Dunelm Group Annual Report 2023

FY2023 Annual Report · Dunelm Group

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DUNELM GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2023

Seizing the

opportunity

In this report

At a glance

We are the UK’s No.1 homewares retailer,
delivering value and joy to help more and
more UK consumers create a home they love

£1.6bn

FY23 sales

£163m

FY23 total dividends paid

£193m

FY23 profit before tax

179

stores across the UK

No.1

Market leader in
UK homewares

c.70,000

products to suit every style and budget

For more performance
highlights please see
page 12.

11,000+

committed colleagues

Strategic report
At a glance
About us
1
Chair’s statement
4
Market review
6
Business model
8
Our strategy
10
Highlights
12
CEO’s review
13
Key performance indicators
20
CFO’s review
22
Sustainability
26
Materiality assessment
28
Stakeholder engagement
30
Section 172 statement
35
Non-financial information
36
40
TCFD report
Our approach to risk management 48
Principal risks and uncertainties
50
Going concern and
viability statement

Governance report
58
Chair’s introduction
60
Governance dashboard
61
Directors and officers
64
Governance structure
68
Board activities
72
Culture and values
Nominations Committee report
74
Audit and Risk Committee report 80
88
Remuneration Committee report
Directors’ Remuneration

Policy 2023

92
Annual Report on Remuneration 103
Directors’ report
119
Statement of Directors’

responsibilities

Financial statements
Independent auditors’ report
Consolidated financial

statements

Parent company financial

statements

Other information
Alternative performance

measures (APMs)
Advisers and contacts

123

126

132

164

172

See corporate.dunelm.com for
more information and for our
Sustainability Report 2023.

About us

Our vision: to build the UK’s
most trusted and valuable
brand for homewares
& furniture

100%

recycled glass vases from
our Conscious Choice range

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Our purpose:

to help create the
joy of truly feeling
at home, now and
for generations
to come

Our purpose guides all business activities and decisions
and helps us understand why people want to shop with us,
work for us, supply to us and stay invested in us

Our shared values
Our shared values have evolved from our fundamental business principles
developed more than a decade ago and reflect our attitudes and behaviours
throughout Dunelm

Stronger
together

Keep listening
& learning

Act like
owners

Long-term
thinking

Read more on pages 72-73.

Dunelm Group plc Annual Report and Accounts 2023

STRATEGIC REPORT

Seizing the opportunity

to
be
inspired

In this section
Chair’s statement
Market review
Business model
Our strategy
Highlights
CEO’s review
Key performance indicators
CFO’s review
Sustainability
Materiality assessment

4
6
8
10
12
13
20
22
26
28

Stakeholder engagement
Section 172 statement
Non-financial information
TCFD report
Our approach to risk

management
Principal risks and
uncertainties

Going concern and viability

statement

30
35
36
40

Dunelm Group plc Annual Report and Accounts 2023

inspired

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Dunelm Group plc Annual Report and Accounts 2023

CHAIR’S STATEMENT

Driving the business
forward sustainably

In my first set of full year results with Dunelm, I am delighted to report
another year of strong sales growth and market share gains.

The last year has undoubtedly been
challenging for UK consumers
and businesses alike. I have been
hugely impressed by the energy
and enthusiasm with which our team
has approached these challenges,
delivering a strong performance for our
stakeholders whilst continuing to think
long-term and investing for the future
in light of the many opportunities we
see on the horizon. We have maintained
a focus on all our key stakeholders:
delighting our loyal customers, and
attracting new ones, by delivering
quality and value; strengthening
relationships with our suppliers and
partners; supporting our colleagues
and the communities we serve; as
well as generating strong shareholder
returns. Alongside this, we are also
making good progress towards our
long-term sustainability goals.

This performance would not have
been possible without the individual
contributions of our more than 11,000
colleagues, across stores, logistics,
manufacturing, customer service and
support centres. I would like to thank
them all for their ongoing hard work
and dedication to the business and our
customers, and for their contribution
to our unique, inclusive and positive
culture which continues to help
us thrive.

Performance
FY23 saw record sales of £1.64bn,
reflecting a strong performance in an
extremely challenging environment.
As ever, we believe that the strength
and relevance of our product range
is a significant advantage, helping us
to provide outstanding value to our
customers, to grow our sales and win
market share.

Our sales grew by 6%1, and our overall
market share increased to 7.2%2, with
gross margin of 50.1%. Profit before tax
was robust at £193m (FY22: £209m)3,
which is particularly pleasing given
the impact of operating cost inflation
and our ongoing investment in the
business. Our profit before tax margin
of 11.8% (FY22: 13.5%3) was robust,
demonstrating the underlying resilience
of the business and tight operational
controls.

Dividends
Consistent and strong cash generation
remains an impressive quality of
Dunelm’s business model. This year,
the Board has proposed a final ordinary
dividend of 27 pence per share,
reflecting our strong profitability and
ongoing confidence in the business.

The last year has undoubtedly been
challenging for UK consumers and
businesses alike. I have been hugely
impressed by the energy and
enthusiasm with which our team
has approached these challenges.

1 For statutory purposes FY22 included a 53rd week. Sales growth shown is on a

comparable 52-week basis. On a 53-week basis sales growth was 4%.

2 GlobalData UK combined homewares and furniture markets, excluding kitchen and
bathroom furniture. Market share for the period July 2022 to June 2023 was 7.2%.

3 For statutory purposes FY22 included a 53rd week. FY22 PBT and PBT margin are

shown on a comparable 52-week basis. On a 53-week basis FY22 PBT was £213m and
PBT margin was 13.5%.

Dunelm Group plc Annual Report and Accounts 2023

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This brings the full-year ordinary
dividend to 42 pence per share, an
increase of 5% and within the range of
1.75x to 2.25x dividend cover4 stated in
our capital and dividend policy. We also
paid a special dividend of 40 pence per
share in April. In all, we returned £163m
of cash in dividends during the year.

We have now returned more than
£1bn5 to shareholders in the last ten
years, demonstrating our consistent
performance and highly cash
generative business model.

Doing the right thing
We build sustainability into all that we
do, embedding a long-term mindset
of doing the right thing through our
decisions and processes, with a view to
delivering for all our stakeholders. You
will be able to read more detail in our
upcoming 2023 Sustainability Report
about our progress, objectives and
future plans.

We strive to achieve product
mastery across our categories, which
increasingly involves innovation to
make our products more sustainable.
A fantastic example of this is Conscious
Choice, a label we introduced in 2022
to showcase own brand products that
are made from at least 50% (by weight)
more sustainable materials than their
comparable alternatives. Conscious
Choice options now account for c.15%
of own brand products across our
categories and we have plans to
expand this further.

We are also working in our stores
and supply chain to reduce carbon
emissions, continuing to replace gas
fired heating equipment, putting in
place energy management systems,
and starting to use vehicles powered
by more sustainable fuel, including
electricity and compressed natural gas,
in our distribution fleet. As a result, we
have seen a further reduction in Scope 1
carbon intensity, ahead of our targets.

Combining sustainability with customer
engagement in our communities is
another positive way in which we
reduce our impact on the planet,
working towards circularity. We now
offer a textiles take-back service in the

majority of our stores, with over 70
tonnes per month of materials being
returned by our customers. As we
move towards product circularity, we
extended the impact of this scheme by
working with one of our suppliers to
turn these recycled textiles, along with
other recycled fibres, into products
for our new ‘Remade’ range. This year
we have also trialled a new Home to
Home initiative, which rehouses our
customers’ pre-loved homewares.

We are still at an early stage in our
sustainability journey, and recognise
there is much more to do, but we are
pleased with the progress being made
and the commitment from colleagues
across the business in this important area.

Board
I was delighted to join the Board as
Chair Designate last September and
take on the role of Chair in January.
I am very pleased with the diverse
experience we have across both our
Executive and Non-Executive Directors
and how this continues to contribute to
our performance.

I would like to thank and congratulate
Andy Harrison, who stepped down
as Chair in January having joined the
Board in 2014. Andy oversaw a period
of growth, particularly in organisational
capability, which left a very strong base
from which we can build going forward.

Seizing the opportunity
I am proud of what the business has
achieved in my first year, and also of its
aspirations for the future. We are very
mindful that the consumer environment
remains challenging and uncertain in
the near term. With the support of our
brilliant colleagues, we believe that
we are well positioned to seize the
opportunity to bring value and joy to
our growing base of customers across
our total retail system. As has been
the case throughout Dunelm’s history,
we will continue to invest wisely and
to deliver for all our stakeholders, in
order to keep growing the business
sustainably, for the long term.

Alison Brittain
Chair
20 September 2023

4 Dividend cover is calculated as earnings per share divided by the total ordinary dividend relating to the

financial year.

5 Ordinary dividends plus special dividends plus special distributions.

First impressions
I have long been a Dunelm
customer and in that capacity
I had a great deal of affection
and admiration for the business.
Having joined the Board last
year, I thought it would be
useful to share some of
my early reflections.

One of my immediate impressions
is of being hugely impressed
by the strong culture within the
business. Dunelm is a company
that truly stands by its values:
stronger together; keep listening
and learning; act like owners;
and long-term thinking. We
have a team of highly motivated
colleagues who show great
commitment to the Company
and its purpose.

The ambition of the Company
and our colleagues continues
to impress me. Dunelm has
consistently grown throughout its
history, and there is huge appetite
for that to continue, both through
our store channels and also by
improving our digital offering to
fully take advantage of our total
retail system. This also extends
to continuously raising the bar
on our product ranges, aiming
to offer customers outstanding
value products at all price points,
with the best designs, materials
and sustainability credentials.
The team here are rightly proud
of Dunelm’s heritage, while also
being focused on looking forward
and continuously improving how
we deliver for customers.

Finally, the Company and the
management team strive for
Dunelm to be a force for good.
Our values are incredibly
important to us, and while it is
vital that we continue to grow
profitably, the team prides itself
on running an organisation that
makes a positive contribution
for its stakeholders. I feel very
proud to be a part of the Dunelm
team and am excited as we look
forward to further progress in the
years to come.

Dunelm Group plc Annual Report and Accounts 2023

MARKET REVIEW

The UK’s market leader
in homewares...

We are the UK’s market leader in homewares, with a
specialist offering for customers across our much-loved
superstores and digital platform dunelm.com.

Where we are today

Homewares market

Furniture market

Combined market

11.0%

FY23 homewares
market share1
+70bps

2.0%

FY23 furniture
market share1
Unchanged

7.2%

FY23 combined
market share1
+40bps

36%

Digital share
of total sales

1 GlobalData UK homewares and furniture markets, July 2022 to
June 2023. Furniture excludes kitchen and bathroom furniture.

The customer
opportunity

During the year we updated
our research into consumers’
attitudes to the home and home
shopping, giving us much deeper
insight into our most valuable
customers to support our next
phase of growth.

Overall four key themes have
emerged which are helping us
seize the opportunity to acquire
and serve more customers:

Varied attitudes
to home
Focus on the home continues to
be high, but for different reasons:
style, sanctuary, entertainment
and family vary widely in
importance for different groups.

Differing perceptions
of value
Value is important for all, but
there are increasingly differing
perceptions on price, quality
and use of credit in the current
environment.

Gaps in brand
awareness
Dunelm brand awareness still
under-indexes in London and
amongst younger age groups.

Under-appreciation
of category breadth
Dunelm is well-loved, but often
across a limited part of the range,
even for customers with high
brand awareness.

Dunelm Group plc Annual Report and Accounts 2023

...with an exciting
runway for growth

We have a significant opportunity to continue growing
our share of all sub-categories of the highly
fragmented homewares and furniture markets.

Dunelm market share by category2

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20%

10%

Furniture

Homewares

We operate in the large homewares
and furniture markets, with a
combined size of c.£24bn1. Each of
these markets comprises a significant
number of sub-categories, often
with different and fragmented
competitors, in which we currently
have varying levels of market share.
We believe we have a significant
runway for further growth, and
that through our entrepreneurial
approach of testing and learning,
we can grow share in all these
categories.

c.2%
Share
c.£9bn
Market

≤5%

Share
c.£6bn
Market

c.10%
Share
c.£3bn
Market

>11%
Share
c.£5bn
Market

2 Each bar represents a Dunelm homewares

or furniture category which in total represent
c.80% of total sales, mapped to GlobalData
market sizes for the period January 2022
to December 2022. Excludes certain
Dunelm categories which are not part of the
GlobalData homewares and furniture markets
e.g. rugs. The furniture market excludes
kitchen and bathroom furniture.

The market
opportunity

Even in our most established categories
we have the opportunity to grow our
share despite being market leaders.
We will optimise our ranges through
product innovation, including offering
more sustainable options and making
our customers’ shopping experiences
easier and more convenient.

We also have an opportunity to gain
share in the remaining homewares
categories, where we are currently
less well established, by developing
our product mastery. We are
confident that our relatively lower
product maturity gives significant
headroom for further growth and
share gain.

Whilst we have grown our share of the
furniture market in recent years, our
overall share remains low, presenting a
substantial opportunity for growth. We
have been building a stronger customer
offer and operating model to help
realise this opportunity.

Dunelm Group plc Annual Report and Accounts 2023

BUSINESS MODEL

How we generate sustainable value
for all stakeholders

Our long-term
thinking
We remain ambitious about
being a good company
that focuses on growing
sustainably. This means
adopting a culture of making
decisions for the long term
to create enduring financial
and social value for our
stakeholders, while reducing
our environmental impacts.

Our customer proposition

We will deliver our purpose by being Customer 1st; striving to improve our
offer for savvy home-lover customers.

Value &
choice
Great product
quality & style
for every
budget

Fast &
convenient
Everything easy
to find, buy & use

Read more in our CEO’s review on page 13.

Friendly &
expert
Service that is
non-judgemental &
knowledgeable

Good &
circular
Positive choices
for people &
the environment

Stakeholder value creation

Customers

Colleagues

Communities

Improving our in-store and digital
services and experiences to raise
the bar on our customer offer and
deliver value and joy.

2.8%1

growth in active
customer numbers

Ongoing investment in social
and financial wellbeing,
communication, diversity, equality
and opportunities to learn in
an ambitious and inclusive
organisation.

82%

participation in
our latest colleague
engagement survey

Creating mutual benefits by
expanding our community
communications, social media
interactions and meaningful local
fundraising initiatives.

61%

own brand products available
for take-back service

1 Growth in unique active customers who have transacted at least once in the 12 months to June 2023. Management estimates using Barclays data.

Dunelm Group plc Annual Report and Accounts 2023

Customer 1st
Our competitive advantages

We have an advantaged business model which helps set us apart from others
in a competitive and fragmented UK homewares market.

Well-known brand
with broad appeal
Our brand is ambitious and
inclusive, appealing to a
broad range of home-lover
customers across different
regions, ages and incomes.

Product mastery
credentials
We design and develop the
majority of our products in-
house, allowing us to offer
relevant and curated ranges
and to adapt quickly to
the changing needs of
our customers.

Strong colleague
culture
Our friendly and
knowledgeable colleagues
are the heart of our
business, driven by our
purpose and shared values
to create an environment
for all to thrive.

Financial strength
We have a highly cash-
generative model and
our deep-rooted founder
mentality keeps us
focused on operational
grip to deliver sustainable
profitable growth.

Runway for growth
We have a relatively small
share of large, fragmented
markets and are confident
of the very significant
opportunities for us to gain
further share to support our
growth ambitions.

Cost-effective total
retail system
Our total retail system
offers customers the
combination of enjoying
friendly service in stores
with the convenience of our
digital channels. Our low-
cost (mainly leased) store
portfolio is complemented
by a maturing digital
channel, allowing us to
benefit from a cost-effective
total retail system.

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Doing the
right thing
We aim to think and operate
in a responsible, sustainable
and ethical way – taking
decisions while evaluating the
risks and opportunities that our
actions might have on our
colleagues, the planet, and
other stakeholders; and doing
the right thing to support the
relationships that we need
for long-term growth.

Read more in our sustainability
section on page 26 and online in
our Sustainability Report 2023.

Read more about stakeholder
engagement on page 30.

Suppliers

Planet

Shareholders

Strengthening engagement to
promote long-term relationships,
based on integrity and
transparency, that are focused
on social, environmental and
product quality standards.

Target-setting and actions to
reduce carbon emissions across
our operations and supply chain,
with increasing focus on the use
of more sustainable materials.

Timely and transparent financial
and ESG communication to
optimise capital allocation
decisions while remaining
focused on financial discipline
and performance.

99%

invoices paid
on time

32%

reduction in Scope 1
carbon intensity since FY19

£163m

total dividends
paid in the year

Dunelm Group plc Annual Report and Accounts 2023

OUR STRATEGY

How we will seize the opportunity

Our vision is to build the UK’s
most trusted and valuable brand
for homewares and furniture.
We are focused on continuing
to deliver sustainable, profitable
growth to create value for our
stakeholders and see a clear
runway for further growth.

Our Customer 1st proposition
remains at the heart of the
business and our ability to deliver
is powered by three core strategic
drivers which underpin our plans.

Aligned with these drivers is our
ambition to be a good company
and build sustainability into all that
we do. We also continue to invest
in digitalising and developing
our foundations to improve our
customer offer and make our
operations more efficient.

Product mastery

Product mastery encapsulates the deep expertise we
are developing across our categories, from creative
design to responsible sourcing via our committed
supplier partners.

We are passionate about offering our customers
outstanding value and quality for every space, style
and budget. With the majority of our products
being own brand and exclusive ranges, we are
innovative and agile in our product development,
working closely with our suppliers. This allows us to
create product ranges which excite our customers
whilst meeting our exacting quality, ethical and
environmental standards.

c.15%

of own brand product range
by stock-keeping unit (SKU)
branded Conscious Choice1

c.20,000

new products added to our online
range, giving customers even
more choice

Generating

value…

We work hard to operate an effective and efficient
business model, harnessing the talents of our colleagues
and combining these with technology to improve our
offer. This facilitates our relentless focus on offering
outstanding value and quality across our product range.
Read more about how we are generating
value in our CEO’s review on page 13.

1 To be part of our Conscious Choice range, every product must be made from at least
50% more sustainable materials (by weight) compared to conventional alternatives.

Dunelm Group plc Annual Report and Accounts 2023

Total retail system

Our thriving total retail system combines the advantages
of physical and digital retail in a seamless offer which gives
choice to our customers in how they shop.

We continue to invest in technology to power this system
and empower our colleagues. Digitalisation encompasses
everything from improving our shopping experience, to
increasing operational productivity, to leveraging data and
insights to refine our proposition.

82%

our highest-ever
participation rate in our
colleague engagement
survey

Our total retail system is people-led,
tech-powered, and efficient.

Brilliant
stores
serving
their local
communities

Digital
channels
optimised for
our customers

A marketing
ecosystem
to grow and
service our
audience

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36%

1.1m

Digital sales mix

community followers

Culture and identity

We have developed a strong culture as an ambitious
and inclusive organisation.

Maintaining the strength of our culture and identity is
essential to the long-term sustainability of our business.
Our shared values embody what we stand for – we remind
our long-standing colleagues of the importance of our values
and we instil these in new joiners. We are entrepreneurial,
inclusive, adaptable and resourceful in a workplace that
welcomes all.

...and joy

We are raising the bar on our proposition, with a
greater focus on bringing joy to more customers.
Joy comes in many forms, from providing a
non-judgemental, knowledgeable and friendly
service in store, to ensuring fast and convenient
home delivery solutions. Joy also comes through
offering more choices that are positive for
the environment, and more products with
personality, such as those found in our
Natural History Museum and Disney ranges.
Read more about how we are delivering
joy in our CEO’s review on page 13.

Dunelm Group plc Annual Report and Accounts 2023

HIGHLIGHTS

Performance summary 2023

Financial highlights
Total sales

£1,639m

£1,581m

£1,639m

£1,336m

Our FY23 focus areas
and what we achieved

Sustainability
• Launched and grew our Conscious Choice
range, which now makes up c.15% of own
brand products

• Launched ‘Remade’, our first step towards

product circularity using post-consumer waste
• Ongoing investment in our colleagues’ learning

and development

FY21

FY22

FY23

Profit before tax

Free cash flow

£193m

FY22: £213m

£160m

FY22: £153m

Digital sales mix

Gross margin

36%

FY22: 35%

Diluted earnings
per share

75.0p

FY22: 83.6p

50.1%

FY22: 51.2%

Ordinary dividends

42.0p

FY22: 40.0p

Operational highlights

Active customer
growth

+2.8%1

FY22: +8.5%

Market
share

7.2%2

FY22: 6.8%

1 Growth in unique active customers who have transacted at least once

in the 12 months to June 2023. Management estimates using
Barclays data.

2 GlobalData UK homewares and furniture markets, July 2022 to
June 2023. Furniture excludes kitchen and bathroom furniture.

Read more in the Alternative Performance Measures table
on page 172.

Dunelm Group plc Annual Report and Accounts 2023

Product development
• Focused on innovative design to broaden

•
•

range and maintain value
Introduced c.20,000 additional products
Improved commercial support through
enhanced data management

Customer understanding
• Developed customer data platform
•

Improved understanding of cross-channel
profile matching

• Started leveraging data to improve our

‘single-customer’ view

Post-sales experience
• Shortened delivery lead times and reduced

•

‘split deliveries’
Improved tracking data and customer
communications

• Trialled parcel shop collections in London and

click and collect lockers

Data and insight
• Strengthened in-house skills and resource
• Enhanced data platforms and capabilities used

to optimise decision-making

• Evolved personalised customer marketing,

based on behavioural insight

Shopping experience
• Diversified payment options via new online

payment platform

• Trialled bookable consultations and live chat,

improving access to colleague expertise

• Upgraded store experience through ten refits
and three new stores (including relocations)

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CEO’S REVIEW

Seizing the opportunity, with
another record year of sales

Our FY23 focus areas

and what we achieved

We delivered another strong performance in FY23. In a difficult
environment for our customers, where cost-of-living pressures were
front and centre, we sharpened our focus on relevance and value.

I am very pleased by what we have
achieved in a trading environment
which continues to present a variety
of challenges. The macro-economic
backdrop during the year continued
to bring uncertainty for colleagues,
customers and suppliers, with high
levels of inflation presenting particular
headwinds. The adaptable approach
we have taken during the last few years
continues to serve us well: executing
successfully by pulling the levers within
our control, and maintaining good
operational grip. This has allowed us to
deliver strong results for all stakeholders,
grow market share, and also given us
the ability to keep investing for the
future, so that we can seize the multiple
opportunities ahead of us.

Whether developing our proposition,
strengthening our relationships,
improving our operations or serving
our customers, it is the work of
every colleague in Dunelm and our
partners that makes this happen.
For contributing their knowledge,
personality, commitment and
enthusiasm, I would like to sincerely
thank all of my colleagues. Together,
we are creating an ever more inclusive
workplace which, alongside our shared
values, is driving performance.

FY23 Review
A strong performance with
relevance and value at its core
We delivered another strong
performance in FY23. In a difficult
environment for our customers, where
cost-of-living pressures were front and
centre, we sharpened our focus on
relevance and value. In the first half of
the year we were able to offer customers
products such as heated clothes airers
and thermal curtains to help them keep
warm and manage their budgets when
energy costs were at their highest. We
continually adapt and evolve our product
range, and our offer was just as relevant in
the second half of the year, when seasonal
items such as garden furniture and
decorations proved appealing.

Total sales growth

+6%

(Comparable 52-week basis)

Market share gains

+40bps

(Combined homewares and
furniture markets)

Nick Wilkinson
Chief Executive
Officer

Dunelm Group plc Annual Report and Accounts 2023

CEO’S REVIEW

The expansion of our range to
approximately 70,000 product
lines allows us to meet more of our
customers’ needs for their homes,
and our relentless focus on offering
outstanding value has remained as
sharp as ever across all price points.
A good example of this during the
period was quickly reducing prices to
pass freight cost savings back to our
customers, with over 1,000 product
lines dropping in price in the spring.

By keeping relevance and value at the
heart of our proposition, total sales
grew by 6% against the comparable
52-week period in FY22 (which also
included a particularly strong Q1 as
Covid restrictions eased). Total sales
were 49% higher than FY19 (the last full
year uninterrupted by the pandemic).
Compared to FY22, we had 2.8% more
active customers1 and our market
share in the combined homewares and
furniture markets increased by 40bps
in challenging market conditions2.

