Companies Act) To all Dixons Shareholders and, for information only, participants in the Dixons Share Schemes and persons with information rights in Dixons Dear Sir or Madam, RECOMMENDED ALL-SHARE MERGER OF DIXONS RETAIL PLC AND CARPHONE WAREHOUSE GROUP PLC 1 Introduction On 15 May 2014, the boards of Dixons and Carphone announced that they had agreed the terms of a recommended all-share merger of Dixons with Carphone to be implemented by way of a Court-sanctioned scheme of arrangement of Dixons under Part 26 of the Companies Act. The Scheme requires, among other things, the approval of the Scheme Shareholders and the sanction of the Court. Your attention is drawn to the letter from the Chairman of Dixons, John Allan CBE, set out in Part I of this document, which forms part of this Explanatory Statement. That letter contains, among other things, information on the background to and reasons for the unanimous recommendation by the Dixons Directors to Dixons Shareholders to vote in favour of the Scheme at the Court Meeting and the Special Resolution at the General Meeting. We have been authorised by the Dixons Directors to write to you to explain the terms of the Merger and to provide you with other relevant information. This Explanatory Statement contains a summary of the terms of the Merger, which is to be implemented by way of the Scheme. The terms of the Scheme are set out in full in Part III of this document. Your attention is also drawn to the other parts of this document, which are deemed to form part of this Explanatory Statement, including the letter from the Chairman of Dixons in Part I, the Conditions and certain further terms in Part IV and the additional information in Part VII of this document. If you wish to vote in favour of the Scheme and the Special Resolution, please take the actions described on pages 7 and 8 of this document within the time frames stipulated. 2 Summary of the terms of the Merger Under the terms of the Scheme, which is set out in Part III of this document and which is subject to the Conditions and further terms set out in Part IV of this document, if the Scheme becomes Effective, Dixons Shareholders will receive: for each Dixons Share of a New Dixons Carphone Share If the Scheme becomes Effective, it will result in the issue of up to 576,067,769 New Dixons Carphone Shares to Dixons Shareholders. The Merger will result in each of the Dixons Shareholders and the Carphone Shareholders holding, in aggregate, 50 per cent. of Dixons Carphone on a fully diluted basis taking into account existing share options and award schemes for both companies. The exchange ratio of the Merger has been determined on the basis that no dividend will be payable by either of Carphone or Dixons prior to Completion, other than an ordinary course Carphone final dividend of 4 pence per Carphone Share in respect of the financial year ended 29 March