Gross margin of 50.1% (FY22: 51.2%3)
was tightly managed through the year
and we stayed true to our principle of
instilling operational grip across the
business. We saw more normalised
customer behaviour during our Sale
events and carefully balanced the
impact of higher cost prices with our
commitment to value. This resulted in
a robust PBT performance of £193m
(FY22: £209m on a comparable 52-
week basis), which was pleasing given
the tough backdrop and reflected
both tight control of margin amidst
inflation in our operating costs and
our ongoing commitment to investment
for the future.

We generated strong free cash flow of
£160m (FY22: £153m), allowing us to
declare a final dividend of 27p, bringing
the total ordinary dividend for the
year to 42p, a year-on-year increase
of 5%, reflecting our confidence in the
future performance of the business.
We returned a total of £163m to
shareholders during the year, including

a special dividend of 40p declared at
the interim results. This brings the total
returned to shareholders over the last
decade to over £1bn4.

Delivering for all our
stakeholders
We try to make decisions based on
the needs and expectations of our key
stakeholders and are guided by our
shared values.

Our committed colleagues are at the
heart of our business. We understand
that the current environment is difficult
for many of them, so during the year
we increased our support on financial
wellbeing, with progressive pay
increases, additional support funds and
advice on a range of financial matters.
We have also invested in learning and
development opportunities to promote
a ‘learning for life’ mindset to help
colleagues to develop their careers.
This continued focus on colleague
development saw us retain 87% of our
colleagues through the year5. Listening
and learning is one of our shared
values and we undertake a twice-yearly
colleague survey. In FY23, we upgraded
our colleague engagement platform,
making it two-way and encouraging
colleagues to give direct feedback to
their line managers. We achieved a
participation rate of 82%, making it our
most comprehensive survey to date and
enabling us to achieve a deeper level of
understanding of our colleagues and to
take more targeted action.

We relentlessly strive to improve our
customer proposition. Product mastery
across our broad range of categories
ensures that our offer remains relevant
throughout the year, and that we are
offering quality and value at every price
tier. We also continued to develop
our digital channels, giving customers
even more choice by adding c.20,000
lines to our website, and by enabling a
more convenient experience with new
payment options such as Apple Pay
and Klarna.

We deepened our relationships with
customers in our store communities
with membership of our local Facebook
groups increasing to over 1.1 million.
Our Christmas ‘Delivering Joy’
campaign was our most successful ever,
with a threefold increase in the number
of gifts donated compared to FY22.
We significantly increased our charity
fundraising with our customers and
colleagues helping to raise over £800k,
of which over £700k was donated to our
charity partner, Mind.

We have always built long-term
relationships with our suppliers and
are committed to offering them a
strong partnership based on mutual
growth and respect. Together we are
growing our shared knowledge on
topics like supply chain technology and
sustainability, including the use
of sustainably sourced cotton.

As we learn more about how to reduce
our impact on the planet, progress on
our Pathway to Zero6 plan continues.
We are making good progress on
reducing our carbon emissions, with our
decarbonisation programme in stores
contributing to a further reduction in
Scope 1 carbon intensity this year. We
are also transitioning our company car
fleet to hybrid or electric vehicles. We
extended our Conscious Choice ranges,
which are made from more sustainable
materials, to c.15% of our own brand
range. We launched our first ‘Remade’
products, using materials including those
from our take-back schemes, our first
step towards product circularity. During
FY23 we moved our environmental
accreditation to Better Cotton, who
are industry leaders in this area. As a
result this was a year of transition during
which we did not achieve our target. We
expect to see a significant improvement
in FY24 as we complete our transition
and remain committed to sourcing
c.100% more responsible cotton by
2025. Finally, we have now reduced our
use of virgin plastic packaging by 36%
compared to FY20 by both reducing the
amount of packaging we are using and
increasing the recycled content.

1 Growth in unique active customers who have transacted at least once in the 12 months to June 2023. Management estimates using Barclays data.

2 GlobalData UK combined homewares and furniture markets, excluding kitchen and bathroom furniture. Market share for the period July 2022 to June 2023 was 7.2%.

3 For statutory purposes FY22 included a 53rd week. Gross margin is shown on a comparable 52-week basis. On a 53-week basis FY22 gross margin was 51.2%.

4 Ordinary dividends plus special dividends plus special distributions.

5 Retention is the percentage of colleagues from the start of the financial year (July 2022) who remained employed until the end of the financial year (June 2023),

excluding any planned leavers.

6 Our Pathway to Zero commitments are described in more detail in the sustainability section of our corporate website at https://corporate.dunelm.com/sustainability.

Dunelm Group plc Annual Report and Accounts 2023

During the year, we submitted our
targets to the Science Based Targets
initiative (SBTi) and were pleased to
receive confirmation, after the year
end, that our near-term and net-zero
targets have been approved by the
SBTi7. This will see Dunelm align to
the latest climate science from the
Intergovernmental Panel on Climate
Change (IPCC) by limiting the global
temperature rise to 1.5°C.

Seizing the opportunity
We are excited and ambitious about
seizing the opportunity ahead of
us to continue to grow sustainably.
Throughout our history, we have had
a strong track record of growing sales
and market share, both in buoyant
markets and in more challenging
conditions. Since our IPO in 2006, our
sales have increased by a compound

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annual growth rate of 10%, and in
the last ten years more than 85% of
this growth has been through market
share gains. In the last year, despite
consumers being under considerable
pressure, we continued to grow our
sales while the overall homewares
market remained broadly flat, reflecting
the gains we made in market share.

Whilst we are the homewares market
leader, we still hold only a c.7% share of
the UK homewares and furniture market
that is worth a total of c.£24bn2. This
significant market is highly fragmented,
giving us the opportunity to serve
many different product categories and
multiple customer missions. Our most
established categories have higher
market shares, which we are confident
of growing further still; at the same time
we have an opportunity to increase our

share in those more nascent categories
where we are currently less well
established.

We are developing and implementing
our plans at a time when consumer
interest in the home remains high
despite cost-of-living pressures.
Customers are seeking propositions
that meet their ever-evolving emotional
and functional needs. Multi-channel
shopping is now fully established in
homewares, and those businesses that
have an effective total retail system
with seamless integration between
their online and store channels, as we
do, have a clear advantage. We have a
strategic plan which will enable us to
capitalise on all of these themes and
seize the opportunity for sustainable
growth. I give an update below on some
of our key priorities.

We will deliver our purpose by being Customer 1st, striving
to improve our offer for savvy home-lover customers.
By focusing on our proposition to deliver more value and joy to our customers, we are confident in our plans
to continue growing our sales and gaining market share.

Value & choice
We will continue to offer
customers relevant products
with outstanding value and
choice. Every customer has
a different perception of
what value means to them
but we know our products
must be practical, attractive,
affordable and, increasingly,
offer a sustainable reason
to buy them.

Fast & convenient
We aim to provide an easy
and seamless online and
in-store customer shopping
and delivery experience –
personable, knowledgeable,
efficient and glitch-free from
start to finish. Information
about our products and their
attributes is transparent,
including how to care for
them and – if need be – how
to return them effortlessly.

Value & choice
Great product
quality & style
for every
budget

Friendly & expert
Service that is
non-judgemental &
knowledgeable

Fast &
convenient
Everything easy
to find, buy & use

Good &
circular
Positive choices
for people & the
environment

Friendly & expert
Whether in store, at the
end of a phone (or email) or
making a delivery to a home,
we train our colleagues to be
friendly and helpful (and track
how well our customers think
they do). Our investment in
technology and data gives
them additional tools to
advise on product choice and
availability more efficiently.

Good & circular
We are making it easier
for our customers to make
thoughtful choices by using
more sustainable materials,
by building circularity into
our product design and by
communicating these initiatives
more clearly to our customers.
This includes our commitment
to treating our own colleagues
and people in our supply chains
fairly and with respect.

7 Our targets approved by the SBTi are as follows. Overall Net-Zero Target: Dunelm Group PLC commits to reach net-zero greenhouse gas emissions across the

value chain by FY40 from a FY19 base year. Near-Term Targets: Dunelm Group PLC commits to reduce absolute Scopes 1 and 2 GHG emissions by 50% by FY30
from a FY19 base year. Dunelm Group PLC also commits to reduce absolute Scope 3 GHG emissions by 50% within the same timeframe. Long-Term Targets:
Dunelm commits to reduce absolute Scope 1, 2 and 3 GHG emissions by 90% by FY40 from a FY19 base year.

Dunelm Group plc Annual Report and Accounts 2023

Customer 1st

CEO’S REVIEW

A plan for
sustainable
growth
With our significant market share
runway and deep understanding
of our customers and product
categories, I have never been
more excited about our plans
for the future as we seize the
opportunity to:

Strengthen our
customer offer

Extend and digitalise
our total retail system

Evolve our marketing
ecosystem

Strengthening our
customer offer

We are constantly striving to improve all
parts of our customer offer; however we
are focusing our efforts in two particular
areas: offering outstanding value and
helping to deliver joy to our customers,
through our products, services and
customer experience.

Value
We work tirelessly on our range
architecture to offer customers value
at all price points. A good example of
this is in our range of Egyptian cotton
towels, where we held prices a year
ago despite cost prices increasing. At
the same time, we introduced a new
‘Super Soft’ range in our lowest priced
‘good’ quality tier. These initiatives
resulted in gains in our volume share
of the bathroom textiles category.

Seizing the opportunity to
strengthen our customer offer
We are constantly striving to improve all parts of our customer offer
but in two particular areas we are redoubling our efforts: offering
outstanding value and helping to deliver joy to our customers,
through our products, services and customer experiences.

Generating
value and joy

Sustainability
Introduced more
sustainable materials
while maintaining prices.

Price drops
Over 1,000 lines reduced
in the spring.

Curated range
growth
Increased range by
c.20,000 to c.70,000
product lines.

Innovation
New compositions
introduced in
cushions including
towelling, beading,
sequin embroidery
and wool blends.

Improving range
architecture
Held prices on Egyptian
cotton towels despite
cost price increases
whilst introducing new
‘good’ price point.

We also demonstrate value across
the range by reducing prices as input
costs fall. During the year we reduced
prices on a number of our furniture lines
and lowered prices on many products
across other categories in the spring.

For us, and for our customers, value
is equally important at higher price
tiers. We can see this in attitudes
towards product quality and also
towards sustainability. Where we have
introduced more sustainable materials
into many of our ranges we have
typically maintained, or even reduced,
retail prices. For example, we reduced
the price of our Dorma 300 thread
count fitted sheet whilst re-sourcing
to a more sustainable cotton, and our
Teddy throws are now made from
recycled polyester at no extra cost to
our customers. We also extended the
higher quality tiers in our cushions
category, with new compositions using
beading, sequin embroidery and wool
blends, all hand-crafted in India. These
new and innovative designs enabled
us to stretch our price points while
continuing to offer outstanding value
for money.

As we grow our offer into new areas,
we remain highly focused on ensuring
value at all price points, even within
more nascent categories. We have
increased our curated range by
approximately 20,000 products in the
last year with the same product quality
and price focus. We will continue to
grow our ranges in this way, with further
additions in categories such as nursery
furniture and live plants.

Joy
Alongside outstanding value, we are
equally focused on delivering joy for our
customers. While shoppers will work
hard to be savvy, looking for ways to

Extended
guarantees
Our Egyptian cotton towel
collection uses more
responsibly sourced cotton
and comes with a five-year
guarantee.

Dunelm Group plc Annual Report and Accounts 2023

save and balancing price and quality to
meet their budget, they are also looking
for their experiences and purchases to
bring them joy.

Our efforts to deliver this are reflected
in how we talk to customers in store
(we track ‘fast’ and ‘friendly’ feedback
scores for every shop), how our
marketing content does not take itself
too seriously, and by the selection of
food and offers in our Pausa cafes (for
example the giant coronation jammy
dodgers). However, we also offer joy in
our product development, in a way that
few other product companies would do.
One way to bring joy is through colour,
which we have embraced in our new
‘pride and joy’ collections for autumn/
winter 2023. We have also extended our
collaboration with the Natural History
Museum to bring customers products
with personality, and grown our Disney
ranges, introducing Mickey Mouse
designs across a number of categories.

The joy of products also requires
us to ensure our customers have a
high-quality shopping experience,
so reducing disappointment when
something goes wrong is also a focus.
We are growing our home delivery
perfect order rates, shortening
lead-times, and resolving problems
efficiently when things do not go as
planned.

Extending and digitalising
our total retail system
One of the key advantages of our
business model is what we call our
total retail system, which combines
the benefits of physical stores with the
convenience of online shopping, and
the reach of our marketing ecosystem.
Whilst digital sales have increased
in recent years (now accounting for
36% of total sales) our stores remain
fundamental to our success, not least
by fulfilling an increasingly important
role in marketing to, and being a part of,
their local communities.

We have continued to expand our store
estate, with three new openings last
year and our 180th store in Greenwich,
south-east London, opening after the
year end. The ongoing programme
to refit our older stores to the latest
standards for store environment
and layout also continues with good

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paybacks. The success of our recent
openings and attractive return on
investment is encouraging, and we see
opportunity to double the run rate of
new (or relocated) stores in the next
two years.

our online offer and driving local
customer awareness to enable us to
benefit fully from our total retail system.
We will continue to apply our usual
discipline and tight operational grip to
these investments.

The typical Dunelm superstore
has approximately 30,000 sq ft of
trading space (including a 10,000 sq
ft mezzanine floor) in an out-of-town
location. We are delighted with the
returns we generate on stores like
these, Weymouth being a recent
example. In recent years we have
opened four smaller stores, averaging
c.15,000 sq ft, and two town-centre
locations of around 30,000 sq ft. We are
seeing the same good returns across all
these openings, with payback periods
averaging under three years.

With better data and insights to
support location planning for new store
selection, we now expect to open five
to ten new stores (including relocations)
in each of the next two years. These are
full-service Dunelm stores, amplifying

At the same time, we continue to
digitalise our total retail system
to improve our customer offer
and increase the efficiency of our
operations. In the last six months we
have been able to offer customers more
convenient payment options such as
Klarna, shortened lead times through
weekend deliveries and improved
our communications with customers.
In addition to these improvements to
our customer offer, we have begun
to roll out new product master data
management tools which will deliver
benefits across our operations, and
our suppliers. Our new ChatBot has
automated some post-sale service
communications, enabling more
customers to self-serve.

Seizing the opportunity to extend
and digitalise our total retail system
One of the key advantages of our business model is what we call our total
retail system, combining the benefits of physical stores with the convenience
of online shopping, and the reach of our marketing ecosystem. At the same
time, we continue to digitalise our total retail system to improve our customer
offer and increase the efficiency of our operations.

Accelerating openings: Superstore openings since FY19

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FY19

FY24 H1

Typical superstore

In-town superstore

Smaller superstore

Recent store openings, outside of our traditional size and location criteria,
have demonstrated strong payback. For each of the next two years we
expect to accelerate openings to five to ten new (or relocated) stores.

Dunelm Group plc Annual Report and Accounts 2023

CEO’S REVIEW

Over the next 12 months we will further
improve our website experience by
using new search tools, introducing
faster site architecture and increasing
the options for delivery of furniture
items. We will continue to expand
our product offer, with new ranges
and made-to-measure categories as
well as launching further convenient
payment options such as long-term
credit. To improve the efficiency of our
operations, we will launch new tools
for forecasting and replenishment and
improve the management of stock in
our warehouses, with both of these
initiatives also increasing availability for
our customers. We will also increase
our personalised communication with
customers, which we describe in more
detail below.

Evolving our marketing
ecosystem

During the year we deepened our
understanding of consumer attitudes to
the home and home shopping, giving
us greater insight into the customer
opportunity for our next phase of
growth. Comprehensive research
has allowed us to better understand
the attitudes of existing and target
customers. For example, whilst home
continues be a strong focus for many
households, motivators can be very
different, with home variously an
expression of personal style, a place of
sanctuary, an opportunity to socialise,
and a place to spend time with family.
The opportunity is to reach target
customers with more tailored and
personalised messages which appeal
to these motivators. At the same time,
growing awareness of the breadth of
our category offer will attract both new
customers and increase the shopping
frequency of existing ones.

At present, Dunelm is typically only top
of mind (1st, 2nd or 3rd mention) for
around half of the product categories
we offer, demonstrating the breadth of
the opportunity.

We can reach these target audiences
more effectively through our ever-
evolving marketing ecosystem. We
continue to make progress towards
a single combined view of our store
and online customers, with our online
payments system to be rolled out to
stores in the first half of this financial
year. In the meantime we have a
significant database of online customers
and those store customers who have
provided an email address. We are
combining data from multiple sources,
including demographics and previous
purchasing behaviour, to begin a more
targeted and personalised level of
marketing, including optimising the
timing of customer communications
and customer-specific product
recommendations within
marketing emails.

We are also testing a more customised
website, where paid search will lead to
a personalised dunelm.com landing
page with a greater range of options
beyond the specifically searched-for
product. This activity is at an early stage
and being approached with our usual
test and learn mindset, but we believe it
provides exciting opportunities for
a better customer experience and
future growth.

At the same time we continue to develop
the effectiveness of our paid marketing
channels and have now performed
testing on the effectiveness of most of
our brand and performance marketing
spend. Tests conducted in the year have
given us the confidence to increase
our brand marketing investment. Our
new brand campaign is launching this
autumn and is our most ambitious ever.

Seizing the opportunity to
evolve our marketing ecosystem
During the year we deepened our understanding of consumer attitudes to
the home and home shopping, giving us greater insight into the customer
opportunity for our next phase of growth. We can reach these target
audiences more effectively through our ever-evolving marketing ecosystem.

Personalisation presents
an exciting opportunity
to improve our customer
proposition and drive
profitable growth.

New brand campaign
launches this autumn to
extend our reach.

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Dunelm Group plc Annual Report and Accounts 2023

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Summary and Outlook
We delivered another strong
performance in FY23 in a challenging
environment. We continued to think
long term and invest for the future while
delivering a strong performance
for our stakeholders. Record sales,
continued growth in market share and
customer numbers, and good strategic
progress were underpinned by our
tight operational grip on gross margin
and costs.

Consumers are still responding to their
own cost-of-living pressures and there
remains uncertainty as to what this
means for discretionary spend. Against
this backdrop we remain focused on our
proposition and ensuring our customer
offer is as relevant as ever. In that
context, we are pleased with trading
early in the new financial year.

We have a clear plan for sustainable
growth and the work we are doing to
strengthen our customer offer, extend
and digitalise our total retail system and
evolve our marketing ecosystem leave
us well positioned to capitalise on the
opportunities available for our business.
We have never been more confident
about our short, medium and long-term
prospects and will therefore continue
to invest where we see good returns,
including in accelerating our store
estate growth.

We are excited to continue to deliver
our strong performance record in the
year ahead.

Nick Wilkinson
Chief Executive Officer
20 September 2023

50% recycled
plastic from Plastic Bank® is
used to make the Quallofil®
Blue fibre seat filling in our
Marlow armchair. The chairs
also have recyclable feet
and frames.

Building sustainability into all that we do
We strive to make decisions that
assortment, made of materials
are guided by our purpose and
coming from pre-loved textiles
underpinned by our shared values
such as those generated from our
that create value for our stakeholders
take-back scheme. This initiative
in a balanced and ethical way. We
reflects our commitment to and first
are becoming bolder in delivering
step towards product circularity, by
meaningful initiatives across the
recycling returned materials and
business to build sustainability
developing products from end-of-
into all that we do.
life items.

Our Conscious Choice range
continues to expand. To qualify
for this range, each product
must be made from at least 50%
more sustainable materials (by
weight) compared to conventional
alternatives. Conscious Choice
options now represent c.15% of
our own brand product ranges
and we are working on further
category extensions. We have been
introducing recycled materials
into our textiles ranges using, for
example, recycled polyester in
cushion fillings and bedding ranges.
We are equally excited by the
opportunities for further product
differentiation in our non-textiles
range, by using materials that are
less carbon-hungry (such as recycled
steel and aluminium) in saucepans
and lighting. Our goal is to launch
these products at competitive price
points, as we believe sustainability
should be accessible to all. We take
a holistic approach to achieving
this – for example, in the design of
packaging to reduce transport costs,
waste disposal costs and (in the
case of plastic packaging) tax.

Our nationwide textiles take-
back scheme continues to gain
momentum. In February 2023, we
launched a new product range called
‘Remade’ in our Conscious Choice

We ‘do the right thing’ by looking
after our colleagues – we support
their mental and financial wellbeing,
invest in learning and training
opportunities and aim to make
them feel ‘at home’ in a diverse
and inclusive workplace.

We continue to support our
store communities through local
fundraising initiatives and by
opening up our retail and cafe
spaces to community groups and
small businesses. We trialled a
successful summer ‘Delivering Joy’
campaign on the back of our popular
winter events and we are looking at
how we can create wider social value
in our communities.

Finally, we do all the above in
an ethical and responsible way,
keeping our house in order through
mandatory training in responsible
business conduct (including product
safety protocols, anti-bribery,
prevention of modern day slavery,
data protection and responsible
marketing and communications),
and by promoting (and auditing)
responsible supply chain practices.

For more information, see page 26
and online in our Sustainability
Report 2023.

Dunelm Group plc Annual Report and Accounts 2023

KEY PERFORMANCE INDICATORS

Measuring our progress

The Board uses a range of financial and non-financial key performance indicators (KPIs) to measure overall Group
performance and progress against our strategic priorities and to determine CEO and CFO remuneration.

Non-financial
Employee net promoter score (eNPS)
Year-on-year improvement %pts

–5%pts

+9%

+1%

-5%

Scope 1 intensity reduction1
Reduction versus base year and Scope 1
tCO2e/£1m Group revenue

Reduction in virgin plastic packaging
of own brand products (by weight
per £1 sales) versus base year1

–32%

LTIP

Base
year

-20%

-32%

–36%

LTIP

Base
year

-23%

-36%

2019 2020 2021 2022 2023

2019 2022 2023

2020 2022 2023

Listening and learning is one of our shared
values and we undertake an annual colleague
engagement survey to derive an eNPS
score. In FY23, we upgraded our colleague
engagement platform, allowing colleagues to
interact directly with their line managers. Our
year-on-year eNPS fell by 5%pts, returning to
its pre-pandemic high point. Participation was
particularly high at 82% (FY22: 78%) enabling
us to better understand our colleagues and to
take more targeted action.

Why this measure is important
This measure rates our colleagues’ experience
with us and the survey helps us understand
where we need to improve.

Scope
We compare results from the May survey
each year. However, due to Covid the May
2020 survey was postponed, and in FY20
we compared the November 2019 and
November 2018 surveys and in FY21, the
May 2021 and November 2019 surveys.

We continue to make good progress in reducing
our carbon intensity, with our decarbonisation
programme in stores contributing to a further
reduction in Scope 1 emissions this year. We are
also transitioning our company car fleet to hybrid or
electric vehicles. Since the year end we introduced
our first compressed natural gas vehicles in our
trunking network, helping us to continue to reduce
our carbon emissions in FY24.

Why this measure is important
This measure helps us to understand how
successful we are in reducing our impact on the
environment and achieving our long-term carbon
reduction targets.

Scope
This metric is for Scope 1 emissions only. Scope
2 emissions for FY23 are negligible due to the
purchase of renewable electricity. For further
details on all carbon emissions, see our TCFD
report on pages 40 to 47.

Percentage of own brand products
for which we offer an easy-to-use
take-back service1

Percentage of own brand cotton
products which meet our ‘More
Responsibly Sourced Cotton’ standard1,2

26%

LTIP

26%

2023

We have achieved a 36% reduction in virgin plastic
packaging in FY23 against our FY20 base. We have
both reduced the amount of packaging we are
using, for example by introducing thinner plastics
or alternative materials, and increased the recycled
content.

Why this measure is important
This measure helps us to understand how
successful we are in reducing our impact on the
environment by reducing the amount of virgin
plastic in our packaging.

Scope
This metric includes all plastic product packaging
for own brand products (primary packaging) plus
sales packaging (in-store carrier bags and home
delivery packaging). Plastic that has a recycled
content greater than 30% is classed as non-virgin
plastic. All plastic packaging weights for the FY20
baseline and for Q1–Q3 for FY22 were assumed to
be virgin plastic. Recycled % was incorporated into
the calculation from Q4 FY22 following improved
availability of data.

Ethnic diversity of our role-model
leaders New
% of role-model leaders from an ethnically
diverse background

3.8%

LTIP

3.8%

2023

During FY23, we moved our environmental
accreditation to Better Cotton, who are industry leaders
in this area. We remain committed to sourcing c.100%
more responsible cotton by 2025. However, FY23 was a
year of transition during which we were registering and
accrediting suppliers to Better Cotton. We expect to
see a significant improvement in FY24 as the remainder
of our suppliers complete this process and our new
approach is more established across our supply base.

Why this measure is important
There are both ethical and environmental
considerations with cotton production, which our ‘More
Responsibly Sourced Cotton’ standard addresses.

Scope
In FY23, we became Better Cotton members and
moved to their verification for our Spring/Summer
2023 products. As Autumn/Winter 2022 was a
transition season, these sales were excluded.
This approach is for FY23 only.

Whilst we believe our colleague base is
representative of wider society, our role-model
leaders do not currently show the same level of
representation.

Why this measure is important
At Dunelm we strive to be an inclusive
organisation. We believe that having a
colleague base that is representative of
wider society will ultimately lead to a better
proposition for our customers.

Scope
Our role-model leaders are defined as ‘Heads
of’ and above and include our regional and
store coaches. We currently have nearly 300
of these roles across the organisation and we
measure the proportion of these colleagues
that come from ethnically diverse backgrounds.

61% 61%

61%

LTIP

2022 2023

Our take-back service has continued to
prove popular with our customers in stores.
We are now collecting over 70 tonnes of
textiles per month and we improved our
collection and sorting processes during
the year to help with our journey towards
product circularity. During the year we also
trialled the take-back of other homewares
products in a selection of stores.

Why this measure is important
This measure supports our commitment to
move towards a circular economy, reduce
our impact on the environment and support
local communities.

Scope
This metric covers own brand products sold
in our stores.

1
2

Bases of reporting for these metrics are available at corporate.dunelm.com.
No comparative figures are presented for this KPI due to changes in the calculation methodology. For details, please refer to the basis of reporting documents at corporate.dunelm.com.

Dunelm Group plc Annual Report and Accounts 2023

Remuneration measures
Details of measures used for FY23 bonus and LTIP outcomes can be found on pages 105 to 107 of the Remuneration Report.
Further information on the performance criteria that apply to the FY24-26 LTIP award can be found on pages 115 to 116.

Bonus

LTIP

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Unique active customer growth
% growth

Financial
Total revenue
£m and growth %

Free cash flow
£m

+2.8%

26.3%

4.8%

18.4%

3.6%

£1,639m

-3.9%

1,581

1,639

1,336

1,100

1,058

Bonus

153

£160m

175

153 160

109

+12.2%

+8.3%

+8.5%

+3.8%

+2.8%

2019 2020 2021 2022 2023

We have grown our active customers by 2.8% as
we continued to attract new customers into our
stores and online during a challenging year. We
have seen broad based growth across age and
income groups as well as particularly strong
customer retention.

We achieved strong revenue growth of 3.6%
by offering customers relevant product
throughout the year, from items to help them
save on energy bills during the winter to
everyday essential items offering great value
for money.

Why this measure is important
We use this metric to measure the growth in
our active customer base and therefore our
ability to reach new customers. It is important
as it underpins our growth in sales. This
measure combines our active store and online
customers.

Scope
Growth in unique active customers who have
shopped in the last 12 months, based on
management estimates using Barclays data.

Why this measure is important
We use total revenue as an indicator of
how relevant we are to our customers, as it
demonstrates how successful we are at selling
the right products through the most convenient
channels.

Scope
FY22 included a 53rd week for statutory
reporting purposes. On a comparable 52-week
basis sales growth was 5.5%.

We remain a strongly cash generative business
with free cash flow of £160m. We converted 81% of
operating profit to free cash flow while continuing
to invest in new stores and refit activity.

Why this measure is important
Dunelm is highly cash generative. This measure
allows the Board to monitor cash flows to support
investment decisions for long-term profitability,
or to return surplus cash to shareholders.

Scope
Free cash flow is defined as net cash generated
from operating activities less capex (net of
disposals) and business combinations, net interest
paid (including leases) and loan transaction costs,
and repayment of lease liabilities. FY22 reflects
53 weeks of trading whereas all other years are
52 weeks.

Net promoter score (NPS)
Year-on-year improvement %pts

–0.9%pts

+1.8%

+4.2%

-4.2% -0.9%

Profit before tax
£m and % sales

13.5%

11.4%

11.8%

10.3%

213

193

158

126

109

£193m

Bonus

Diluted earnings per share
pence and growth %

46.6%

37.8%

32.9%

-10.3%

83.6

75.0

-14.0%

62.9

49.9

42.9

75.0p

LTIP

2019 2020 2021 2022 2023

NPS was relatively stable during FY23. We saw
similar or improved year-on-year scores in three
of the four quarters, with service in the second
quarter being impacted by exceptional demand
for our winter ranges.

Why this measure is important
The NPS metric is a common business tool that
measures how likely people would (or would
not) be to recommend a product, service or
company. At Dunelm we use this to measure
how our customers rate their full experience
with us.

Scope
We measure customer NPS across the different
channels that our customers shop with us and
the metric above is a weighted average.

Profit before tax (PBT) of £193m was 9.4% lower
than FY22, as expected, with FY22 benefitting
from an extra week of trading, an additional
Sale event and pent-up demand following the
final Covid lockdown. Gross margin was closer
to historical levels and we maintained tight
control of operating costs despite inflationary
pressures, particularly on wages.

Why this measure is important
PBT measures the overall financial performance
of the business, reflecting sales, gross margin
and cost control. It is also used as a key bonus
measure.

Scope
FY22 included a 53rd week for statutory
reporting purposes. On a comparable 52-week
basis PBT fell by 7.8% between FY22 and FY23.

Diluted earnings of 75.0p was 10.3% lower than
FY22 reflecting the lower profit before tax in the
year and an increase in the rate of corporation
tax.

Why this measure is important
Earnings per share is a key measure for
shareholders and one of the performance
criteria for awards under our LTIPs.

Scope
FY22 included a 53rd week for statutory
reporting purposes. On a comparable 52-week
basis EPS fell by 8.6% between FY22 and FY23.

Dunelm Group plc Annual Report and Accounts 2023

CFO’S REVIEW

Focus on delivering
outstanding value

We delivered another strong performance in FY23 with growth in sales, customer
numbers and market share, and tight operational grip. Our significant free cash
flow allowed us to return £163m to shareholders.

Total sales

£1.64bn

FY22: £1.58bn

Total ordinary dividend

42p

FY22: 40p

Total sales for the period to 1 July
2023 increased by 5.5% to £1,639m
on a comparable 52-week basis (FY22
52w: £1,553m, FY22 53w: £1,581m).
Compared to FY19 (the last fully
comparable year before the pandemic),
total sales grew by 49% (FY19: £1,100m).

We saw strong sales growth for
the year despite the challenging
market conditions and particularly
strong comparative in Q1 (due to our
rescheduled Summer Sale and pent-
up demand following the final Covid
related lockdown). We were pleased to
see growth increasingly from volume as
we progressed through the year. Sales
increased both in stores and online,
with digital sales now making up 36%
of total sales, up 16ppts since FY19.

Growth was broad based across
categories as we focused on relevance
and value throughout the year.
Customers enjoyed shopping our
Winter Warm ranges as they looked for
ways to mitigate rising heating costs.
Similarly, our Summer Living collections,
in particular garden furniture and
decorations, performed well in the
warmer weather towards the end of the
financial year. Our two main Sale events
also resonated with our home-loving
customers. We continued to improve
and expand our offering, adding 20,000
carefully curated products online while
extending our Conscious Choice range
of sustainability-focused lines.

We continued to focus on offering
outstanding value to our customers
across all our categories and price
points. As a result of our relentless focus
on value we were pleased to be able to
pass on cost savings from lower freight
rates and reduce prices on over 1,000
lines in the final quarter of the year.

Karen Witts
Chief Financial Officer

Dunelm Group plc Annual Report and Accounts 2023

Revenue

Total Group sales
Digital % total sales

Active customer growth1
Homewares market share2
Furniture market share2

FY23
(52 weeks)

YoY
(52w v 52w)

YoY
(52w v 53w)

£1,638.8m
36%

N/A
11.0%
2.0%

+5.5%
+1ppt

+2.8%
+70bps
+0bps

+3.6%
+1ppt

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Our broad product offer continues
to resonate well with our customers
and the number of active customers
increased by 2.8%1 in FY23, with an
increase in customer retention. We
were pleased to see higher growth in
the younger (16 to 24 years) and lower
income (<£20k) groups, reflecting our
growing appeal and focus on value.

We continued to gain market share,
with our sales growing year-on-year
and our share increasing by 40bps to
7.2%2 against a combined market for
furniture and homewares which was
broadly flat. We were pleased to grow
share in homewares by a further 70bps
to 11.0%2. Our market share in furniture,
where we have been building a stronger
customer offer and operating model,
was broadly flat. Sales across our
furniture categories increased by 4%
year-on-year, with a particularly strong
performance in upholstery ranges
being partly offset by lower sales in
cabinet categories.

Gross margin
Gross margin of 50.1% was in line with
expectations and 110bps lower than
last year (FY22 52w: 51.2%, FY22 53w:
51.2%), reflecting both a return to more
normal patterns of customer behaviour
in our Sale events as well as the impact
of higher input cost prices.

We have good visibility of FY24 input
costs. We plan our purchasing for
each season, which helps us manage
changes in raw material prices, freight
costs and foreign exchange within
our margin rates. Looking ahead, we
will continue to balance the impact of
these with our commitment to offering
outstanding value to our customers.

We expect a net tailwind from
these factors this year, as well as the
sustainable benefit from the operational

actions we have taken in recent years,
and therefore expect gross margin in
FY24 to be c.100bps higher than FY23.

Operating costs
Total operating costs were £622m
(FY22 52w: £582m, FY22 53w: £592m),
representing an operating cost:sales
ratio of 38.0% (FY22 52w: 37.5%,
FY22 53w: 37.4%).

We maintain a tight operational grip on
costs and have worked hard to offset
inflationary impacts of c.£20m, mainly
relating to wages, through operational
efficiencies. Efficiencies in stores and
the supply chain, as well as the removal
of excess storage costs, and other small
one-off impacts generated savings
of £18m.

Volume growth added £8m of costs
to our distribution network and
performance marketing spend. The
annualisation of investments during
FY22 and new store openings added
£7m to operating costs in the period.
Our investments in recent years have
delivered strong sales growth and
so we continued to invest, increasing
spend by £22m on digitalisation
and building new capability in data,
technology and insight and analytics.

We are focused on seizing
opportunities for growth and will
continue to deploy resources
thoughtfully in digitalisation, capability,
and accelerating our store roll out
plans. We have been gaining new
insight into the effectiveness of our
marketing spend and our data-led
approach is giving us confidence to
invest more in areas such as brand
marketing in order to expand our
reach. We will continue to invest in
digitalising our total retail system as
well as expanding our store portfolio.
We also expect inflationary pressures

to continue in FY24, which we will
partially mitigate through productivity
improvements. While our focus remains
on tight operational grip and making
every pound count, we expect our
operating cost:sales ratio to increase
to c.39% in FY24.

Profit and earnings per share
Operating profit of £199m was £15m
lower than the comparable period in
FY22 (FY22 52w: £214m, FY22 53w:
£218m), against a tough backdrop and
reflected both tight control of margin
amidst inflation in our operating costs
and our ongoing commitment to
investment for the future.

Net finance costs of £6m (FY22
52w: £5m, FY22 53w: £5m) included
interest on IFRS 16 lease liabilities of
£5m (FY22 52w: £5m, FY22 53w: £5m).

Profit before tax in the period was
£193m (FY22 52w: £209m, FY22 53w:
£213m), a reduction of £16m year-on-
year on a comparable 52-week basis.
Profit after tax of £152m (FY22 52w:
£168m, FY22 53w: £171m) reflected
an effective tax rate of 21.2% (FY22:
19.5%). The increase in the effective tax
rate is broadly in line with the increase
to the UK headline rate of corporation
tax, which moved from 19% to 25% for
the final three months of the year. The
effective tax rate was 70bps higher than
the UK headline rate, due to our usual
items of disallowable expenditures.

In FY24 we expect PBT to be higher
than FY23, and the effective tax rate
to continue to trend slightly above the
headline rate of 25% from FY24.

Basic earnings per share (EPS) for the
period was 75.2 pence (FY22 52w: 83.0
pence, FY22 53w: 84.5 pence). Diluted
earnings per share was 75.0 pence (FY22
52w: 82.1 pence, FY22 53w: 83.6 pence).

1 Growth in unique active customers who have transacted at least once in the 12 months to June 2023. Management estimates using Barclays data.
2 GlobalData UK homewares and furniture markets, July 2022 to June 2023. Furniture excludes kitchen and bathroom furniture. FY22 has been restated.

Dunelm Group plc Annual Report and Accounts 2023

CFO’S REVIEW

CFO’s review continued

Cash generation and net cash
In the period, the Group generated £160m of free cash flow (FY22: £153m), with strong conversion of operating profit to free
cash flow of 81% (FY22: 70%).

Operating profit
Depreciation and amortisation1
Net movement in working capital
Share-based payments
Tax paid
Net cash generated from operating activities
Capex and business combinations
Net interest and loan transaction costs2
Interest paid on lease liabilities
Repayment of principal element of lease liabilities

Free cash flow

FY23
(52 weeks)
£m

FY22
(53 weeks)
£m

198.8
79.4
(4.2)
4.8
(38.2)
240.6
(21.8)
(1.1)
(5.3)
(52.0)

160.4

217.7
79.3
(14.8)
4.8
(35.2)
251.8
(41.7)
(2.1)
(4.8)
(50.2)

153.0

There was a small working capital
outflow of £4m in the period (FY22:
£15m outflow). The prior year outflow
reflected the decision to build inventory
in order to mitigate the risk of further
supply chain disruption. Whilst
inventories at the end of FY23 of £211m
(FY22: £223m) were lower than FY22,
the resulting working capital inflow
was broadly offset by a reduction
in payables due to lower accruals,
including freight accruals. We
expect working capital in FY24
to be broadly stable.

Total capital investment of £22m (FY22:
£42m) primarily related to £19m spent
on the three new stores opened in the
period, refits of ten existing stores, and
our decarbonisation initiatives. FY22
included £18m paid to acquire the
trade and assets of Sunflex, a division
of Hunter Douglas (UK) Limited.

We expect to increase the rate of new
store openings to five to ten (including
relocations) in FY24, therefore capital
expenditure will increase to c.£30-40m.

Cash tax paid was £38m (FY22: £35m)
reflecting the higher effective tax rate.
FY22 also included cash receipts in
relation to research and development
claims made at the end of FY21.

In the period, the Group spent £7m
(FY22: £28m) purchasing shares to
be held in treasury to satisfy future
obligations under its employee share
schemes. The Group held 1.7m shares
in treasury as at 1 July 2023.

After total dividend payments in the
period of £163m (FY22: £282m), the
Group ended the year with net debt3
of £31m (FY22: £24m).

Banking agreements
At the year end date, the Group had
in place a £185m sustainability-linked
unsecured revolving credit facility
(‘RCF’). The terms of the RCF included
covenants in respect of leverage
(net debt3 to be no greater than 2.5×
adjusted EBITDA4) and fixed charge
cover (EBITDAR5 to be no less than
1.75× fixed charges6), both of which
were met comfortably as at 1 July 2023.

Since the year end the Group has
renegotiated its RCF, extending the limit
to £250m to reflect the growth in the
business in recent years. The maturity
date is September 2027 with an option
to extend by a further two years at
Dunelm’s request, subject to lender
consent. The terms are consistent
with normal business practice and
the covenants are unchanged. In
addition, the Group maintains £10m
of uncommitted overdraft facilities.

1 Including impairment and loss on disposal.

2 Excluding interest on lease liabilities.

3 Excluding lease liabilities. Full definition provided in the table of alternative performance measures.

4 Adjusted EBITDA defined as EBITDA less depreciation on right-of-use assets.

5 EBITDAR defined as EBITDA plus rent.

6 Fixed charges are defined as net interest costs plus right-of-use asset depreciation plus rent.

Dunelm Group plc Annual Report and Accounts 2023

Our Tax Strategy

Net VAT collected
Payroll taxes including National Insurance7
Corporation tax
Plastic packaging tax

Total tax contributions

FY23
£m

164.7
56.2
38.2
0.1

259.2

FY22
£m

163.3
50.2
35.2
—

248.7

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Dunelm is committed to full compliance with all statutory obligations and full disclosure to tax authorities. The Group’s tax affairs are
managed in a way that is consistent with the Group’s commitment to high standards of governance. The Board has established a set of
principles that form the basis of the management philosophy and the tax policy of the Group. These principles can be found in full in our
Group Tax Strategy which is published on our corporate website and reviewed each year. Our Group Tax Strategy sets out one shared
vision within the Group of tax compliance and one view of performance.

Tax Strategy available on corporate.dunelm.com

Capital and dividend policies
The Board policy on capital structure
targets an average net debt level
(excluding lease obligations and short-
term fluctuations in working capital)
of between 0.2× and 0.6× the last
12 months’ EBITDA8. The Group’s
dividend policy targets ordinary
dividend cover of between 1.75×
and 2.25× earnings per share
during the financial year to which
the dividend relates.

The Board will continue to consider
returning surplus cash to shareholders
if average net debt, excluding lease
liabilities, over a period, consistently
falls below the minimum target of
0.2× EBITDA8, subject to known and
anticipated investment and expenditure
plans at the time.

Capital and dividend policies
• Target average net debt

between 0.2× and 0.6× the last
12 months’ EBITDA8

• Ordinary dividend cover of
between 1.75× and 2.25×
earnings per share during
the financial year to which the
dividend relates

• Return surplus cash if net debt
consistently falls below the
minimum target of 0.2×EBITDA8

The Group’s full capital and dividend
policies are available on our website at
corporate.dunelm.com.

Dividends
The Board has proposed a final ordinary
dividend of 27 pence per share,
recognising our strong performance in
the year and our ongoing confidence
in the business. This takes the full year
ordinary dividend to 42 pence per
share, 5% ahead of the 40 pence per
share paid in FY22, with dividend cover9
of 1.8×, which is within the range of
our stated policy. The final dividend
will be paid on 20 November 2023
to shareholders on the register on
27 October 2023, subject to it being
approved by shareholders at the AGM.

We paid total dividends of £163m in
the year, including a special dividend
of £81m.

Karen Witts
Chief Financial Officer
20 September 2023

7 All Dunelm colleagues are based in the United Kingdom, except for 50 colleagues who work in our store in Jersey. Payroll taxes for FY22 have been restated.

8 EBITDA defined as operating profit plus depreciation and amortisation of property, plant and equipment and intangible assets plus loss on disposal and

impairment of property, plant and equipment and intangible assets plus depreciation on right-of-use assets.

9 Dividend cover is calculated as earnings per share divided by the total ordinary dividend relating to the financial year.

Dunelm Group plc Annual Report and Accounts 2023

SUSTAINABILIT Y

Building sustainability
into all that we do

We are taking action to embed sustainability in
the business and to give our stakeholders more
information and choice.

Our progress in FY23

Customers
We have developed many
more sustainable choices for
customers, both across our
product range and in other
services we provide. In FY23, we:

• Launched and grew our

Conscious Choice1 range to
c.15% of own brand products by
SKU and created an information
hub on our website.

•

Increased focus on ‘care and
repair’ and other upcycling
options.

• Collected c.70 tonnes a month

of pre-loved textiles and
used some of these in our
Remade range.

Colleagues
Our learning-thriving-belonging
people strategy supports
our commitment to making
our colleagues feel ‘at home’
wherever they work. In FY23, we:

•

Invested in learning and
development opportunities
to strengthen our leadership
capabilities and promote a
‘learning for life’ mindset.

•

Increased support on financial
wellbeing given ongoing cost-
of-living pressures.

• Continued focus on colleague
development and retention,
which increased to 87%.2

In May 2023, we launched a range
of 21 Remade cushions and throws,
which use recycled fibres, such as
those collected through our textiles
take-back services.

Communities
We continued to support
communities in and around our
stores through various local
initiatives and in-store services.
In FY23, we:

• Collected and distributed

c.62,000 gifts during our winter
‘Delivering Joy’ campaign
(a threefold increase).

• Welcomed small businesses
and community groups to
make use of space in our
stores and Pausa cafes.

• Raised over £800k for charities,
including over £700k for our
Group charity partner, Mind.

Conscious Choice
Since its launch in August 2022, we
have grown our Conscious Choice1
range to c.15% of own brand
products.

‘Find your happy place’
is the central slogan for our
employer value proposition.

Bag and bring your clean and

undamaged home textiles here

and we’ll give them a second life

Visit Dunelm.com or ask in-store for details.

1 To be part of our Conscious Choice range, every product must be made from at least 50% more

sustainable materials (by weight) compared to conventional alternatives.

DUN4735/102712

2 Retention is the percentage of colleagues from the start of the financial year (July 2022) who remained

employed until the end of the financial year (June 2023), excluding any planned leavers.

Dunelm Group plc Annual Report and Accounts 2023

Protecting our business
Our strong corporate and ESG governance frameworks,
holistic approach to risk management, well-established codes
of conduct and policies and Group-wide focus on health and
safety help to protect our stakeholders and preserve value in
our business.

Whilst the Board has overall responsibility for the Group’s
sustainability framework and strategy, responsibilities are
delegated to the CEO and Executive Team, supported by
steering groups as set out on page 64. This includes the
Group’s Risk and Resilience Committee, which helps to keep
the Board and Audit and Risk Committee informed of new or
emerging risks (including those related to sustainability) as
they relate to the Group. There is also a continued emphasis
at Dunelm on ‘doing the right thing’, guided by our purpose
and consistent with our shared values (see pages 1 and 73).

For more information about our approach
to sustainability, progress and performance
against our sustainability metrics, see our
Sustainability Report 2023, available at
corporate.dunelm.com.

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Suppliers
We reorganised our commercial
processes so that product quality
is reviewed alongside ethical
and environmental supply chain
standards, whilst increasing
engagement with our suppliers.
In FY23, we:

• Joined Better Cotton, industry
leaders in sustainably sourced
cotton.

• Engaged with key suppliers on
‘Better Manufacturing’, ethical
and packaging standards.

•

Increased the number of
unannounced ethical audits,
resulting in corrective action,
and further increased our
visibility of supply chain
participants.

100% recycled glass
Our Pride and Joy table lamp
uses recycled glass that saves
energy during the production
process when compared with
virgin glass.

Planet
Our improve-innovate-advocate
approach helps us focus on
things in our control, while
collaborating with others in the
industry to progress our net zero
commitments. In FY23, we:

• Reduced Scope 1 carbon

intensity and plastic
packaging, ahead of targets.

• Submitted carbon reduction

and net-zero targets to the SBTi
for validation with approval
received post year-end3.

• Used more recycled materials
in our products to lower our
environmental impact and to
support product circularity.

Shareholders
We shared our sustainable
and ethical performance with
shareholders, rating agencies and
banks to help them make more
informed investment decisions.
In FY23, we:

• Undertook our first third-

party materiality assessment,
gaining perspectives from
key stakeholders – including
investors and analysts – on
material ESG areas.

• Reviewed progress against

ESG metrics linked to our loan
facility (applicable only for FY23).

• Continued to engage with ESG

rating agencies.

Seat at the table
We continued our advocacy
work with: Textiles 2030,
Better Cotton, the Sustainable
Logistics Forum, the British Retail
Consortium, the Aldersgate
Group, and we joined the
Sustainable Apparel Coalition.

3 Please see our corporate website for our full target wording.

Dunelm Group plc Annual Report and Accounts 2023

MATERIALIT Y

Materiality assessment

In FY23, we undertook a
materiality assessment,
working with an
independent third
party to understand
the views of our
stakeholders on
our most material
environmental, social
and governance
(‘ESG’) topics.

We engage regularly with our key
stakeholders and believe we have a
fair understanding of what resonates
with them. However, we also recognise
the importance of applying a more
structured approach to understanding
how stakeholders view our ESG risks
and opportunities. Given greater
external scrutiny in this area and the
emergence of more prescriptive
sustainability reporting frameworks, in
FY23 we carried out our first, externally-
led materiality assessment.

The purpose of this exercise was to gain
insight into stakeholder perceptions on
how we manage our most material ESG
risks and opportunities. We present a
summary of the methodology in the
table to the right and a representation
of our findings to date in the matrix on
page 29 opposite.

While the research did not bring about
any major surprises, it elicited debate
and made us think more about why,
how and when we might communicate
more on these topics – internally and
externally. Having completed the
research in June 2023, our next task is
to utilise this work to analyse further
the potential impact of ESG risks and
opportunities over the short, medium
and long term, to review the metrics
that we use and to consider how this
work could shape the development of
our overall sustainability framework
and strategy.

Process overview

We engaged a third-party specialist to review our most material ESG topics
with our stakeholders and to create an informed assessment as a base for
further analysis of related risks and opportunities. We outline below the steps
taken so far.

Desktop audit
• Desktop assessment of company, peer group

and industry.

• Review of global benchmarks and media coverage to

identify sector issues.

• With Dunelm input, developed list of 25 ESG topics for

the survey.

Stakeholder identification
• Stakeholder groups mapped.
• Quantitative survey and qualitative interviewee lists determined.

Quantitative survey
• Online survey sent: 90 responses from colleagues

(including the senior leadership team and Group Board),
suppliers, customers, investors and analysts.

• Stakeholders asked to review relative impact of ESG topics

on Dunelm’s performance and viability.

• Risks and opportunities identified and plotted on matrix by
internal and external stakeholders (see opposite page).

Qualitative interviews
• Follow-up qualitative interview conducted with

24 internal and external stakeholders.

• Sessions allowed ‘free comment’, allowing deeper scrutiny

•

of current management approaches.
Insight used to identify perceived ‘managed’ and ‘unmanaged’
risks, and opportunities.

Findings report
• Findings presented internally, including: degree of

stakeholder consensus, ESG disclosure gap analysis, initial
strategic and KPI recommendations.

• Findings discussed in workshop attended by Executive

Team, a Non-Executive Director, other members of the senior
leadership team, the Head of Climate Change and the Head
of Product Quality and Compliance.

Ongoing work and next steps
•

Internal work to assess potential impacts and
opportunities to inform a more time-bound
materiality assessment.

• Analysis of findings to inform sustainability strategy, Group
strategic focus, performance metrics and communications.

Dunelm Group plc Annual Report and Accounts 2023

Materiality matrix

10.00

9.00

8.00

7.00

6.00

5.00

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e
r
c
n

S
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A
T
E
G
C
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P
O
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T

S
TU

P
Q

C
D

F
H

E
R

4.00

5.00

6.00

7.00

8.00

9.00

10.00

Increasing importance to internal stakeholders

Environment

Social

Governance

Responsible sourcing and
traceability

Customer engagement and
satisfaction

Carbon footprint

Health, safety and wellbeing

Plastics and packaging

Employee rights

Diversity, equity and
inclusivity

Talent acquisition and
development

Employee engagement

Community engagement
and investment

Energy use

Sustainability of product
offering

Chemical safety

Waste management

Resource management

Climate change and
decarbonisation

Water use

Biodiversity

Product safety and quality

Financial performance

Data privacy and cyber
security

Human rights and supply
chain management

Business ethics

Corporate governance and
risk management

Industry engagement and
public advocacy

Source: Buchanan Communications Ltd./Dunelm

Dunelm Group plc Annual Report and Accounts 2023

STAKEHOLDER ENGAGEMENT

Stakeholder engagement

We seek to build long‑term relationships with our key stakeholders based on
fairness and respect, consistent with our Code of Business Conduct, and our
shared values and culture.

Key stakeholders
By understanding what our key
stakeholders care about, and
considering their perspectives,
we believe that we can build more
meaningful relationships and take
fully informed decisions that create
value for the long term.

We engage with a wide range of
stakeholders in the day-to-day running
of our business. Our key stakeholders
are those who we know are highly
likely to be affected by our actions and
decisions, and vice versa. Typically,
we engage with these stakeholder
groups regularly at an operational level,

with responsibility held by members
of the Executive Team, and this is
described in the following pages 31
to 34. We also set out how the Board
is kept informed about the interests
of our key stakeholders, as well as
how our Board members engage with
them directly. Pages 68 to 71 in the
Governance Report provide further
detail as to how important stakeholder
feedback is presented to the Board
for discussion and debate, as well as
some examples of how the Board uses
outcomes of stakeholder engagement
in its decision-making. Examples of
metrics used by the Board to measure
the effectiveness of our engagement
are set out below.

In May 2023, we undertook research
with a third party to understand
stakeholder perceptions relating to our
most material environmental, social and
governance (‘ESG’) topics and more
information about this research can be
found on pages 28 to 29. Stakeholder
feedback from this exercise has been
included in the ‘what they care about’
entries on the following pages.

In addition to key stakeholders, we
acknowledge the importance of other
stakeholder groups on page 34.

Our S172(1) Companies Act 2006
confirmation statement is on page 35.

Examples of metrics used by the Board to measure the
effectiveness of our engagement:

Communities
• Monies raised for
good causes

• Take-back
• Diversity

Customers
• Unique active

customer growth

• Total revenue
• NPS
• Safety scores

Colleagues
• eNPS
• RIDDOR1 incidents
• Gender pay gap

reporting
• Retention
• Whistleblowing

Suppliers
• % Tier 1 factories

audited

• % products with

responsibly sourced
raw materials
• Whistleblowing
• CO2 emissions

Shareholders
• Share price
movements
• Free cash flow
• Profitability
• AGM voting
outcomes

1 Reporting of Injuries, Diseases and Dangerous Occurrences Regulations.

Dunelm Group plc Annual Report and Accounts 2023

Customers

2.8%2

growth in unique active customers
shopping with us online and
in store

What they care about
➔ Value, style, choice and quality.
➔ Product safety.
➔ A great shopping experience
and responsive customer
services.

➔ Responsible use and protection

of personal data.

➔ Ethical and sustainable

sourcing.

Key management responsibility
Customer Director

Why we engage
Our business revolves around
our customers. We aim to be
Customer 1st, striving to improve
our customer offer. We seek to
achieve this by delivering great
products, services and experiences.
Engagement improves our customer
insight which, in turn, influences our
strategic focus areas and capital
allocation. Ongoing investment in
customer data and analysis allows
us to respond more quickly and
accurately to develop relevant
product ranges and services, helps
drive brand awareness and grow
our customer base.

How we engage day‑to‑day
• During the shopping experience

and at point of sale in store,
with feedback being shared as
appropriate within the business.
• By means of our customer service
team and the channels by which it
communicates with our customers.

• Social media channels.
• Customer focus groups/panels.
• Customer surveys.

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How the Board engages
• Conducts store visits and
reviews online experience.
• Receives customer insights

report at every Board meeting.

• Monitors customer KPIs

(including NPS) and challenges
management to ensure
the customer proposition
remains at the forefront of all
development activities.

• Receives regular updates on
health and safety, product
quality and ethics, sustainability
and data protection.

How we have listened and
learned – highlights in FY23
• Reviewed value for money

across all categories and price
points, lowering prices on over
1,000 lines.

• Launched and grew our

‘Conscious Choice’ range to
c.15% of own brand products.

• Refreshed our Group-wide

policy on data protection and
privacy and continued to invest
in data security.

• Launched collaboration with

Airtasker to help customers put
their flatpack furniture together.
• Updated our health and safety

policy and continued the rollout
of a new training course for
store coaches and team leaders.

• Opened new stores outside
of our traditional size and
locations.

• Continued to develop our

ethical audit programme, which
covers suppliers of own brand
products.

2 Growth in unique active customers who have transacted

at least once in the 12 months to June 2023. Management
estimate using Barclays data.

Dunelm Group plc Annual Report and Accounts 2023

STAKEHOLDER ENGAGEMENT

Stakeholder engagement continued
Stakeholder engagement continued

National Colleague
Voice (‘NCV’)
Our colleague representative
body, NCV, has been running for
four years. Members represent
a range of ages, ethnicities,
genders, locations, tenures and
levels of seniority across Dunelm.

During FY23, we held five
meetings, each attended by Nick
Wilkinson and members of the
People team. Marion Sears, who
is our designated Non-Executive
Director (‘NED’) for colleague
matters, attended and other
NEDs often joined, alongside
presenters (as appropriate).

Each meeting comprises three
parts: a business performance
update from Nick, a ‘What’s on
your mind?’ item for members
to raise concerns, and a ‘Big
Topic’ where we communicate
and seek feedback on important
matters. In FY23, these were
financial wellbeing, community
and charity, colleague safety,
sustainability, and reward.

The aim is to stimulate discussion
and debate, with representatives
acting as strong advocates for
their colleagues. This is achieved
by encouraging reps to ask
their wider teams for views both
generally and on the chosen ‘Big
Topic’ in advance of meetings.
After each meeting, members
share feedback with colleagues
and views and concerns raised
are presented to the Board.

The NCV is a valuable forum
for colleagues to engage, be
listened to and see action as a
result. For example, following the
community and charity session,
we increased communication of
our initiatives and ways in which
colleagues could participate and
support. And after our colleague
safety session, we trialled new
security-related initiatives. The
NCV has also been an important
part of the dialogue on colleague
pay and reward, as detailed
further on pages 71 and 118.

Colleagues

11,000+

colleagues

What they care about
➔ Fair pay and reward.
➔ Opportunities for progression.
➔ A safe, inclusive and diverse

workplace.

➔ Personal data protection.
➔ Opportunities to be listened to

and make a difference.

Key management responsibility
Stores and People Director

Why we engage
Committed and ambitious
colleagues are at the heart of our
business. We engage with them
to understand how best to recruit,
retain, motivate and reward them,
including helping with their mental
and financial wellbeing. We also
use this information to make better
decisions for our customers and
communities and to support our
strategic growth.

How we engage day‑to‑day
• Annual colleague engagement
survey, followed by targeted
pulse survey.

• Two-way ‘always on’

communication via our Home
Comforts intranet, on which
we also publish regular CEO
updates, known as ‘Nick’s Note’.

• Colleagues represented

through our NCV (see left for
more information) and our Local
and Regional Colleague Voice
networks (see our Sustainability
Report 2023 for more details).

• Store colleague roadshow.
• Weekly/monthly colleague

‘huddles’ at every store/for each
business area.

• 24/7 independent, confidential

whistleblowing hotline.

• End of year events reflect on the
past year and look ahead to the
new financial year.

Dunelm Group plc Annual Report and Accounts 2023

How the Board engages
• Visits stores and other sites.
• The designated NED for

colleague matters and CEO
attend NCV meetings and
report to the Board.

• Receives People update in each

CEO report to the Board.

• Receives overview of

whistleblowing reports.
• Reviews key outcomes and
actions from colleague
engagement survey.
• Reviews a more detailed

colleague dashboard (including
key metrics) presented by the
Stores and People Director at
least twice per year.

• Discusses the gender pay gap

disclosure.

How we have listened and
learned – highlights in FY23
•

Invested in learning and career
development opportunities to
strengthen our employer value
proposition, ‘grow’ talent and
improve succession planning.

• Piloted mentoring schemes

across the business to help with
professional development.
• Ongoing focus on colleague
financial health and support
given cost-of-living pressures.

• Taken a carefully considered

approach to colleague pay and
reward decisions for FY23.
• Personalised our benefits
system to help colleagues
easily locate their benefits
and find information to make
informed choices.

• Signed up to the ‘Menopause
Workplace Pledge’ and issued
our new menopause policy.
• Updated parenthood policies.
Introduced pump/quick lift
•
trucks at our logistics site
to make it easier and more
efficient to raise pallets/totes.
Improved the quality of uniform
for colleagues at our logistics
sites.
Increased communication
about our charity and
community activities.

•

Communities

185+

local community catchment areas
served by our stores and sites

What they care about
➔ Charitable initiatives.
➔ Services that support the
community and local area.

➔ Local employment and

volunteering opportunities.
➔ A business they are proud to
have in their neighbourhood.

Key management responsibility
Customer Director

Why we engage
By understanding local community
needs and concerns we build
awareness and trust, help evolve
our customer offer, strengthen our
local reputation and provide

Suppliers

1,200+

stock and non‑stock suppliers

What they care about
➔ Fair trading and prompt

payment terms.

➔ Collaborating to maintain high

ethical standards and deliver on
sustainability initiatives.
➔ Long-term relationships.
➔ A growth opportunity for their

business.

Key management responsibility
Director of Commercial and
Supply Chain

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another reason for people to shop
with us. We have also learned how
much our customers and colleagues
benefit from being involved
in meaningful local initiatives
and by having direct means of
communication with their local store.

How we engage day‑to‑day
• Community champions for each
region facilitate the sharing of
internal and external feedback,
learnings and ideas.

• Daily interaction with local store
communities via individual store
Facebook groups (organised by
locally appointed community
champions).

• Feedback from local businesses
and community groups who use
space in stores and Pausa cafes.
• Regular meetings with our Group

charity partner, Mind.

How the Board engages
• Receives updates on charity and

community initiatives.

• Reviews community-related
KPIs, including level of take-
back and monies raised for
good causes.

How we have listened and
learned – highlights in FY23
• Expanded our ‘Delivering Joy’

campaign, achieving a threefold
increase in the number of
donated gifts.

• Launched ‘Home to Home’

trial for customers to donate
pre-loved homewares to be
redistributed to those in need.

• Expanded use of our Pausa

cafes by small businesses and
community groups.

• Raised over £700k for Mind.
• Enhanced processes for our
textiles take-back services.

Why we engage
We work closely with our suppliers
and manufacturers worldwide to
develop relationships and business
growth opportunities through regular
engagement, and to ensure that we
are aligned on the importance of
upholding our high quality, ethical
and environmental standards.

How we engage day‑to‑day
• Hold annual stock supplier

conference and regular webinars.

• Regular supplier meetings.
• Regular contact for our committed
stock suppliers with our design
and commercial teams, as well as
our product quality, compliance
and sustainability teams.

• Dedicated procurement function
engages with non-stock suppliers.

How the Board engages
• Receives updates on

ethical trading, product
quality, modern slavery,
supplier payment terms and
whistleblowing reports.

• Receives updates on progress
against sustainability metrics.

• Ad hoc supplier meetings.

How we have listened and
learned – highlights in FY23
• Held webinars with our
key suppliers on ‘Better
Manufacturing’, ethical
standards and packaging.
• Undertook more ethical audits.
• Reviewed our protocols for

non-compliance.

• Provided greater access
to shared resources.

•

• Continued to collaborate
on sustainability initiatives.
Implemented new stock
supplier portal to support
improved ways of working.

Dunelm Group plc Annual Report and Accounts 2023

STAKEHOLDER ENGAGEMENT

Stakeholder engagement continued

Shareholders

1,900+

shareholders including the
Adderley family

What they care about
➔ Strategy, performance and

outlook.

➔ Strong leadership.
➔ Culture and shared values

conducive to good governance
and high standards of business
ethics.

➔ Executive remuneration.
➔ ESG risks and opportunities.

Key management responsibility
CEO and CFO

Why we engage
Meaningful engagement is key to
building trust and driving long-
term success. It enables us to
better understand our investors’
priorities and concerns.

We help our shareholders and their
representatives to have a good
understanding of our business
model, strategy, investment
opportunities and culture, and we
aim to be transparent and comply
with shareholder governance
requirements.

How we engage day‑to‑day
• Executive Directors meet with

investors during the year.

• Arranged store visits.
• Discuss ESG-related matters

on request.

• Via our corporate website.

How the Board engages
• Chair seeks regular engagement

with major shareholders on
governance and performance
against strategy.

• Consults as appropriate, including
in FY23 on the proposed new
Remuneration Policy.

• Attends results presentations and

the AGM.

• Non-Executive Directors are

available to discuss any matter
with shareholders on request.

• Reviews AGM voting,

shareholder comments and
proxy reports. Reviews investor
roadshow feedback.

• Governance and other meetings

arranged as appropriate.

How we have listened and
learned – highlights in FY23
• Held more than 70 meetings
with shareholders (excluding
our largest shareholder) during
the year.

• Completed externally-facilitated

materiality assessment to
gain perspectives from key
stakeholders on material ESG
topics (including investors
and analysts).
Included feedback from
Remuneration Policy
consultation within Board
discussions.

•

• 89.98% of issued share capital

voted at FY22 AGM.

Other stakeholders

We work with a number of other
stakeholders whose relationships
are important to the day-to-day
running of our business. These
stakeholders tend to impact
our business more than we
impact theirs and, in some cases,
engagement may be one-way.
We monitor and evaluate these
relationships regularly and the
Board is informed as required.
In all cases, our approach is to
seek to build long-term trusted
relationships based on fairness
and respect, consistent with our
Code of Business Conduct and
our values.

Other stakeholders with whom we engage include:

• Local and national UK Government bodies, including HMRC.
• Regulators, including Leicestershire County Council and Charnwood

Borough Council with whom we have a Primary Authority relationship, and
other bodies such as the Health and Safety Executive, Trading Standards
and Environmental Health officers.
• Banks and other financial institutions.
• A trusted team of professional advisers (for example, brokers, financial
PR, accountancy and recruitment firms, environment and sustainability
advisers).

• Shareholder representative bodies, ESG investment and credit ratings

agencies and potential investors.

• Other business support providers (e.g. logistics, landlords (as the majority
of our stores are leased), technology and construction/store development
companies).
Industry bodies and working groups, such as Textiles 2030, Better Cotton
and the British Retail Consortium.

•

Dunelm Group plc Annual Report and Accounts 2023

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Section 172 statement

Decisions made by the Board must balance the occasional
conflicting needs and priorities of our key stakeholders, whilst
also ensuring they promote the long‑term success of the Group.

This duty is enshrined in section 172 of
the Companies Act 2006 (‘s.172’) which
requires a director of a company to act
in good faith and promote the success
of the company for the benefit of its
members as a whole. In doing so, they
must also have regard (amongst other
things) to a range of factors set out in
section 172(1) of the Companies Act,
including the interests of stakeholders.

Engagement with stakeholders plays
a hugely important role in ensuring
that our Directors fully understand
their needs and make well-informed
decisions that consider different
priorities. We recognise that not every
decision will benefit all stakeholders,
and we inevitably have to make trade-
offs between stakeholder groups
from time to time. By taking account
of the Company’s purpose and values
together with its strategic aims, and
closely following our decision-making
process, we aim to make sure that our
decisions are fair and consistent.

The preceding pages on stakeholder
engagement and pages 68 to 71 of the
Governance Report provide examples
of how the Directors performed their
s.172 duties during the year.

The Board confirms that during the year
under review, it has acted to promote
the long-term success of the Company
for the benefit of its shareholders
whilst having due regard to the factors
set out in section 172(1) (a) to (f) of the
Companies Act 2006.

Signed for and on behalf of the Board

Nick Wilkinson
CEO

The table below outlines other areas of this report that set out how the Board
has had regard to s.172 factors when making decisions:

s.172 factor

Where to find more information

Page

(a) likely consequences of
any decisions in the long
term

(b) interests of the company’s
employees

(d) impact of the company’s
operations on the
community and environment

(e) desirability of the
company maintaining a
reputation for high standards
of business conduct

➔ Chair’s statement
➔ Business model
➔ CEO review
➔ Stakeholder engagement
➔ Board activities

➔ Stakeholder engagement
➔ NF&SI statement
➔ Board activities
➔ Remuneration Committee

report

➔ Business model
➔ Stakeholder engagement

➔ CEO review
➔ Sustainability
➔ TCFD report
➔ Board activities

➔ Sustainability
➔ TCFD report
➔ Risk management
➔ Governance report

(f) need to act fairly as
between members of the
company

➔ Business model
➔ Stakeholder engagement
➔ Directors’ report

119

Dunelm Group plc Annual Report and Accounts 2023

NON-FINANCIAL INFORMATION

Non-financial and sustainability
information statement FY23

In the following pages, we present
information relating to the non-financial
reporting requirements as contained
in sections 414CA and 414CB of the
Companies Act 2006. These include
our commitment to and management
of environmental and social matters
(as listed in the requirements) and how
these impact our business and key
stakeholders. We include links to some
of our relevant policies and references
to where additional information can
be found both within and outside
this report.

Our business model is on pages 8-9.

£820k

FY22: £632k
raised in FY23 through Group
charity and fundraising events

Customers

Colleagues

Some of our relevant policies
(see website: corporate.dunelm.com)

• Data Security and Privacy Policy

• Health and Safety Policy

Where to find more information
and outcomes in this report

➔ Customer proposition
in the CEO Review

Page/s

8, 15

➔ Customer net promoter score
➔ Stakeholder engagement

31,35

and s.172 statement

➔ Principal risks

50–54

Additional information outside this report

• Sustainability Report 2023

Our approach
Our vision is to build the UK’s most
trusted and valuable brand for
homewares and furniture. We have a
legal and moral obligation to develop
and sell products that are safe to use
(and safe to eat from our Pausa cafes)
and that are accurately and fairly
labelled, marketed and sold to our
customers. We must also provide a
safe environment for our customers
to shop – whether in store, online
or receiving home deliveries. As we
increase our customer engagement,
we have a responsibility to look after
and treat our customers’ personal
data and information with respect and
integrity. Increasingly, we are giving our
customers the option to choose from
a range of products that are sourced
‘more responsibly’ (with strict qualifying
criteria set).

Our outcomes
Alongside measuring customer
numbers and shopping frequency, we
predominantly measure the outcomes
relevant to our approach through our
Customer Net Promoter Score (NPS).

• Health and Safety Policy

• Equality and Diversity Policy

• Whistleblowing Policy

• Anti-corruption and
Anti-bribery Policy

• Domestic Abuse Policy

• Colleague Code of Conduct

• Code of Business Conduct

Where to find more information
and outcomes in this report

Page/s

1, 73

➔ Culture and values
➔ Chair’s statement
➔ CEO’s review
➔ Employee eNPS KPI
➔ Sustainability
26–27
➔ Stakeholder engagement, 32, 35, 68

13–19

4-5

s.172 statement and the
‘Board’s approach to s.172’
in the Governance report

➔ Principal risks
➔ ‘Diversity and inclusion’ in

50–54

78–79

Nominations Committee report

➔ Remuneration

Committee report

88–118

Additional information outside this report

• Sustainability Report 2023

• Gender Pay Report 2023

Our approach
We are committed to treating our
colleagues fairly, to reward them
appropriately for the work they do and
to give them opportunities to develop
and learn. We want them to be heard
and feel connected to our business
and to feel ‘at home’ in a safe and
inclusive working environment. We
continue to support their mental and
financial wellbeing – particularly given
the pressures on our colleagues in the
current UK economic environment.

Dunelm Group plc Annual Report and Accounts 2023

Our commitment to protecting
colleagues can be found in our Code of
Business Conduct and Colleague Code
of Conduct. All colleagues are obliged
to comply with our Anti-corruption and
Anti-bribery Policy and are trained upon
induction.

We continue to focus on achieving
diversity and gender balance across
all levels of the business and, in FY23,
we introduced an ethnicity leadership
metric to our Long-Term Incentive Plan.
Our median gender pay gap of 4.3%
and our mean gender pay gap of 19.1%
reflect that 70% of our colleagues are
women, 90% of whom are in hourly-
paid, predominantly store roles (see
table below).

We work with our colleague network
groups to understand possible barriers
and challenges to progression and
have adapted policies as a result. We
have expanded our apprenticeship
programme to improve social mobility.

Our outcomes
Alongside a number of colleague and
culture metrics (including colleague
retention and promotion from within)
we predominantly measure the
outcomes of the above through our
Employee Net Promoter Score (eNPS).

Gender breakdown, year-end FY23 versus year-end FY22

Female

Male

FY23

FY22

Change

FY23

FY22

Change

Group Board

-1

Total
FY23

Senior
management1

Store
colleagues

All
colleagues

45%

36% +9%pts

55%

64% -9%pts

50%

45% +5%pts

50%

55% -5%pts

6,499

6,362

+137

2,351

2,237

+114

8,850

73%

74% -1%pts

27%

26% +1%pts

7,669

7,410

+259

3,828

3,614

+214

11,497

67%

0%pts

33%

0%pts

1 Senior management for these purposes means our Executive Team (excluding Executive
Directors who sit on the Group Board) and members of our Dunelm leadership team.

Ethnicity data

White – British

79%

White – Other

Asian British

Black

Multi-ethnic

Other

Note: This data covers 80% of all colleagues.

Board and Executive Team ethnicity data is on page 79.

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Communities

Some of our relevant policies
(see website: corporate.dunelm.com)

• Tax Strategy

• Responsible Cotton Policy

• Responsible Timber Policy

Where to find more information
and outcomes in this report

➔ Chair’s statement
➔ CEO’s review
➔ Sustainability
➔ Stakeholder engagement

and s.172 statement

➔ Principal risks

Page/s

4–5

13–19

26–27

33, 35

50–54

Additional information outside this report

• Sustainability Report 2023

Our approach
We are increasingly making more
meaningful connections to support
thriving, purpose-driven communities
in and around our stores and other
sites. We want to be known as the brand
that puts community at the heart of
its business to help people feel more
at home by expanding community
initiatives and services (including our
take-back services which are highly
popular and valued by our store
communities). Alongside promoting
Group-wide fundraising activities we
encourage colleagues to support local
charities, businesses and community
groups. We are also committed to
full compliance with all statutory tax
obligations and full disclosure to tax
authorities.

Our outcomes
At a Group level we track the amount
of Group and colleague fundraising
and Group cash charity contributions.
Informally, we monitor the number of
store Facebook group followers and
the number of small businesses and
community groups that we support
at the store level.

Dunelm Group plc Annual Report and Accounts 2023

NON-FINANCIAL INFORMATION

Non-financial and sustainability information statement FY23 continued

Our approach
We have a responsibility to protect
and respect human rights and to
uphold high ethical standards in our
supply chains. We set out our minimum
expectations in our Ethical Code of
Conduct for Suppliers and Partners
that applies to all businesses involved
in the production of goods for Dunelm
and we use a risk-based approach
in our ethical auditing programme
to monitor supply chain practices
against our standards. We aim to work
collaboratively with suppliers to achieve
continuous improvement through
increased engagement and education
– including environmental and product
quality standards, alongside ethical
considerations. We are committed
to treating our suppliers properly
in accordance with agreed terms
and conditions and to paying them
promptly.

Our outcomes
We have set a Group target to increase
the percentage of own brand products
that meet our ‘More Responsibly
Sourced Cotton’ standard (which
covers both ethical and environmental
standards) as set out in our policy.
We have also set sustainability metrics
for other sourcing material areas such
as timber and palm oil.

Planet

Some of our relevant policies
(see website: corporate.dunelm.com)

• Environmental Policy

• Plastic and Packaging Policy

Where to find more information
and outcomes in this report

Page/s

➔ Reduction in Scope 1
carbon intensity KPI

➔ Reduction in virgin plastic
packaging of own brand
products KPI
➔ s.172 statement
➔ Task Force on Climate-related
Financial Disclosures report

➔ Streamlined Energy

and Carbon Reporting

➔ Principal risks
➔ Chair’s introduction in the

Governance report

➔ ‘Board’s approach to s.172
and sustainability update’
in the Governance report
➔ ‘Sustainability reporting’ in
Audit and Risk Committee

40–47

50–54

58-59

68, 71

➔ ESG metrics within Executive 107, 116

remuneration

Additional information outside this report

• Sustainability Report 2023

Suppliers

Some of our relevant policies
(see website: corporate.dunelm.com)

• Whistleblowing Policy

• Slavery and Human Trafficking

Statement

• Anti-corruption and
Anti-bribery Policy

• Ethical Code of Conduct for

Suppliers and Partners

• Responsible Animal Welfare Policy

• Responsible Cotton Policy

• Responsible Palm Oil Sourcing Policy

• Responsible Timber Policy

• Competition Law Policy

Where to find more information
and outcomes in this report

Page/s

➔ ‘More responsibly sourced

cotton’ KPI
➔ Sustainability
➔ Stakeholder engagement

and s.172 statement

➔ Principal risks

26–27

33, 35

50–54

Additional information outside this report

• Sustainability Report 2023

36%

reduction in virgin plastic
versus an FY20 baseline.

59%

recycled steel content

We have switched to using
recycled steel in our new galley
easy fit pendant light to reduce the
carbon impact of its raw materials.

Dunelm Group plc Annual Report and Accounts 2023

Our approach
Our investment in resources to focus
on Pathway to Zero (a pillar of our
overall approach to sustainability)
has increased the level of awareness
across the business for the need to take
urgent action to reduce our impacts
on the planet. Our goal is to reduce
our absolute greenhouse gas (‘GHG’)
emissions by 50% by FY30 against a
FY19 baseline. We support the British
Retail Consortium’s Climate Action
Roadmap to achieve net zero by 2040,
and we are a partner member of Textiles
2030, with a commitment to meet their
carbon and water footprint reduction
targets. We remain focused on reducing
operational waste, including plastics and
other packaging, and exploring product
circularity solutions.

Our outcomes
We have made considerable progress
in better understanding the most
significant sources of GHG emissions
along our supply chains, using our
improve-innovate-advocate approach.
However, we need to act faster to hit our
published targets. Metrics relating to
plastic packaging and Scope 1 carbon
emissions intensity are set as Group
KPIs to maintain our focus. Although
we are still at an early stage, we are
making good headway in our product
circularity plans.

Greenhouse gas emissions and
Streamlined Energy and Carbon
Reporting information
can be found on page 46.

Shareholders

Some of our relevant policies
(see website: corporate.dunelm.com)

Principal risks by key
stakeholder group
Our principal risks are listed on
pages 50 to 54. We summarise how
these map to our key stakeholder
groups below.

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• Capital and Dividend Policy

• Customers

– Customer offer
– Product reputation and trust
– IT systems, data and cyber security
– Business change
– Regulatory and compliance
– Supply chain resilience
– Climate change and environment

• Colleagues

– People and culture
– IT systems, data and cyber security
– Business change
– Regulatory and compliance
– Supply chain resilience
– Climate change and environment
– Finance and treasury

• Communities

– Customer offer

• Suppliers

– Customer offer
– Product reputation and trust
– Business change
– Regulatory and compliance
– Supply chain resilience
– Climate change and environment

• Planet

– Product reputation and trust
– Regulatory and compliance
– Climate change and environment

• Shareholders

– Customer offer
– People and culture
– IT systems, data and cyber security
– Business change
– Regulatory and compliance
– Climate change and environment
– Finance and treasury

• Employment of Former Employees

of the External Auditor Policy

• Tax Strategy

• Anti-corruption and
Anti-bribery Policy

Where to find more information
and outcomes in this report

➔ Stakeholder engagement

and s.172 statement

➔ Principal risks
➔ ‘Board’s approach to s.172’
in the Governance report
➔ ‘Sustainability reporting’

in Audit and Risk Committee

➔ ESG metrics in Executive

Page/s

34–35

50–54

remuneration

107, 116

Additional information outside this report

• Sustainability Report 2023

Our approach
We strive to provide our shareholders
with as clear a picture as possible of
our business and our prospects – both
financial and non-financial – in order
to enable them to make informed
investment decisions. We give various
opportunities for shareholders to meet
our Board and management through
scheduled meetings and on request.
We provide regular overviews of our
governance arrangements and our
progress in non-financial reporting.

Our outcomes
Our focus on sustainable returns has
led to progressive ordinary and special
dividends. We have returned over
£1bn to shareholders through
dividends over the last 10 years¹.

BIO-CNG

See corporate.dunelm.com for more
information and for our Sustainability
Report 2023.

In July 2023, we moved our Home Delivery Network trunking
vehicles to bio-compressed natural gas (BIO-CNG) from diesel.

1 Ordinary dividends plus special dividends plus

special distributions.

Dunelm Group plc Annual Report and Accounts 2023

TCFD REPORT

Task Force on Climate-related
Financial Disclosures (‘TCFD’)

The Board recognises the risks and opportunities posed by
climate change to the Group’s business model and strategy.

Climate change has been considered
a principal risk for the Group since
FY19 and the current view of this
risk is described in detail on page
53. Following publication of the first
voluntary TCFD report in FY21, the
Group released its first full report
in FY22 and remains committed to
improving its disclosures in line with
evolving requirements. This year,
for example, we evolved our TCFD
reporting to include an updated FY19
Scope 3 baseline which is Greenhouse
Gas Protocol compliant and based on
more robust data and assumptions than
the high-level view reported in FY22.
We have also included the estimated
impact of mitigations in our climate
scenario modelling for transition risks,
in line with our carbon reduction
targets. We continue to consider the
potential financial impacts of climate
change in the cash flow scenario
modelling within our viability statement
on page 55 and in our accounting
policies note on page 141 of the
financial statements.

Governance
Governance a) Board’s oversight
of climate-related risks and
opportunities
The Board takes overall responsibility
for our Pathway to Zero climate change
roadmap. It considers our approach,
strategy, risk management and
performance, receiving regular
updates on progress against our
climate-related KPIs. There is a
minimum of two Pathway to Zero deep
dives with the Board each year, led by
our Head of Climate Change. This year,
in October 2022 and March 2023, the
Board received detailed updates on
our emerging Scope 3 roadmap, as
well as our broader Pathway to Zero
strategy, looking at circularity, carbon
and community, and our approach to
governance and reporting (see page 71
for more detail).

The Board is supported by three
committees: the Audit and Risk
Committee, Remuneration Committee
and Nominations Committee. The Audit
and Risk Committee formally reviews
principal risks twice a year and TCFD,
ESG processes and reporting to verify
non-financial KPIs annually.

The Remuneration Committee reviews
and approves Executive Director and
Executive Team remuneration, including
climate-related targets in performance-
related pay. The Nominations Committee
sets specifications for new Board
roles and has oversight of the Talent
Committee to ensure necessary talent
and skills are available to deliver our
Pathway to Zero strategy.

The Board continues to listen and
learn about the implications of climate
change on the Group’s business model.
Board members are also regularly
updated on our wider sustainability
strategy, including our long-term
carbon emissions reduction targets,
and progress against them, as well
as other related topics such as water
reduction and product circularity.

The Audit and Risk Committee regularly
receives an update on upcoming
sustainability reporting requirements
and Dunelm’s planned approach. In
FY23, they also received an internal audit
report on the assessment of Dunelm’s
processes and controls relating to
our sustainability strategy, materiality
and target-setting activities which
highlighted several recommendations
which were already being actioned.

Group Board

Board Committees

Audit and Risk Committee

Remuneration Committee

Nominations Committee

Operational Committees

Chief Executive Officer

Executive Team

Pathway to Zero Steering Group

Risk and Resilience Committee

Talent Committee

Dunelm Group plc Annual Report and Accounts 2023

Governance b) Management’s role in
assessing and managing climate-
related risks and opportunities
Our CEO, Nick Wilkinson, leads the
Group’s climate-related activities and
chairs the Pathway to Zero Steering
Group. Meetings are held six times a
year and include the CFO, Commercial
& Supply Chain Director, Customer
Director, Group General Counsel and
Company Secretary and the Head of
Climate Change.

The Executive Team receives regular
updates on our climate-related KPIs and
reviews the principal risks prior to the
Group Board review. The management-
level Risk and Resilience Committee
is chaired by our CFO, Karen Witts,
and provides oversight and review of
risks, including climate change and
environment risk. The Talent Committee
is chaired by our Stores and People
Director, and ensures that we have the
correct capability in place to meet our
ambitions in this area.

Climate change considerations are
increasingly integrated into day-to-day
business activities: an assessment of
energy efficiency and carbon impact
is included in all new store and store
refit proposals; our product design
team is focused on increasing the use
of less carbon intensive materials such
as recycled cotton and polyester; and
we continue to reduce packaging or use
more sustainable packaging. In FY23,
we became Better Cotton members,
we have continued to develop plans to
introduce lower emission fuels into our
HGV fleet, with our first CNG vehicles
going live just after our FY23 year
end in July 2023, and we introduced
Remade, a range of cushions and
throws using textile materials such as
those recovered from stores as part of
our customer textile take-back scheme.

As climate-related considerations
become increasingly central to our
business, we are developing them into
‘business as usual’ protocols within
our strategy and financial planning.
An example of this is that we will be
devoting time once a quarter in our
Performance Executive meetings to
focus specifically on sustainability,
including climate change.

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Strategy
Strategy a) Climate-related risks and
opportunities identified over the
short, medium and long term
Our purpose – To help create the joy
of truly feeling at home, now and for
generations to come – is deliberately
forward-looking, and when combined
with our business model (see pages 8
to 9), is designed to encapsulate our
desire to have a positive impact on our
communities and the planet, now and
in the future. It is underpinned by our
commitment to remain ambitious about
being a good company and building
sustainability into all that we do. A key
component of our customer proposition
is ‘good & circular’ which we describe as
being ‘positive choices for people and
the environment’.

Over the last two years, Dunelm has
engaged external TCFD consultants to
support the identification of potential
physical risks and opportunities
(relating to extreme weather events
and long-term chronic shifts in global
temperatures and precipitation) and
transition risks and opportunities
(relating to changes in regulation,
carbon pricing, consumer demand
changes and reputational damage) and
to determine their financial materiality.
To identify material risks, we reviewed
the existing risks and opportunities
in our risk registers and considered

additional risks and opportunities
based on a systematic peer comparison
and sector review. Each identified risk
and opportunity was then scored on the
basis of its potential impact, likelihood
and velocity to determine its relative
materiality, integrating stakeholder
insights and secondary data. The
top-ranked risks and opportunities
were then subject to detailed
scenario analysis and financial impact
quantification to enable the Group t
o assess the potential impact
on the business’ future profitability.

Following this work, six material risks
and opportunities were selected for
deep-dive risk modelling and financial
impact analysis. We used a range of
internal and external data sources,
including the Network for Greening
the Financial System (NGFS) v3.0, the
International Energy Agency (IEA)
World Economic Outlook 2022 and the
Intergovernmental Panel on Climate
Change’s (IPCC) Sixth Assessment
Report (AR6) – Model Intercomparison
Project Phase 6 (CMIP6) climate models,
and applied a number of assumptions.
In FY23, we enhanced our financial
modelling to include the impact of
current mitigating actions and planned
activities, using business growth
forecasts, market research, commodity
pricing forecasts and climate forecasts
to create ranges of financial impacts.

Financial impact ranges: We have
used financial impact ranges, which
are the same as we use for our
corporate risk management process.

Impact

Low

Medium

Financial range
(Annual Profit before tax)

Less than £5m

Between £5m
and £50m

High

Greater than £50m

Time horizons: We have used the three time horizons described below:

Time period

Years

Reason

Short

2023–2030

Medium

2030–2040

Long

2040–2050

Aligned to our 50% carbon reduction
target and strategic plan

Aligned to our net zero target and to
capture transition risks and opportunities

Longer term to capture physical risks and
opportunities

Dunelm Group plc Annual Report and Accounts 2023

TCFD REPORT

TCFD continued

Climate scenarios: We undertook climate risk and opportunity analysis under three climate scenarios outlined below:

Global Net Zero 2050

Delayed Transition

Business as usual (BAU)

Scenario
Limits global warming to
1.5°C by 2100, with stringent
and immediately introduced
climate policies and emissions
reductions to achieve net zero
emissions by 2050.

Transition Risk
Transition risks are extreme
under this scenario in the
short to medium terms, unless
mitigated.

Physical Risk
Physical risks will be the least
extreme under this scenario.

Scenario
Action taken to limit emissions
growth, but Paris targets missed
resulting in greater than 2°C
warming by 2050.

Transition Risk
This scenario presents a
significant transition risk in the
medium to long term, given
the speed and severity of
the response required when
implemented.

Physical Risk
Physical risks will be higher
than the Global Net Zero 2050
scenario due to warming greater
than 2°C instead of well below.

Scenario
World takes no/limited action,
equivalent to a 3.5-4.5°C
warming.

Transition Risk
Limited transition risks expected
due to lack of policy changes
and regulation.

Physical Risk
The most extreme physical risk
impacts in this scenario.

There is a high degree of inherent
uncertainty in the modelling outcomes
given the complex interactions arising
under the different climate change
scenarios. That said, the information
shown represents the Group’s best
efforts in understanding the potential
impacts of climate change on its
financial position and performance.

Furthermore, our five-year strategic
planning process considers the
investment required to develop our
business processes to ensure that
we are making progress against our
climate change targets. We also
consider the impact of climate change
on commodity prices as part of our
strategic planning process.

Strategy b) Impact of climate-related
risks and opportunities on business,
strategy and financial planning
In preparing the financial statements,
the Directors have considered the cash
flow impacts of climate change on a
number of key estimates within the
financial statements, including:

• The impact of climate change on the
going concern basis of preparation
and the viability of the Group over
the next five years.

• The impact on potential impairment

triggers, and where a trigger is
identified, the impact on the value in
use of the related non-current assets.

We are committed to reducing our
carbon emissions, both in our direct
operations and also in our supply
chain, which accounts for c.99% of
our carbon emissions (see the table
on page 46 for the breakdown of our
emissions). We work in partnership
with our suppliers to support them in
various ways to help reduce supply
chain emissions. We have developed
and launched our Better Manufacturing
programme which focuses on lowering
carbon emissions during the product
manufacturing stage, and in FY23 we
held our first ‘Introduction to Net Zero’
workshops which were attended by key
suppliers. We have recently invested in
a supplier data platform and a tool to
enable us to complete product life-

cycle assessments, both of which focus
our attention on reducing carbon in
the most impactful areas and improve
the robustness of data to enhance the
accuracy of our reporting. We continue
to advocate at an industry level through
organisations such as the British Retail
Consortium, Better Cotton and Textiles
2030 to accelerate the reduction of
carbon emissions in our supply chains.

Whilst we have a high level roadmap
for the reduction of our emissions
in line with our FY30 target of a 50%
reduction in emissions against our
FY19 baseline, in FY24 we are planning
to produce a more detailed net zero
transition plan in line with the Transition
Plan Taskforce (‘TPT’) guidance. This
plan will set out our climate-related
ambitions and the actionable steps we
are taking to support our transition to a
low-carbon economy and to meet our
targets, including our overall emissions
reduction targets and actions to
mitigate climate risk. We plan to publish
a standalone net zero transition plan in
line with the timeframes set by the TPT.

Dunelm Group plc Annual Report and Accounts 2023

Strategy c) Resilience of strategy,
taking into consideration different
climate-related scenarios, including
a 2°C or lower scenario
Our commitment to ‘building
sustainability into all that we do’ ensures
that climate change considerations are
integrated into our business activities.
The work we have carried out has
confirmed that we are focused on the
most material climate risks to us as a
business.

The scenario analysis that we have
completed and updated this year,
together with the mitigating actions
we are currently taking, brings a high
degree of confidence in the long-term
resilience of the business.

The table below highlights the material
climate change risks and opportunities
that we have considered, and includes
an overview of our current and future
actions against these risks.

Our focus for FY24 will be on further
exploring each risk identified and
working with relevant business teams
to develop our risk management
and mitigation plans, as well as
continued horizon scanning to identify
any additional emerging risks or
opportunities.

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Risk and opportunities
summary description

Potential impact
(pre-mitigation)

Potential impact
(post-mitigation)

Business readiness

Policy & Legal
Global Net Zero scenario most significant impact in short to medium term

Impact of carbon taxes on Dunelm suppliers

High in short to
medium term

Medium in
short term

Low in medium
to long term

Introduction of a carbon
price could lead to an increase
in the cost of products with
high GHG emissions; this
could negatively impact
profits due to taxation on
Dunelm or taxation on
suppliers passed on to
Dunelm in product cost.

• Actively engaging with our suppliers
to support the reduction of their
carbon emissions through setting
aligned carbon reduction targets
and sourcing better quality data.
In FY24, we are planning to produce
a detailed transition plan in line
with the Transition Plan Taskforce
guidelines.

•

Extension of producer responsibility: increased cost of existing packaging regime and extension
to additional product categories such as textiles

Extended Producer
Responsibility (EPR) fees
are being introduced in the
UK from January 2024. We
have assumed that EPR costs
will increase in line with the
carbon price and that an EPR-
type scheme for textiles will
be introduced in 2025.

High in the short,
medium and long
term (assuming prices
increase in line with
the carbon tax price
increase).

Not yet fully
modelled for
textiles as scheme
not currently
proposed (but
no exemptions
assumed).

• Estimated cost of packaging EPR

•

included in strategic plan.
Increasing recycled content in
packaging (both plastic and
cardboard).

•

• Monitoring extension to other
categories beyond textiles.
Increasing recycled content of
Dunelm product range including
using materials such as those from
our take-back scheme.

Market
BAU scenario most impactful for this risk as fuel prices increase the most in the outer years

Changes to fuel prices caused by climate-related market disruption or increased taxation

Related
metrics and
targets

Carbon
emissions
metrics and
targets

Nature and
packaging
metrics and
targets

Medium across all
timeframes

Changing market dynamics
and decarbonisation trends
impact both fuel prices and
the transition to non-fossil
fuel alternatives, leading to
increased fuel costs across
the delivery network.

Low across all
timeframes as
we assume a
degree of offset
through a range
of operational
actions.

Carbon
emissions
metrics and
targets

• Moved trunking vehicles from diesel
to CNG, which produce >85% fewer
emissions than the diesel equivalent.
• Trialling electric vehicles in our fitter
van fleet and using one fully electric
44 tonne vehicle in partnership
with DHL.

• Working with our key logistics

suppliers to support their transition
from diesel to non-fossil fuel
alternatives.

Dunelm Group plc Annual Report and Accounts 2023

TCFD REPORT

TCFD continued

Transition risks and opportunities continued

Risk and opportunities
summary description

Potential impact
(pre-mitigation)

Potential impact
(post-mitigation)

Business readiness

Reputation
Global Net Zero scenario most significant impact in medium to long term

Reputational damage due to failure to act on sustainability trends

Related
metrics and
targets

If Dunelm fails to continue
to move towards using
more sustainable raw
materials and reduce carbon
emissions then we might
lose customers who switch to
retailers who they consider
to be more sustainable; we
could also struggle to retain
and attract colleagues and to
secure funding.

No impact in the short
term in all scenarios,
reflecting Dunelm’s
current position
versus the market.

High in the medium
to long term in both
the Global Net
Zero and Delayed
Transition scenarios
if other retailers
outpace Dunelm in
sustainability.

See opportunity
below in relation
to increasing
market share by
demonstrating
leadership in
addressing climate
change and
sustainability.

• We have set ambitious climate
change reduction targets.
• Starting to use lower-impact

materials in our products and
moving towards a more circular
sourcing model to enhance our
competitive advantage.

Carbon,
nature,
water stress,
packaging
and circular
metrics and
targets

Increased market share by demonstrating leadership in addressing climate change and sustainability

If Dunelm demonstrates
leadership in addressing
climate change and
delivering its climate change
reduction targets, whilst
other retailers do not, we
might gain market share from
customers actively moving
towards shopping at Dunelm.

Medium in the short
term in all scenarios.

N/A

Medium in the
medium and long
term in the BAU
scenario, but not a
differentiator in the
medium or long term
in the Global Net Zero
or Delayed Transition
scenarios as it is
assumed that other
retailers also take
similar action.

Physical risks

•

Increasing our communication to
customers and colleagues around
the increasing sustainability
credentials of our range, including
Conscious Choice.

• Working in collaboration with our
suppliers to reduce their carbon
emissions and create a more circular
sourcing model.

Carbon,
nature,
water stress,
packaging
and circular
metrics and
targets

Risk and opportunities
summary description

Potential impact
(pre-mitigation)

Potential impact
(post-mitigation)

Business readiness

Physical Risks
BAU scenario most impactful

Physical risks (drought, flooding, wildfires, etc.) impact the availability of raw materials such as cotton or
timber, or impact manufacturing sites and logistics in countries from which we source our products

Physical risks mainly manifest
themselves in our supply
chain as none of our UK store
or depot footprints are in
areas at high risk of flooding.
Physical risks in our supply
chain are already being
experienced, for example the
recent floods in Pakistan.

Medium in the short,
medium and long
term

Not modelled
as changes in
sourcing strategy
are not currently
defined

• We are undertaking a detailed
exercise to map where our raw
materials originate.
In FY24, we will overlay our nature-
related impacts on these maps to
better inform sourcing decisions and
help suppliers to build resilience.

•

• Working with the Textiles 2030

group of retailers to support actions
to mitigate these risks and to move
towards a more circular sourcing
model, which is being built into our
product design process.

Related
metrics and
targets

Nature and
water stress
metrics and
targets

Dunelm Group plc Annual Report and Accounts 2023

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Metrics and Targets b) Scope 1,
Scope 2 and Scope 3 greenhouse gas
(GHG) emissions and the related risks
In FY23, we undertook a full review
of our FY19 baseline for our Scope 3
emissions and updated this using more
robust data and assumptions available
following our continued investment in
this area. Our updated FY19 baseline
is fully compliant with the Greenhouse
Gas Protocol, which includes an
adjustment for the acquisition of the
Sunflex business in FY22. We submitted
this updated baseline, along with our
reduction targets, to the Science Based
Targets initiative (‘SBTi’) for validation
and received confirmation of approval
in September 2023, post year-end1.
We have defined and reported on
our full target boundary for Scope
3 emissions. We have determined
indirect use phase of sold products
emissions to be outside of our target
boundary, however we have measured
and reported these indirect emissions
based on materiality and in line with
the principles of transparency and
completeness in the GHG protocol.

For our FY19 baseline and FY23
Scope 3 emissions we have used an
entirely spend-based calculation
methodology for our most material
category of purchased goods and
services. Throughout FY23 we have
developed our data management plan
and will begin transitioning away from
an entirely spend-based approach in
FY24. This will include increasing the
amount of supplier-specific data that we
are gathering and completing life-cycle
assessments across a broad range of
our products. We intend to incorporate
this more accurate data into our
reporting from FY24 onwards.

Risk Management
Risk Management a) Processes for
identifying and assessing climate-
related risks
In FY21, we completed a detailed
climate change risk register with
the support of the Carbon Trust. In
FY22, we refined this risk register
with external TCFD consultants, and
quantified the most significant risks by
likelihood and potential impact on our
business. In FY23, we used the same
external TCFD consultants to review
these risks and also to consider our
mitigation plans. This work confirmed
that directionally we have identified
and understood the most significant
risks and that we are addressing these
through the mitigating actions we are
taking and planning to take.

In FY23, we also conducted our first
external materiality assessment, which
was a stakeholder-led study into
Dunelm’s sustainability-focused risk
and opportunities including climate-
related risks and opportunities. This
materiality assessment was developed
using information from a quantitative
survey followed up with qualitative
interviews across a range of our key
stakeholder groups. The output of this
study was mapped against the climate-
related risks already identified through
previous exercises, and reassuringly,
there were no material omissions
identified. For further details on this
activity see pages 28 to 29.

Risk Management b) Processes for
managing climate-related risks
Climate change and environment risk
is classified as a principal risk in our risk
register. Our detailed climate change
risk register and quantification feeds
into this process and is owned by our
Head of Climate Change. Our Pathway
to Zero Steering Group uses this
climate change risk register to inform
its actions. Our CEO, Head of Climate
Change and other leaders throughout
the Group continue to work with expert
external advisers such as the British
Retail Consortium (BRC), WRAP, Textiles
2030, the Aldersgate Group and others
to keep up to date with regulatory and
best practice developments.

Risk Management c) Processes for
identifying, assessing and managing
climate-related risks are integrated
into the organisation’s overall risk
management
As one of our principal risks, climate
change and environment risk is
discussed formally with our Executive
Team, Risk and Resilience Committee,
Audit and Risk Committee and Group
Board as part of the twice-yearly formal
review of principal risks. The Risk and
Resilience Committee also conducts at
least one deep dive review into climate
risks each year.

The principal risks are considered
by management in connection with
the assessment of the viability of the
business over the longer term, with
these considerations informing the
Viability Statement in this report (page
55). Further details on the assessment
of our climate change and environment
risk can be found on page 53. Our
overall risk management framework
and supporting processes can be
found on pages 48 to 54.

Metrics and Targets
Metrics and Targets a) Metrics used
to assess climate-related risks and
opportunities in line with its strategy
and risk management process
The metrics we use to assess climate-
related risks and opportunities are set
out in the table on page 47. We have
chosen these metrics because they
relate directly to our material climate
risks and opportunities, and because
they are where we can make the biggest
potential impact. In setting our metrics
and targets, we have ensured that they
are in line with the Paris Agreement and
aligned to a 1.5°C pathway, the UK’s
commitment in the Climate Change Act
2008 (2050 Target Amendment) Order
2019 and other relevant legislation, as
well as the British Retail Consortium’s
Climate Action Roadmap which we
support. The carbon, cotton and water
metrics are aligned to the Textiles
2030 voluntary agreement, which we
have signed up to as members (and
now a partner). These topics are also
important to our colleagues, customers
and society more broadly.

1 Please see our corporate website for our full target wording.

Dunelm Group plc Annual Report and Accounts 2023

TCFD REPORT

TCFD continued

In FY23, we reduced our overall Scope
1 carbon emissions by 0.2% from our
FY19 baseline despite the strong sales
growth of 49% over the period. We have
achieved this through our gas boiler
replacement programme in stores
(which is on track to be completed by
FY30) and the ongoing transition of
our company car fleet to fully electric
or hybrid. However, we realise that we
need to do more to hit our FY30 target
of a 50% absolute reduction against our
FY19 baseline. We moved our trunking
vehicles from diesel to compressed
natural gas in July 2023, which should
reduce emissions from these vehicles
by >85%. In addition, we are trialling
electric vans in our Made to Measure
fitter fleet and using a fully electric

44-tonne vehicle for deliveries to
stores in partnership with DHL. We are
actively looking for more opportunities
to reduce emissions within our vehicle
fleet in line with the innovation of the
fleet industry.

Our Scope 2 emissions increased
slightly in the year due to the acquisition
of the Sunflex business towards the end
of FY22. However, we transitioned this
business to renewable electricity and
from October 2022 all of our electricity
supply is from renewable sources.

The Scope 3 emissions in our target
boundary have increased by 30%
since FY19, mainly due to the 49%
increase in sales in that time period.

Currently we are using spend-based
data for our purchased goods and
services emissions, which are 62%
of the Scope 3 emissions within our
target boundary. Due to the limitations
with this approach, we will not be able
to recognise any progress that our
suppliers are making in reducing their
emissions until we transition to more
specific supplier and product-based
information. We are moving towards
this in FY24 as we have invested in
a supplier data platform and are
currently conducting product life-
cycle assessments as well as working
in partnership with our suppliers to
support them on their transition to
net zero.

Scope 1
Scope 2 (market-based)
Scope 3
Purchased goods and services
Use of sold products (direct use phase only)
Upstream transportation & distribution
End-of-life treatment of sold products

All other categories combined1
Total Scope 3 within target boundary2
Total Scope 3 (including indirect use phase
of use of sold products)

FY19 (updated)
Emissions
(tCO2e)
7,059
10,861

FY20
Emissions
(tCO2e)
7,108
8,757

FY21
Emissions
(tCO2e)
8,633
268

FY22
Emissions
(tCO2e)
7,902
21

449,762
164,736
30,296
26,873

16,240
687,907

1,012,190

N/A
N/A
N/A
N/A

N/A
N/A

N/A

N/A
N/A
N/A
N/A

N/A
N/A

N/A

FY23
Emissions
(tCO2e)
7,044
27

557,924
238,774
43,449
33,986

19,785
893,918

N/A
N/A
N/A
N/A

N/A
N/A

N/A

1,385,812

Streamlined Energy and Carbon Reporting emissions by source

Purchase of energy
Vehicles on company business
Vehicles in the Home Delivery Network

FY19
MWh

57,167
4,061
9,467

FY20
MWh

50,547
3,720
12,198

FY21
MWh

53,158
4,382
15,959

FY22
MWh

51,980
3,979
15,773

FY23
MWh

51,415
3,398
15,725

1 All other categories includes capital goods, fuel & energy-related activities, waste generated in operations, business travel, employee commuting, upstream

leased assets, downstream transportation & distribution, processing of sold products, downstream leased assets, franchises and investments.

2 Target boundary for Scope 3 excludes the indirect use of sold products.

Dunelm Group plc Annual Report and Accounts 2023

Metrics and Targets c) Targets used to manage climate-related risks and opportunities and performance against targets
In response to the Net-Zero Standard set by SBTi, we submitted our net zero 1.5-degree aligned targets across all Scopes to
be validated by SBTi, and received confirmation of approval in September 2023, post year-end1. As members of the BRC and
Textiles 2030, we also have targets aligned to cotton and water usage metrics. We have long-term remuneration targets for
Executive Directors over a range of sustainability metrics. These vary from year to year, but include Scope 1 carbon emissions,
plastic packaging, more responsibly sourced cotton and take-back % (see page 107 for more details).

Climate-related risk Metric and target

Baseline

Progress

Carbon
emissions

Reduce absolute Scope 1
carbon emissions by 50%
against an FY19 baseline
by FY30

7,059 tCO2e
in FY19

7,044 tCO2e in FY23, which is a 0.2% reduction on the FY19
baseline reflecting the progress made (see Scope 1
commentary on pages 45 to 46).

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Reduce Scope 1 carbon
emission intensity against
FY19 baseline2

6.4 tCO2e/£1m
Group revenue
in FY19

Purchase 100% renewable
electricity every year

N/A

Reduce absolute Scope 3
carbon emissions in our
target boundary3 by 50%
against an FY19 baseline
by FY30

Reduce aggregate water
footprint in own brand
textile products by 30%
by 2030

100% of own brand
cotton more responsibly
sourced by 20252

687,907 tCO2e
in FY19

Calendar year
(CY) 2019

N/A

Water stress

Nature

32% reduction in FY23 to 4.3 tCO2e/£1m Group revenue
(20% reduction on the FY19 baseline in FY22).

99.7% in FY23 for the year on average but 100% from October
2022 onwards (99.7% in FY22).
893,918 tCO2e in FY23. Absolute Scope 3 carbon emissions
have increased by 30% due to sales and spend increasing by
49%. There is, however, an intensity reduction of 11%. We
have plans to transition away from entirely spend-based data
towards more product and supplier-specific data for Scope 3.

This target reduction is in line with our commitment to Textiles
2030. We have carried out our baseline water footprint using
the WRAP water footprint tool and have just received our
CY2022 footprint which we are assessing.

26% in FY23. During FY23, we moved our environmental
accreditation to Better Cotton, who are industry leaders in
this area. We remain committed to sourcing c.100% more
responsible cotton by 2025. However, FY23 was a year of
transition during which we were registering and accrediting
suppliers to Better Cotton. We expect to see a significant
improvement in FY24 as the remainder of our suppliers
complete this process and our new approach is more
established across our supply base.

Packaging

50% more responsibly
sourced timber by FY25

N/A

We are currently working towards obtaining robust weight-
based data ahead of publishing, which should be in FY24.

30% less virgin packaging
in own brand range by
2025 measured by weight
per £1 sales2

2.2g per £1
sales in FY20

36% reduction in FY23 (FY22: 23% reduction). We have both
reduced the absolute amount of plastic packaging used per
item and also increased the recycled content in our plastic
packaging.

Circular
economy

Easy to use take-back
service in place for 50% of
our own brand products2

N/A

61% in FY23 (FY22: 61%). Our take-back service has continued
to prove popular with our customers in stores. We are now
collecting over 70 tonnes of textiles per month and we
improved our collection and sorting processes during the
year to help with our journey towards product circularity.
We have been trialling take-back of other homewares items
in a selection of stores.

1 Please see our corporate website for our full target wording.
2 Limited assurance provided by Ernst & Young LLP for FY23 and applicable to our Revolving Credit Facility (not applicable beyond FY23) and LTIPs as relevant.
3 Target boundary for Scope 3 excludes the indirect use phase of use of sold products.

Listing Rule 9.8.6R Compliance Statement
Dunelm Group plc has complied with all of the requirements of LR 9.8.6R by including climate-related financial disclosures in this section (and
in the information available at the locations referenced therein) consistent with the TCFD Recommendations and Recommended Disclosures.

Independent Assurance
We engaged Ernst & Young LLP to provide limited assurance for FY23 over the key performance metrics which are marked with a 2 in the
table above. The full assurance statement and the Basis of Reporting documents that were applied in preparing these metrics can be found
online on our corporate website: corporate.dunelm.com.

Dunelm Group plc Annual Report and Accounts 2023

RISKS AND RISK MANAGEMENT

Our approach to risk management

Risk governance
The Board as a whole takes
responsibility for the management of
risk throughout the Group and ensures
that our strategic objectives are in line
with our risk appetite. It is supported by
the Audit and Risk Committee, which
monitors the ongoing effectiveness of
our risk management framework and
receives independent assurance on
the effectiveness of our approach to
risk management and internal control
systems through the activities of
internal audit.

For more information on the management
of our internal controls see page 85.

There is a formal process for setting
the risk appetite and for identifying,
assessing, and reviewing risks, as
described below and opposite. Risks
inevitably evolve and change over
time and the Board acknowledges
that the risk management framework,
and our system of internal controls,
are designed to manage such risks
appropriately, rather than eliminate
them.

Risk management
We have an established Risk
and Resilience Committee (‘R&R
Committee’) which is chaired by the
CFO and meets monthly. It comprises
risk owners from various business
areas and senior representatives from
our compliance functions. In addition,
a representative from internal audit
attends the meetings to provide
additional insight and challenge.

The R&R Committee’s key purpose
is to develop and review the risk
management framework to ensure
that it is effective and assist the Board
and Audit and Risk Committee in their
oversight of risk management. At each
meeting there is a review of leading
and lagging key risk indicators (‘KRIs’)
associated with Dunelm’s principal risks
enabling management to discuss and
take proactive steps to further mitigate
as may be appropriate. In addition, a
different deep dive topic is presented
at each meeting – these typically cover
principal or key operational risks that
are trending upwards or retain a high
residual risk impact. Meetings also
consider progress against action
plans arising from internal audit
reviews, updates from key compliance

areas (such as data protection, cyber
security, product quality and ethics
and food safety) and horizon scanning.
A summary of the R&R Committee’s
activities and findings is reported on
a regular basis to the Audit and Risk
Committee.

Individual risks
Individual members of the Executive
Team and senior leadership have
responsibility for managing the risks
and mitigating controls for their
respective business areas. They do this
by maintaining their own operational
risk registers and are responsible
for ensuring that any material issues
or trends are escalated to the R&R
Committee as appropriate.

Risk identification and
prioritisation
We adopt a top-down and bottom-up
approach to ensure that there is an
overarching view of Group risks. This
is considered monthly by way of the
KRIs presented to the R&R Committee,
but also more formally by way of a
biannual review of the key operational
risks (presented by each respective
operational risk register owner), as well
as the Group’s principal risks (presented
by each respective principal risk owner).
As part of the assessment, the key
operational risks are mapped to the
principal risks to enable appropriate
challenge to those risks identified as most
material to the Group. The assessment
considers both the inherent risk (before
mitigation) and residual risk (after
mitigation is applied). The output of
the assessment is reported to the Audit
and Risk Committee for challenge and
consideration ahead of being presented
to the Board for review and approval.

Risk appetite
The Board sets the risk appetite for
the Group, taking into consideration
the expectations of its shareholders
and other stakeholders. The clear
articulation of our risk appetite provides
for an effective mechanism to inform
investment decisions, facilitate the
discussion of risk, set parameters within
which objectives must be delivered,
and support the awareness of risk by
our colleagues and partners. The Board
reviewed the Group risk appetite in
July 2023 and confirmed that it remains
appropriate.

Dunelm Group plc Annual Report and Accounts 2023

Principal risks and
uncertainties
The Board confirms that a robust
assessment of the principal risks
facing the Group has been carried
out, including emerging risks and those
that would threaten its business
model, future performance, solvency,
or liquidity.

In conducting such a review, we
identified two principal risks where
the potential impact is deemed to be
increasing.

The IT systems, data, and cyber risk
is considered to be increasing due
to the rise in malware and phishing
attacks targeting organisations of all
types. These activities pose a serious
challenge to the security and integrity
of our digital infrastructure. Combating
these threats remains a priority and we
continue to invest in proactive measures
to protect the business.

This year we separated business change
risk from the IT systems, data, and cyber
risk to reflect our ongoing investment
in change programmes that are key to
our strategy and the delivery of further
growth and efficiencies. We consider
this an increasing risk in the short term
as we take on larger and more complex
projects. However, it is anticipated that
the risk will stabilise as we continue to
deliver.

We also removed catastrophic business
events as a standalone principal risk.
The impact of, and approach that we
would take to, large disruptive events
has been considered as part of our
review and ongoing management of
each of the other principal risks. Our
approach is supported, amongst other
things, by learnings from our response
to the pandemic and our business
continuity plans.

The Board’s assessment of the principal
risks and uncertainties facing the Group
as at the date of this report and how
we mitigate them is set out on pages
50 to 54. The principal risks are not set
out in any order of priority and do not
represent all risks associated with the
Group’s activities. Additional risks that
are not currently deemed principal risks
are nevertheless monitored for their
impact on the Group.

Risk management framework

Risk governance and oversight
Group Board
• Overall responsibility for the
risk management framework.

• Sets the risk appetite for

the Group.

• Responsible for ensuring that
effective internal control and
risk management systems are
embedded within the business.
• Conducts annual assessment of

principal risks.

Audit and Risk Committee
• Responsible for assessing

the ongoing effectiveness of
the Group’s risk management
framework, controls and
processes.

• Approves the internal audit

programme and undertakes an
independent review of action
plans to mitigate and manage
material risks.

• Reviews the Group risk register.

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Top-down
review of risks

Bottom-up
review of risks

Independent assurance
Internal audit
• Provides independent assurance
to the Board, Audit and Risk
Committee and management
on the effectiveness of risk
management and internal control
systems.

• Conducts independent audits of

risks to the business in accordance
with risk-based internal audit
programme.

Risk-based reviews
• Conducts specialist third-party

reviews as required.

Risk management
Risk and Resilience Committee
• Responsible for developing and
reviewing the risk management
framework and processes.

• Supports the Board and Audit and
Risk Committee in their oversight
of risk management.

• Conducts reviews of the principal

•

risks.
Identifies and manages risks as
they arise.

• Monitors Key Risk Indicators.
• Provides forum to assess progress
under action plans to mitigate and
manage risks.

• Conducts deep dives into areas of

operational risk.

• Reviews management information
on key compliance areas such as
health and safety, data protection
and information security.

Risk and control owners
Individual Executive Team and operational risk owners
• Primary responsibility for
identifying, assessing and
managing risk in area of
responsibility within risk appetite.

as appropriate.

• Maintain operational risk register

in area of responsibility.

• Escalate key risks and concerns

Dunelm Group plc Annual Report and Accounts 2023

RISKS AND RISK MANAGEMENT

Principal risks and uncertainties

At a glance

Principal risks

Customer offer

Product reputation and trust

Business change

People and culture

IT systems, data and cyber security

Regulatory and compliance

Customer offer

Risk trend

Description of risk
Ongoing external uncertainty and inflationary pressure
on consumers has led to significant change in consumer
behaviour. Failure to respond to changing consumer needs
and to maintain a competitive offer (value & choice, friendly &
expert, fast & convenient and good & circular) will undermine
our ambition to increase market share and drive profitable and
sustainable growth.

Climate change and environment

Stakeholder groups

Risk trend

Link to strategy

Risk owner
Customer Director

How we mitigate
•

Increased utilisation of customer and market insights
enabling us to understand more about our existing and
potential new customers and adapt as appropriate to their
changing needs.

• Ongoing review and development of our strategy to

become a more trusted and valuable brand (see pages 8
and 9 for business model).

• Continued investment in digitalising our business to

improve our customer offer.

• Focus on new product development, particularly own
brand, in both existing and new categories, as well as
continued product innovation in existing categories with
‘sustainability’ being a key element to strengthen our
customer offer.

• Ongoing review of supply chain capacity and capability,

investing as needed.

• Continued expansion of our range of products to appeal to
every budget and style and regular review of price points.
• Ongoing focus on engagement through social media and

community involvement.

Supply chain resilience

Finance and treasury

Strategic drivers

Product
mastery

Total
retail system

Culture
and identity

Stakeholder groups

Customers

Colleagues

Communities

Suppliers

Planet

Shareholders

Risk trend

Stable

Increasing

Decreasing

Dunelm Group plc Annual Report and Accounts 2023

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Product reputation and trust

Business change

Description of risk
Our stakeholders expect us to deliver products that are safe,
compliant with legal and regulatory requirements, and fit
for purpose. Our customers are increasingly aware of the
environmental and social impact of their purchases and want
to know that our products have been responsibly sourced and
that their environmental impact is minimised.

Failure by our suppliers to uphold our approach to business
ethics, regulatory compliance, human rights (including safety
and modern slavery) and the environment may undermine or
damage our reputation as a responsible retailer, and result in
a loss of confidence in Dunelm.

Description of risk
Dunelm recognises that there is a huge opportunity in
digitalising the business and has invested and will continue to
invest in system improvements to drive growth and efficiency.

Failing to successfully introduce and deliver wider technology
and new systems across the business and leverage the
data generated to further improve our proposition and
operations could result in reduced operational efficiency,
competitiveness, relevance and growth. Furthermore, failure
to deliver the expected objectives on time and on budget
could impact delivery of the planned business benefits.

Stakeholder groups

Risk trend

Stakeholder groups

Risk trend

Link to strategy

Risk owner
Director of Commercial and
Supply Chain

Link to strategy

Risk owner
Chief Technology and
Information Officer

How we mitigate
• Mandatory training, a range of policies and our Ethical
Code of Conduct for Suppliers and Partners govern,
amongst other things, the quality of products and
production processes, and our expectations in relation
to responsible sourcing, anti-bribery and corruption and
modern slavery.

• Monitoring of our expectations on business practices,

product quality and compliance with applicable regulations
undertaken by a dedicated team, assisted by third-party
due diligence checks and our ethical audit programme.
• Provision of enhanced training to commercial teams and

suppliers on identifying and utilising sustainable materials
in our products and packaging.

• Conduct regular supplier conferences and awareness

training at which compliance with policies and the Ethical
Code of Conduct for Suppliers and Partners is a key topic.
• Focus on collation of data from suppliers in connection with

sustainability targets for products and packaging.

• Regular review by senior management of product recalls

and product safety-related issues, with clear procedures in
place to enable swift action to be taken as appropriate.

• Whistleblowing procedure and independently

administered helpline enables concerns to be raised in
confidence.

How we mitigate
• Continued investment in digitalisation aligned to strategic

priorities.

• Structured and disciplined delivery methodology applied
to business change programmes, led by experienced
project managers.

• Detailed management oversight to monitor progress

and cost.

• Dedicated resource allocated to key change programmes,
supported by additional, external expertise as needed.
• Regular review of roadmaps and workstream prioritisation
by cross-functional leaders to ensure ongoing alignment
with delivery of strategy.

• Focus on building and developing strong third-party
relationships to enable effective collaboration,
communication and ongoing delivery.

• Ongoing simplification and rationalisation of processes

and systems.

• Regular reviews of progress using appropriate KPIs with all
stakeholders, including identification and management of
risks to delivery.

Dunelm Group plc Annual Report and Accounts 2023

RISKS AND RISK MANAGEMENT

Principal risks and uncertainties continued

People and culture

IT systems, data and
cyber security

Description of risk
Our business could be adversely impacted if we fail to attract,
retain, and develop colleagues with the appropriate skills,
capabilities and diverse backgrounds.

Description of risk
Our IT systems and infrastructure are critical to managing
our operations, interacting with customers, and trading
successfully.

Failing to embed and live our values could impact business
performance, the delivery of our purpose and the long-term
sustainability of our business.

A key system being unavailable or suffering a security
breach could lead to operational difficulties, loss of sales
and productivity, legal and regulatory penalties due to loss
of personal data, reputational damage, and loss of
stakeholder trust.

Stakeholder groups

Risk trend

Stakeholder groups

Risk trend

Link to strategy

Risk owner
Stores and People Director

Link to strategy

Risk owner
Chief Technology and
Information Officer

How we mitigate
• Regular review by the Executive Team and the Group Board
of colleague ‘dashboard’ and KPIs, including attrition and
recruitment rates. Such reviews also include an assessment
of capabilities to ensure that we continue to have the right
skillsets in the business to deliver our strategy.

• Continued focus on training, development and mentoring
opportunities, with emphasis on ‘growing our own’ talent,
driven by the management-level Talent Committee.

• Ongoing review and development of our total employee
value and reward proposition, assisted by benchmarking
exercises as appropriate.

• Enhanced mental and financial wellbeing programmes and
initiatives to support colleagues including introduction of
targeted support relating to parenthood, pregnancy loss,
and menopause.

• Regular communication with colleagues through

engagement surveys, National, Regional and Local
Colleague Voice meetings, D&I networks and huddles.
Utilising feedback to understand colleague perception of
culture and implementing actions based on the output.

• Commitment to increasing diversity across the Group.
• Continuing to ‘bring our shared values to life’ under our

behavioural framework project.

How we mitigate
• Continued investment and roadmap for further investment

in systems development and security.

• Ongoing programme of work to decommission outdated

applications, platforms, and infrastructure.

• Onboarding of new suppliers or suppliers undergoing

contract renewal requires an assessment of the robustness
of their security and data protection controls.

• Data protection and information security policies and
procedures in place and governed by subject matter
experts, including a dedicated, specialist information
security team, data protection officer and head of data
management.

• Mandatory training and ongoing awareness programmes
keep colleagues informed and aware of data protection
and information security risks.

• Security Operations Centre and vulnerability management
service tools provide increased visibility of security events
and enable vulnerabilities to be monitored and quickly
addressed. In addition, periodic systems vulnerability and
penetration testing carried out.
• Restricted access to sensitive data.
• Regular review and testing of incident and crisis

management plans, and business continuity plans, which
includes reviewing the resilience of and disaster recovery
for IT systems.

• Data and reporting used to track system performance,
utilisation, and vulnerability across our IT estate, with
regular reviews undertaken and delivery of resulting
actions monitored.

Dunelm Group plc Annual Report and Accounts 2023

Regulatory and compliance

Climate change and environment

Description of risk
We operate in an increasingly regulated environment and must
comply with a wide range of laws, regulations, and standards.

Failure to comply with or to take appropriate steps to
prevent a breach of these requirements could result in formal
investigations, legal and financial penalties, reputational
damage and loss of business.

Description of risk
Failure to positively change our impact on the environment
would fall short of the expectations of our customers,
colleagues, shareholders, and other stakeholders which could
lead to reputational damage and financial loss.

In addition, an inability to anticipate and mitigate climate
change and other environmental risks could cause disruption
in the availability and quality of raw materials such as cotton
and timber, affecting production capacity, product quality,
and overall supply chain resilience. This, and potential
transition risks related to environmental taxation, could result
in higher costs, delays, and potential loss of customers.

Stakeholder groups

Risk trend

Stakeholder groups

Risk trend

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Link to strategy

Risk owner
Group General Counsel
and Company Secretary

Link to strategy

Risk owner
Chief Executive Officer

How we mitigate
• Suite of compliance policies in place which are reviewed

regularly and governed by subject matter experts.
Group-wide mandatory training provided for high-risk
compliance areas such as health and safety, anti-bribery
and corruption, data protection and cyber security, with
additional training undertaken as required or as may be
appropriate to a specific role.

• Data trends for high-risk compliance areas and KPIs
monitored and reviewed by the Risk and Resilience
Committee, as well as cross-functional steering groups
(such as Pathway to Zero).

• Dedicated teams for product quality and ethics,

sustainability and health and safety, supported by in-house
legal team.

• Whistleblowing procedure and independently

administered helpline enables concerns to be raised in
confidence.

• Compliance with policies and Ethical Code of Conduct

for Suppliers and Partners monitored via our ethical audit
programme.

• Regular health and safety meetings for each of the retail
and distribution centres. Health and safety reports,
including audit outcomes, reviewed by the Risk and
Resilience Committee and the Board on a regular basis,
with in-depth presentation made by the Head of Health &
Safety to the Board at least annually.

• Continued focus on food hygiene and allergen awareness
in our Pausa cafes by way of regularly reviewed operating
guidelines, compulsory colleague training and regular
audits.

• Ongoing horizon scanning and monitoring of legislative
and regulatory developments and announcements in
relation to prospective change.

How we mitigate
• Annualised targets in place to reduce emissions, energy
usage and waste to landfill, and increase recycling in our
operations.

• Pathway to Zero Steering Group (chaired by the CEO)
oversees progress against environmental targets and
climate change work with support from external advisers
(as required).

• Updates on progress towards targets/commitments,

including emerging risks, challenges and opportunities
under our climate change roadmap, regularly provided to
the Board.

• Regular review of standards and policies that govern

our approach to high-risk raw material types and routes.
Increased use of lower-impact raw materials in products
and ongoing work with our suppliers to move towards a
more circular design and business model.
Implemented initiatives to shift vehicles from traditional
fossil fuels to more sustainable alternatives.

•

• Sustainability targets built into Executive Director long-

term incentives.

• Active engagement with suppliers and partners on the

collation of data required to assess delivery against carbon
reduction targets.

• Dedicated sustainability team.
• Regular horizon scanning conducted to keep abreast of

regulatory change and stakeholder sentiment.

Further information can be found in the
TCFD report on pages 40 to 47.

Dunelm Group plc Annual Report and Accounts 2023

RISKS AND RISK MANAGEMENT

Principal risks and uncertainties continued

Supply chain resilience

Finance and treasury

Description of risk
We are dependent on complex global supply chains and
fulfilment solutions to deliver products to our customers.
Instability in the global supply chain or failure of a key supplier
may impact our ability to effectively manage stock and satisfy
customer demand.

Description of risk
Progress against business objectives may be constrained by a
lack of short-term funding or access to long-term capital.

Stakeholder groups

Risk trend

Stakeholder groups

Risk trend

Link to strategy

Risk owner
Director of Commercial
and Supply Chain

Link to strategy

Risk owner
Chief Financial Officer

How we mitigate
• Ongoing review of supply chain strategy to ensure capacity

is in line with long-term financial plan.

• Detailed budgeting and forecasting processes match

capacity to demand, and are reviewed weekly by a cross-
functional team.

• Continuous monitoring of demand and stock visibility.
• Regular review and testing of incident and crisis

management plans, and business continuity plans.
• Dedicated procurement team oversees process for

tendering and negotiating with supply chain suppliers and
ensures that appropriate due diligence is carried out on
existing and prospective third-party partners.

• Active management of key supplier relationships to enable
early warnings of disruption and agree mitigating actions.

• Active engagement with suppliers and partners on the

collation of data required to assess delivery against carbon
reduction targets.

• Ongoing focus on initiatives to improve efficiency in the

delivery process.

How we mitigate
• Maintain relationships with a syndicate of committed

partner banks to ensure appropriate funding is available.
• Revolving Credit Facility of £250m in place, extended until

September 2027.

• Group treasury policy governs levels of debt, cash

management strategies and foreign exchange exposures.

• Hedging for foreign exchange and freight and energy

prices agreed in advance, to help mitigate volatility and aid
margin management.

• Continued focus on cost discipline through capital

investment approval process and ongoing scrutiny of
discretionary expenditure.

• Treasury and Capital Committee ensures appropriate

governance around matters such as funding, dividends,
foreign exchange, and energy hedging.

• Ongoing focus on actions to improve controls around stock
and cash management, stock purchasing and forecasting.

Emerging risks and opportunities
Risks continue to evolve and change, and an awareness of emerging risks is important in driving effective strategic
planning. Understanding the potential implications of emerging risks and monitoring them enables us to consider them
appropriately within our decision-making processes.

We identify emerging risks by reviewing customer and market metrics and insights, relevant publications and consultation
papers, with the assistance of both internal and external subject matter experts.

While no significant emerging principal risks were identified in the year, we recognise that there is a high level of ongoing
uncertainty in the economy and continue to closely monitor the potential impact so far as it relates to Dunelm. We also
continue to consider the impact of technological change and monitor the pace of regulatory change and stakeholder
sentiment in relation to environmental and other sustainability-related matters.

Dunelm Group plc Annual Report and Accounts 2023

GOING CONCERN AND VIABILIT Y STATEMENT

Going concern and
viability statement

At the time of approving the financial
statements, the Board of Directors is
required to formally assess that the
business has adequate resources to
continue in operational existence and as
such can continue to adopt the ‘going
concern’ basis of accounting. The Board
is also required to state that it ‘has a
reasonable expectation that the Group
will continue in operation and meet its
longer-term liabilities as they fall due’
(the ‘Viability Statement’). To support
this statement, the Board has considered
the Group’s current financial position,
its strategy, the market outlook and its
principal risks. As the Group runs a five-
year planning process, the Board has
reviewed viability over a five-year period.
The base case for this review is the five-
year plan presented to and approved by
the Directors in May 2023.

The Group is operationally and
financially strong and has a long track
record of consistently generating profits
and cash, which is expected to continue
both in the short and long term. In the
financial years ending June 2020 and
June 2021, despite the impact of the
pandemic and the enforced closure of
its stores for significant periods, the
business continued to generate high
levels of cash before distributions.

Modelling potential
downside scenarios
In their consideration of going concern
and the future viability of the Group, the
Directors have reviewed future profit
forecasts and cash projections, which
reflect their experience in managing
the business. Both scenarios modelled
assume that variable costs would reduce
as sales reduce.

The ‘market downturn’ scenario assumes
a change in consumer spending away
from homewares, due to inflationary
pressures, with FY24 showing no sales
growth on FY23 and 8% lower growth
in FY25 than in the base case scenario.
In addition, a lower margin than base
case is assumed throughout the five-year
period. This ‘market downturn’ scenario
does not include any mitigating cost
reduction actions, which would be
taken if such a downturn occurred, and
assumes the continuation of dividend
payments in line with our current
dividend policy. In this ‘market downturn’
scenario, the Group would not breach
any of its financial covenants.

The ‘deeper market downturn’ scenario
assumes a 5% sales decline in FY24
compared to FY23 and 8% lower growth
in FY25 than in the base case. A more
severe margin erosion is assumed in
this scenario compared to the ‘market
downturn’ scenario and margin erosion
continues throughout the five-year
period. Similar to the ‘market downturn’
scenario, we have assumed no cost
mitigation and the continuation of
dividend payments in line with our
current dividend policy. As with the
‘market downturn’ scenario, the Group
would not breach any of its financial
covenants.

The Directors continue to assess the
risks that climate change poses to the
business via modelling and disclosures
in line with the Task Force on Climate-
related Financial Disclosures. The Group
will actively manage and mitigate these
risks as required within the existing
enterprise risk management processes
(as outlined on page 45). Climate change
is not expected to have a significant
impact on the Group’s going concern
assessment or on the viability of the
Group over the next five years.

Reverse stress testing
To provide additional assurance around
the Group’s viability, two reverse stress
tests have been modelled, similar to
the reverse stress testing carried out
at the end of FY22. In both of these
reverse stress tests we have assumed
that variable costs would reduce in
line with sales, that we would be able
to save £20m per annum of fixed costs
and that we would reduce the level of
capital investment to £10m per annum
and suspend the payment of dividends.
In the first reverse stress test, we have
modelled the sales decline required to
breach either of the current covenants
in the Revolving Credit Facility (RCF). A
sales reduction of 23% in FY24 and 28%
in FY25 from the base case would be
required for covenants to be breached
by the end of FY25. In the second reverse
stress test scenario, we have modelled
the level of sales reduction required
to breach the RCF limit of £250m. This
would require a reduction in sales of
47% in both FY24 and FY25 from the
base case to effectively run out of
funding by the end of FY25, assuming
reasonable mitigating actions have been
implemented.

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Financing
The Group’s banking agreements and
associated covenants are set out in the
CFO’s Review and include a £250m RCF
(maturing in September 2027 with a two-
year extension option, subject to lender
consent), an accordion option with a
maximum facility of £100m and a £10m
uncommitted overdraft.

The Group ended the financial year
with net debt of £31m. The financial
covenants are tested in line with our
December interim reporting and June
year-end reporting. These covenants
are met with significant headroom. In
both downside scenarios, the Group
continues to forecast compliance with all
financial covenants throughout the going
concern and viability period.

Going concern and
viability conclusion
In both downside scenarios Dunelm has
sufficient liquidity to continue trading,
including maintaining the payment of
dividends in line with its dividend policy
and comfortably meeting its financial
covenants. The reverse stress modelling
has demonstrated that a sales reduction
of 23% in FY24 and 28% in FY25 from
the base case is required to breach
covenants by the end of FY25 and a 47%
sales reduction is required to breach the
RCF limit by the end of FY25, assuming
reasonable mitigating actions have been
implemented. Even in such an event,
management would follow a similar course
of action to that initially undertaken during
the recent Covid-19 pandemic. Such
actions could include further reductions
in discretionary spend (e.g. marketing and
travel) and capital investment in new stores
and refits, and reducing headcount.

The Board believes that the Group is well
placed to manage its financing and other
significant risks satisfactorily and that the
Group will be able to operate within the
level of its facilities and meet its liabilities
as they fall due, for at least the next five
years. For this reason, the Board also
considers it appropriate for the Group
to adopt the going concern basis in
preparing its financial statements.

Strategic Report
This report was reviewed and signed by
order of the Board on 20 September 2023.

Nick Wilkinson
Chief Executive Officer
20 September 2023

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Seizing the opportunity

to
savour
experiences

In this section
Chair’s introduction
Governance dashboard
Directors and officers
Governance structure
Board activities
Culture and values
Nominations Committee

report

58
60
61
64
68
72

Audit and Risk

Committee report

Remuneration

Committee report

Directors’ Remuneration

Policy 2023

Annual Report on
Remuneration
Directors’ report
Statement of Directors’

responsibilities

103
119

123

Dunelm Group plc Annual Report and Accounts 2023

experiences

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Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Chair’s introduction to
corporate governance

On behalf of the Board, I am pleased
to present our Governance report for
the year ended 1 July 2023.

Dunelm’s long-term success depends
on our strong culture and shared values,
of which we are immensely proud,
underpinned by robust governance.
This report provides insight into the role
and activities of our Board and how our
governance framework contributes to
the development and delivery of the
Group’s strategic ambitions, for the
benefit of all our stakeholders.

We recognise the ongoing focus
given to all aspects of governance
by our stakeholders, including audit
and risk, regulatory compliance and
sustainability, and the need to ensure
that our approach is appropriate for
Dunelm. We also recognise that a
high level of engagement is key to
understanding what matters most to
those with an interest in our business
and that it is important to communicate
our thinking and approach in response.

I am confident in our ability to
effectively engage with our key
stakeholders and to incorporate their
views in our decision-making. This
has been demonstrated this year as
we have recognised the impact of the
challenging economic environment in
on our approach to offering more value
and choice to customers, colleague
reward and remuneration and our
community initiatives. More information
on how we consider the interests of
our key stakeholders is set out on
pages 30 to 34.

Key activities
During the year, the Board focused on
reviewing our key strategic priorities
and areas of focus, as well as continuing
to build capabilities and develop our
ambitions for growth. Strategic deep
dives into all areas of the business took
place, providing valuable insight into
our runway for growth and enabling
constructive challenge and robust
debate. This was particularly evident
at the May strategy day, as articulated
further on page 70.

Alison Brittain
Chair

We remain fully committed to our
sustainability agenda, working
collaboratively with suppliers,
colleagues, and customers to achieve
success. More details about our work
this year can be found on pages
26 and 27 and in our Sustainability
Report 2023.

We also maintained focus on
reviewing and laying the groundwork
for upcoming regulatory change,.
This includes the Government’s final
proposals on new corporate reporting
set out in its response last year to
the White Paper on restoring trust
in audit and corporate governance
and the forthcoming sustainability-
related requirements of the Transition
Plan Taskforce, the International
Sustainability Standards Board, and the
Taskforce on Nature-related Financial
Disclosures.

The Board has continued to prioritise
senior management succession
planning and development of internal
talent to support our growth ambitions.

This work has resulted in a clearer
understanding of capabilities and a
stronger pipeline for succession. We
also continue to promote diversity
and inclusion across the colleague
population, as acknowledged by our

inclusion of an ethnic diversity target in
this year’s LTIP and the Board’s ongoing
support for our colleague networks and
their respective initiatives and events,
further details of which are set out in our
Sustainability Report 2023.

This year we also conducted a detailed
review of our remuneration framework,
ahead of proposing to shareholders
a new policy for adoption at the 2023
AGM. This included consultation with
major shareholders and proxy agencies
and I offer our thanks to them for their
engagement and input. A detailed
explanation of the proposed changes to
the policy can be found on pages 89 to
91 and the new policy itself is on pages
93 to 102.

Board changes in FY23
I was delighted to be appointed as
Chair as of 1 January 2023, having
joined the Board in 7 September 2022
as an Independent Non-Executive
Director and Chair Designate. I would
like to take this opportunity to thank
my predecessor Andy Harrison for his
dedication and significant contribution
in leading the Dunelm Board over the
last nine years.

Dunelm Group plc Annual Report and Accounts 2023

Board effectiveness
and composition
The Board considers evaluation to
be an essential check and balance on
whether its composition, focus and
approach is in line with the Company’s
overall ambitions. During the year, we
conducted an internal performance
review and I am pleased to report
that the output of this work was that
the Board and its Committees are
operating efficiently and productively.
More details of the evaluation process
can be found on page 78.

Our broad range of Board talent covers
a variety of skills and our diverse group
of Non-Executive Directors continue
to bring experience and challenge to
Board discussions.

Nevertheless, we are mindful that
two of our Non-Executive Directors,
William Reeve and Peter Ruis, will have
completed nine years on the Board
during 2024. Therefore, we go into

the new financial year focused on
succession planning to ensure that we
are well-placed to continue delivering in
a way that is beneficial to our business
and our stakeholders, consistent with
our culture and true to our
shared values.

AGM
Our AGM this year takes place on
Thursday 16 November 2023. In line
with the UK Corporate Governance
Code, all Directors will be seeking
re-election. In addition, in accordance
with the Listing Rules, each of the Non-
Executive Directors will be subject to
a vote of shareholders independent
of the Adderley family. In light of the
Adderley family holding, we are also
required to seek a Rule 9 waiver to allow
us to buy back shares to fulfil colleague
share option entitlements. We hope
that shareholders will support this
resolution, which is limited to
this purpose.

The year ahead
The Board remains conscious of the
ongoing need for good governance
and I am reassured that our framework
is strong and effective. The past year
has not been without its challenges and
the commitment demonstrated by our
colleagues is admirable.

I would like to take this opportunity to
say thank you, on behalf of the Board,
to all our colleagues in the business for
their continued hard work, dedication
and focus on ensuring we are ‘doing
the right thing’ for Dunelm and its
stakeholders, and to my fellow Directors
for their valued contribution. We have
started FY24 with confidence and in the
knowledge that the Company is led by
a highly competent and professional
team. I look forward to the support of
our shareholders as the business seizes
the opportunities that lie ahead.

Alison Brittain
Chair
20 September 2023

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Code compliance statement
This Governance report explains how we have applied the Principles of the UK Corporate Governance Code published
in July 2018 (the ‘Code’), which is available on the website of the Financial Reporting Council, www.frc.org.uk. These
Principles are applied to the Company’s sole trading subsidiary through the Group’s governance, risk management and
internal control structure.

The Board considers that it has complied in full with the Code during the financial year. Details of how we have applied
the Principles and complied with the Provisions can be found throughout this Annual Report. The table below provides an
overview of where relevant content and information can be found.

How we comply with the UK Corporate Governance Code 2018

Board leadership and
company purpose
Promoting and preserving
long-term value

Purpose, values, strategy
and culture

Page(s)

35, 58, 68

1, 10, 13, 72

Division of
responsibilities
Board structure and
independence

Board responsibilities

Page(s)

64, 66

Audit, risk and
internal control
Audit and Risk Committee report

Page(s)

External auditor and internal audit
independence and effectiveness 83, 85

Section 172 statement

Board biographies

Fair, balanced and understandable 82

Board engagement with
shareholders

Managing director conflicts
of interests

34, 68

66, 122

Composition, succession,
and evaluation
Nominations Committee report

Workforce policies and practices 36, 72

Board succession planning

Board evaluation

Page(s)

Risk management and internal
control framework

48, 85

Remuneration
Remuneration Committee report

Page(s)

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Governance dashboard

Board overview
Gender

55% Men

45% Women

Nationality

Length of tenure

82% British

9% Indian

9% Swedish

46% 0–3 years

18% 3–6 years

18% 6–9 years

18% 9+ years

Independence*

Age diversity

Ethnicity

40% Non-independent

60% Independent

* Number excludes the Chair who
was independent on appointment.

9% 40–50

64% 50–60

27% 60+

91% White

9% Asian

Board and Committee attendance

Director

Alison Brittain1

Sir Will Adderley

Nick Wilkinson

Karen Witts

Ian Bull

Kelly Devine

William Reeve

Peter Ruis

Marion Sears

Arja Taaveniku

Vijay Talwar

Andy Harrison2

Committee memberships

Board

Audit and Risk
Committee

Remuneration
Committee

Nominations
Committee

R N

R N A

R N

8/8

9/9

4/4

N/A

3/3

N/A

3/3

N/A

3/3

N/A

4/4

N/A

4/4

2/2

4/4

N/A

4/4

2/2

A Audit and Risk Committee member

N Nominations Committee member

R Remuneration Committee member

Chair

1 Alison Brittain joined the Board on 7 September 2022 and attended all meetings following her appointment.

2 Andy Harrison stepped down from the Board and its Committees on 31 December 2022. He attended all meetings prior to that date.

Dunelm Group plc Annual Report and Accounts 2023

Directors and officers

1. Alison Brittain
Chair
Independent on appointment
Appointed: September 2022
and as Chair in January 2023

Key strengths
An experienced business leader who brings
considerable expertise as NED and former
Chief Executive of a range of consumer-
facing companies. Has successfully scaled
businesses in the UK and internationally
and has longstanding plc experience
and shareholder understanding, coupled
with strong strategic insight and focus on
execution.

Past experience
Alison was CEO of Whitbread PLC from 2015
to 2023. Prior to that, she held a number
of senior roles in the UK banking industry,
serving as Group Director in the Retail
Division of Lloyds Banking Group PLC (2011-
2015), and Board Director at Santander UK
PLC (2007-2011) and Barclays PLC (1987-
2007). Alison is a former Non-Executive
Director of Marks & Spencer Group PLC.

Other commitments
Senior Independent Director at Experian plc.
Chair of English football’s Premier League.
Non-Executive Director at British Airways
plc. Chair and Trustee of The Prince’s Trust
Group Company.

1. Alison Brittain
R N I

2. Sir Will Adderley

3. Nick Wilkinson

4. Karen Witts

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2. Sir Will Adderley
Deputy Chair
Non-independent
Appointed: April 2003

3. Nick Wilkinson
Chief Executive Officer
Non-independent
Appointed: February 2018

4. Karen Witts
Chief Financial Officer
Non-independent
Appointed: June 2022

Key strengths
Previous Chief Executive of Dunelm, with a
detailed understanding and experience of all
aspects of the business. Particular expertise
in buying and trading, maintaining strong
and long-standing supplier relationships.

Past experience
Will has worked for Dunelm his whole
career since joining in 1992. He took over
the day-to-day running of the Group from
his father in 1996 and remained as Chief
Executive through the Group’s IPO in 2006.
Will became Deputy Chair in February 2011
and was reappointed Chief Executive in
September 2014 for an interim period until
31 December 2015.

Will retains an executive role to support the
business in matters agreed with the CEO,
as required.

Other commitments
Owner of WA Capital Limited and Trustee of
Stoneygate Trust.

Key strengths
An experienced CEO, and proven business
leader in multichannel retail businesses
operating across a number of consumer
brands and geographies.

Past experience
Nick was the Chief Executive of Evans Cycles
from 2011 to 2016 and the Chief Executive of
Maxeda DIY from 2007 to 2010. Prior to that,
he was Group Buying Director and MD of
Currys at Dixons Retail Group (1999 to 2006).
Nick spent his early career at Unilever and
McKinsey & Co.

Other commitments
Trustee of Rewilding Britain.

Key strengths
A highly qualified Chief Financial Officer
with a strong background in finance and
management, and a wealth of experience
across global retail and consumer-facing
businesses.

Past experience
Karen was CFO of Compass Group plc from
2019 to 2021 and CFO of Kingfisher Group
plc from 2012 to 2019. Before that, she
held various senior finance, strategic and
operational roles with Vodafone Group plc
(2010 to 2012), and at BT Group plc (1999
to 2010). Karen qualified as a Chartered
Accountant with Ernst & Whinney.

Other commitments
Non-Executive Director of Ipsen Pharma, SA.

Key

A Audit and Risk Committee member
N Nominations Committee member
R Remuneration Committee member

Chair

I Independent Director
D Designated NED for colleague matters

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Directors and officers continued

5. Ian Bull
Non-Executive Director
Independent
Appointed: July 2019

Key strengths
An experienced finance and strategy
specialist. Fellow of the Chartered Institute
of Management Accountants with over 20
years’ business and financial experience in
leading consumer-facing businesses. Long-
standing plc experience and shareholder
understanding.

Past experience
Ian was CFO of Parkdean Resorts Group from
2016 to 2018 and CFO of Ladbrokes plc from
2011 to 2016. He was Group Finance Director
of Greene King plc (2006 to 2011), having
spent his early finance career at Whitbread
PLC, Walt Disney Company and BT Group.
Ian is a former Non-Executive Director and
Audit Committee Chair of Paypoint Limited,
Senior Independent Director and Audit
Committee Chair of St. Modwen Properties
plc and Chair of Lookers plc.

Other commitments
Senior Independent Director at Domino’s
Pizza Group plc. Member of Chapter Zero,
the Directors’ Climate Forum and a regular
attendee of its events.

6. Kelly Devine
Non-Executive Director
Independent
Appointed: March 2022

Key strengths
An accomplished business leader having
held multiple executive roles in financial
services and payment firms. Particular
experience building enterprise partnerships
in complex ecosystems to increase
market share.

Past experience
Kelly was Senior Vice-President, Head
of Bank Partnerships at Mastercard from
2018-2020, having first joined the company
in 2015. Prior to that, she held various roles
at American Express from 2005 to 2015
and was a member of PwC’s Economics
consultancy practice from 2003 to 2005.

Other commitments
President of Mastercard UK & Ireland.
Board Member at UK Finance.

5. Ian Bull
R N A I

6. Kelly Devine
R N A I

7. William Reeve
R N A I

8. Peter Ruis
R N A I

7. William Reeve
Senior Independent Non-Executive
Director
Independent
Appointed: July 2015

Key strengths
An entrepreneur and technology investor
with extensive experience in the digital
sector and M&A.

Past experience
William co-founded three internet-
related businesses: Fletcher Research,
LOVEFiLM.com, and Secret Escapes.
He is a former Non-Executive Director of
Graze.com, Paddy Power plc, Zoopla and
Nutmeg among others.

Other commitments
Chief Executive of Oh Goodlord Limited.

8. Peter Ruis
Non-Executive Director
Independent
Appointed: September 2015

Key strengths
An experienced executive with particular
expertise in retail, brands, marketing and
product developed working for both large
and more entrepreneurial organisations.

Past experience
Peter was CEO of Indigo Books & Music Inc.
from 2022 to 2023, having previously joined
as President in 2021. He was the Managing
Director of Anthropologie Europe and
International from 2018 to 2020 and the
Chief Executive of Jigsaw from 2013 to 2018.
Prior to that, he held senior positions at John
Lewis Partnership (2005 to 2013), Levi Strauss
(2001 to 2004) and Ted Baker (1997 to 2001).

Other commitments
None.

Changes to the Board:
Alison Brittain joined the Board
on 7 September 2022.

Andy Harrison stepped down from the
Board on 31 December 2022.

Bill Adderley
Founder and Life President

Bill, together with his wife Jean, founded the business in 1979. Although no longer on the
Board or actively involved in management, Jean remains a major shareholder.

Dunelm Group plc Annual Report and Accounts 2023

9. Marion Sears
DN

10. Arja Taaveniku
R N A I

11. Vijay Talwar
R N A I

12. Luisa Wright

9. Marion Sears
Non-Executive Director
Non-independent
Appointed: July 2004

Key strengths
A long-standing Board Director, with
extensive City, investor and banking
experience, including M&A. Significant plc
experience and stakeholder understanding.

Past experience
Marion was Dunelm’s Senior Independent
Director and Chair of the Remuneration
Committee from 2006 to 2015 and was Chair
of the Nominations Committee until 2016.
She was Managing Director – Investment
Banking at JP Morgan, from 1994 to 2001,
prior to which she worked in corporate
finance and as an investment analyst.

Other commitments
Non-Executive Director and Chair of
Remuneration Committee at WHSmith
plc, and Keywords Studios plc, and Senior
Independent Director at abrdn New Dawn
Investment Trust plc. Director of WA Capital
Limited. Member of Chapter Zero, the
Directors’ Climate Forum and a regular
attendee of its events.

10. Arja Taaveniku
Non-Executive Director
Independent
Appointed: February 2021

Key strengths
A former Chief Executive with a wealth of
knowledge from international home retail
businesses. Particular expertise in the
strategic and operational development of
customer propositions and product value
chains, alongside environmental, social
and governance initiatives.

Past experience
Arja was a member of the Group Executive
at Kingfisher plc and Chief Executive of its
subsidiary, Kingfisher International Products
Limited from 2015 to 2018. Prior to that, she
was Chief Executive of lkano Group S.A.
from 2012 to 2015, having previously held
various leadership roles at IKEA Group from
1989 to 2012 including Global Business Area
Director.

Other commitments
Chair of Svenska Handelsfastigheter AB and
Polarn O. Pyret and Non-Executive Director
at Handelsbanken Group. Member of
Chapter Zero, the Director’s Climate Forum,
and a regular attendee of its events.

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11. Vijay Talwar
Non-Executive Director
Independent
Appointed: October 2021

Key strengths
A proven business leader in driving
significant digital and operational
transformations. Broad international
executive experience developed at
consumer-facing, omni-channel businesses.

Past experience
Vijay was Chief Executive of ContextLogic
Inc from February to September 2022. Prior
to that, he was Chief Executive of Footlocker
EMEA from 2019 to 2022 and President of
Digital at Foot Locker from 2016 to 2019.
Previously, he was President of Gifts/Special
Occasions at Sears Holdings (2014 to 2016),
held C-suite positions at Blue Nile from 2010
to 2014 and was Chief Executive at William
J Clinton Foundation India (2008 to 2010).
Vijay was COO for EMEA at Nike from 2002
to 2008.

Other commitments
Chief Digital Officer and Chief Customer
Officer at Dufry AG.

12. Luisa Wright
Group General Counsel
and Company Secretary
Appointed: November 2022

Key strengths
An accomplished general counsel, company
secretary and regulatory adviser, with
extensive plc experience built at consumer-
facing digital, retail and technology
companies.

Past experience
Luisa was Group General Counsel and
Company Secretary of The Rank Group
Plc from 2018 to 2022 and Group General
Counsel and Company Secretary of Sportech
Plc from 2011 to 2017. Prior to that, Luisa
was a private practice lawyer at Olswang
LLP (now CMS Cameron McKenna Nabarro
Olswang LLP) from 2000 to 2011. Luisa
qualified as a lawyer with Olswang LLP.

Other commitments
None.

Key

A Audit and Risk Committee member
N Nominations Committee member
R Remuneration Committee member

Chair

I Independent Director
D Designated NED for colleague matters

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Governance structure

We have always believed that good governance – in our words ‘doing the right thing’ – helps companies make better decisions
for the benefit of all stakeholders. The framework below provides a high-level summary of our approach, illustrating where
responsibilities fall so as to enable informed decision-making, effective oversight and clear accountability. Our framework also
allows for delegation of specific matters to the appropriate committees.

The Board believes that good governance supports Dunelm’s purpose, shared values and strategy, and is satisfied that these
elements and Dunelm’s culture are aligned.

Group Board
The Board as a whole is responsible for the overall direction, performance and long-term success of the Group.
It is responsible for setting and role modelling our purpose and shared values. It provides effective challenge to
management on the execution of the strategy and is responsible for ensuring that the Group maintains effective
risk management and internal control systems.

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Board Committees

The Board is supported by three committees to which it has delegated certain matters in order to ensure that
they receive the appropriate level of consideration. These committees support the Board in discharging its
duties. Each of the committees operates under terms of reference approved by the Board, which are reviewed
annually and can be found on the corporate website: corporate.dunelm.com.

Nominations Committee
Recommends appointments to the
Board, keeps the composition of
the Board under review, oversees
the succession plans for the Board
and senior management and
promotes diversity on the Board
and across the Group.

See page 74 for Nominations
Committee report.

Audit and Risk Committee
Has oversight of the Group’s
financial and narrative reporting,
assesses the effectiveness
of internal control and risk
management systems, monitors
the independence of internal
and external audit and manages
the relationship with the external
auditor.
See page 80 for Audit and Risk
Committee report.

Remuneration Committee
Establishes the Remuneration
Policy, determines the
remuneration of the Executive
Directors and Chair, oversees
implementation of the
Remuneration Policy and of
remuneration policies and
practices across the Group.

See page 88 for Remuneration
Committee report.

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Executive Team
The Board delegates responsibility for the day-to-day operational management of the Company to the CEO.

The CEO is supported by a team of executives who head each of the key function areas of the Group and form the
Executive Team, which operates under the CEO’s direction and leadership.

The Executive Team is, in turn, supported by three executive management committees, which provide updates to
the Board, Audit and Risk Committee, Remuneration Committee and Executive Team as appropriate.

Risk and Resilience
Committee
Oversees and reviews
principal and operational
risks, tracks key risk indicators
and considers trends and
matters of significance.
Chaired by the CFO.

Pathway to Zero Steering
Group
Manages and tracks progress
of sustainability initiatives,
including those relating to
climate change. Chaired by
the CEO.

See page 48 for more
information.

See page 40 for more
information.

Talent Committee
Oversees and develops
succession planning at all
levels of the business and
monitors progress against
our ‘Know-Grow-Flow talent
management initiative.
Chaired by the Stores and
People Director.

See our Sustainability Report
2023 for more information.

Each of the respective Executive-led committees are supported by working groups led by subject matter experts.

Dunelm Group plc Annual Report and Accounts 2023

The Chair and Chief Executive have clearly defined roles which are separate and distinct. The specific duties and division of
responsibilities between them have been agreed by the Board and are summarised below, together with information on the
roles of the Senior Independent Director, the Executive Directors, the Non-Executive Directors and the Group General Counsel
and Company Secretary. Further information can be found at corporate.dunelm.com.

Executive

Non-Executive

Chief Executive Officer
• Proposing the strategic objectives of the Group
for approval by the Board and delivering the
strategic and financial objectives in line with the
agreed purpose and strategy.

• Leading the Executive Team and senior
leadership in managing the operational
requirements of the business.

Chair
• Leading the Board and responsible for its

effectiveness and governance.

• Setting the agenda, style and tone of Board

discussions with a particular focus on strategic
matters.

• Ensuring each Non-Executive Director makes

an effective contribution to the Board.

• Leading the climate change and sustainability

• Ensuring that the Directors receive accurate,

objectives of the Group.

• Providing clear and visible leadership of our

shared values.

• Effective and ongoing communication with

colleagues and shareholders.

Chief Financial Officer
• Working with the CEO to develop and

implement the Group’s purpose and strategic
objectives.

• Focusing on financial delivery and performance

of the Group.

• Ensuring that the Group remains appropriately

funded to pursue the strategic objectives.
• Ensuring proper financial controls and risk

management of the Group and compliance with
associated regulations.

• Leading on investor relations activities and

communications with shareholders.

timely and clear information.

• Promoting a culture of openness and debate.
• Facilitating constructive Board relations.

Senior Independent Non-Executive Director
• Acting as a ‘sounding board’ for the Chair and

an intermediary for the other Directors.

• Leading the Non-Executive Directors in their

annual assessment of the Chair’s performance.

• Available to shareholders, particularly if they
have concerns that the normal channels have
failed to resolve, or for which such contact
would be inappropriate.

• Leading the Chair succession process.

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Deputy Chair
• Maintaining a close dialogue with the Chair and

Non-Executive Directors
• Providing constructive contribution and

the CEO.

• Contributing to the development of the Group’s
purpose, culture and values by promoting and
visibly demonstrating the Company’s long-
established shared values.

• Assisting the CEO in strategic and operational

activities as requested.

• Supporting and deputising for the Chair

as required.

challenge to the development of strategy
and ensuring that decisions are taken so as to
promote the success of the Company in the
interests of all stakeholders.

• Monitoring operational and financial

performance and scrutiny of management
performance in the delivery of strategic
objectives.

• Providing oversight of financial and other
control processes for risk management.

Governance

Group General Counsel and Company Secretary
• Supporting the Chair and the Non-Executive

Directors with their responsibilities.

• Advising on corporate governance matters and

regulatory compliance.

• Facilitating individual induction programmes
for Directors and assisting with training needs
as required.

• Assisting with communications with shareholders

and organising the AGM.

Designated Non-Executive Director for
colleague matters
• Engaging with colleagues (for example through
the National Colleague Voice) to represent the
‘colleague voice’ at the Board.

• Monitoring the effectiveness of colleague

engagement initiatives.

• Providing regular updates to the Board.

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Governance structure continued

About our Board
The Board has agreed that our optimum
number of Board Directors is between
nine and eleven. It currently comprises
eleven, with an independent Chair,
four Executives/Non-Independent
Directors, and six independent Non-
Executive Directors. We consider that
this structure provides a good mix
of backgrounds and skills, enables
the right level of independent
challenge, and allows for effective
decision-making. We maintain a clear
division of responsibilities between
the leadership of the Board and the
executive leadership of the business,
as articulated on the preceding page.

Schedule of matters
reserved
Certain key matters requiring
Board approval are set out in
a formal schedule of matters
reserved, which the Board reviews
periodically. Examples of such
matters include Group strategy
and budget, Group capital
structure, approval of financial
results and the Annual Report
and Accounts, significant capital
or contractual commitments,
ensuring maintenance of internal
control and risk management
systems and approval of
significant Group-wide policies.

The schedule of matters reserved
for the Board is available at
corporate.dunelm.com.

Managing conflicts of interests
Directors are required to disclose any
actual or potential conflicts of interest
to the Board immediately as and when
they arise throughout the year. These
are considered by the Board and any
authorisations given are recorded
in the Board minutes and reviewed
annually. In addition, a formal process
is undertaken each year when all
Directors confirm to the Board
details of any other directorships
and relevant information in
connection with related parties.

The Board takes action to ensure
that the influence of third parties
does not compromise or override the
independent judgement of the Board.
Should Directors have any concerns
about the operation of the Board or
Dunelm management that cannot be
resolved, these can be recorded in the
Board minutes. If, upon resignation, any
Non-Executive Director has concerns of
this nature, they may provide a written
statement to the Chair for circulation.

The Board considers that its procedures
to approve actual and potential
conflicts of interest, to ensure that any
related party transactions involving
Directors or their connected persons
are conducted on an arm’s length
basis and to provide a communications
channel for any unresolved concerns,
are in place and operating effectively.

Director independence
The Board considers that Alison Brittain
was independent on her appointment
to the Board and subsequently as
Chair. All Non-Executive Directors,
with the exception of Marion Sears,
are considered to be independent.

The Board has treated Marion Sears
as a Non-Independent Non-Executive
Director since September 2015 in
view of her tenure of more than
nine years on the Board, and her
subsequent appointment as a Director
of WA Capital Limited in March 2016.

WA Capital Limited is a private limited
company established by Sir Will
Adderley (the Deputy Chair, and major
shareholder) to act as a long-term
holding company for his beneficial
interest in the Company and various
other investments. The Dunelm Board
has determined that this appointment
does not affect her judgement as
a Director of Dunelm, and that any
potential conflict of interest has been
cleared on the basis that WA Capital
Limited and Sir Will Adderley are
parties to a Relationship Agreement,
details of which can be found in the
Directors’ report on page 119.

Re-election
In accordance with the UK Corporate
Governance Code, all Directors will
stand for re-election at the 2023 AGM.

Non-Executive Directors will be subject
to a separate vote by shareholders
independent of the Adderley family
as required by the Listing Rules of the
United Kingdom Listing Authority.
Marion Sears will put herself forward
for reappointment at the AGM by
shareholders, independent of the
Adderley family, as well as under
a full shareholder vote.

Time commitment
The Board recognises the importance
of individual members having
sufficient time to discharge their
duties. On behalf of the Board, the
Nominations Committee has reviewed
the time commitment of the Chair
and each Non-Executive Director.
The Board is satisfied that they each
commit sufficient time to their duties
to discharge their responsibilities
effectively.

None of the Executive Directors hold
any non-executive board positions at a
FTSE 100 company.

Please see pages 61 to 63 for each
Director’s biography, which includes
details of their other key commitments.

Dunelm Group plc Annual Report and Accounts 2023

Induction and training
Upon joining the Board, each new
Director is offered a comprehensive
and tailored induction programme with
visits to key sites and meetings with
senior managers and other colleagues.

See page 76 for information on
Alison Brittain’s induction process.

The Group General Counsel and
Company Secretary reports to the
Board at each meeting on new
legal, regulatory and governance
developments that affect the Group
and actions are agreed where needed.
Directors attend seminars provided by
independent organisations which cover
a wide range of governance topics.
As part of the annual Board evaluation,
any additional training or development
needs are addressed by the Chair with
each Director. For details of the specific
skills and experience of each Director,
see the Directors’ biographies on pages
61 to 63.

Advice and insurance
All Directors have access to the advice
and services of the Group General
Counsel and Company Secretary. In
addition, Directors may seek legal
advice at the Group’s expense if they
consider it necessary in connection
with their duties. The Group purchases
Directors’ and Officers’ liability
insurance cover for its Directors.

Share buyback and
Rule 9 waiver
Since the time of flotation of the
Company, the members of the Adderley
family, including Bill and Jean Adderley
and Sir Will Adderley, have been
considered to be acting in concert
(‘a Concert Party’) for the purposes of
Rule 9 of the City Code on Takeovers
and Mergers (the ‘Takeover Code’).

At the date of this report, Sir Will
Adderley controls 37.5% of the issued
share capital of the Company, and the
Concert Party controls 42.4%. Bill and
Jean Adderley are no longer Directors
of the Company or actively involved.
Sir Will Adderley is a Director and
Deputy Chair.

As usual we will be requesting authority
to buy back up to 5 million shares (2.5%
of our share capital) at the AGM. This
authority is to allow the Company to
purchase shares in order to satisfy
future share option entitlements
for Executives, excluding Sir Will
Adderley. Given that it is expected
that shares bought by Dunelm in the
market will be reissued, no dilution or
change of control should occur either
for the Concert Party or for other
shareholders. As Sir Will Adderley has
a beneficial interest of above 30% of
our share capital, and the interest of
the Concert Party is less than 50%,
we are required to ask shareholders
to approve a waiver of Rule 9 of the
Takeover Code. This waiver permits
the Company to exercise its authority
to buy back shares without triggering
an obligation on Sir Will to make an
offer to buy all of the shares in the
Company. We understand that some
shareholders have concerns about Rule
9 waivers in general and/or they may
be bound by their voting policy to vote
against the resolution. Nevertheless,
we hope that shareholders will give this
administrative matter full consideration
and conclude that they can support the
waiver, notwithstanding any internal
voting policy. In this regard we would
like to reassure shareholders that:

• Shares bought back by the Company

would be held in treasury and
used only to satisfy share option
entitlements, and not cancelled.

• Since 2012, Sir Will Adderley no

longer participates in the Long-Term
Incentive Plan or any other share-
based incentive plan, and therefore
his shareholding will not increase
through that mechanism.

• Since flotation of the Company

in 2006, the Adderley family has
reduced its holding from 67% to the
current 42.4%.

• There has been a Relationship

Agreement in place since flotation
which provides safeguards to other
shareholders – for details please see
the Directors’ report on page 119.

We therefore request that shareholders
take into account our specific
circumstances when making their voting
decision on the waiver resolution, and
hope that shareholders will support the
Board’s recommendation.

The Board has reviewed whether our
policy to purchase shares in the market
to satisfy share option entitlements
(as opposed to issuing shares) is still
appropriate; we believe that it is in
the interests of our shareholder base
as a whole as it avoids dilution of
shareholdings, and it is supported
by the majority of our institutional
shareholders. We would like to
reiterate that shares bought back by
the Company will be held in treasury
and used only to satisfy share option
entitlements, and not cancelled. The
Company purchased 908,064 of its
own shares during FY23.

Risk
The Board has overall responsibility for
the management of risk and for setting
risk appetite. During the year the Board
conducted a review of the Company’s
principal risks and approved the Group
risk appetite.

See page 48 to 54 for the risk management
framework and the Group’s principal risks
and uncertainties.

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Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Board activities

Board activities during
the year
The Board discharges its
responsibilities through an annual
programme of Board and Committee
meetings, with additional ad hoc
meetings as required to meet business
needs. These are supplemented by
visits to stores and other sites. Agendas
are determined in advance to ensure
that meetings are well-planned and
time is allocated as appropriate. Papers
are circulated ahead of time to ensure
that Directors are able to review and
arrive at meetings fully prepared.

At each meeting the CEO reports on
strategic progress and operational
performance (including customers,
colleagues and health and safety)
and the CFO reports on financial
performance. A rolling agenda of other
operational, strategic, sustainability, risk
and governance matters is refreshed
during the year as necessary to ensure
the Board continues to focus on areas of
priority, whilst also continuing to meet
regulatory requirements.

The Board held nine formally scheduled
meetings during FY23, as well as a full
day dedicated to a review of strategy,
details of which are set out page 70.

See page 60 for meeting attendance.

The Chair meets with the Non-
Executive Directors at the end of each
Board meeting. This is a useful way of
exchanging views and dealing with
any concerns or questions. In addition
to this, the Chair and the other Non-
Executive Directors regularly have
informal, individual meetings with the
Executive Directors and other senior
managers in the business.

We measure the time spent by the
Board on strategy, governance and
operational performance at each
meeting. Over the year, the biggest part
of our time was spent on performance,
followed by strategy and governance,
which the Board considers to be
appropriate in respect of FY23.

The Board acknowledges that every
decision it makes will not necessarily
result in a positive outcome for all
stakeholders. A key consideration
when making decisions is for the Board
to balance the sometimes conflicting
needs of our stakeholders while
considering the Company’s purpose,
values and strategic priorities, which
ensures the Board’s decision-making is
consistent and in the best interests of
the Company.

We actively engage with our major
shareholder and institutional investors
throughout the year to understand their
views on a variety of topics. The AGM
provides a valuable opportunity each
year for all shareholders to hear from
the Board, and for the Board to hear
from our shareholders. This year’s AGM
will be held on 16 November 2023.

See page 35 for our s.172 statement.

Our approach to section 172
Each of our Directors is mindful of
their duties under section 172 of
the Companies Act 2006 (‘s.172’) to
run the Company for the long-term
benefit of its shareholders and, in
doing so, to consider the interests
of its key stakeholders during its
decision-making, and the impact of
any of its decisions on stakeholder
relationships, on the Company’s
reputation for high standards of
business conduct, and on the
environment.

The matters encompassed in s.172
touch on everything we do, at a Board
level in our discussions and decision-
making, and also at a business level by
members of our Executive Team and
the senior leadership team. More detail
can be found on pages 70 and 71 where
we provide examples of the ‘Board in
Action’ and on pages 30 to 34 where
we describe our key stakeholders and
summarise how and why we engage
with them more generally, what
matters most to them, allocation of
responsibility within the business and
how we consider the effectiveness of
our engagement.

Summary: keeping s.172 high on the Board’s agenda
We ensure that the requirements of s172(1) Companies Act 2006 are met
and the interests of our stakeholder groups are considered, challenged and
debated through a combination of the following practical approaches:

• The Board carries out an annual review of strategy which assesses the long-
term sustainable success of the Group and our impact on key stakeholders
(see page 70 for more insight). Agenda items for the following year are
based on the decisions and next steps agreed at this meeting.

• The Board’s risk management procedures identify the principal and

emerging risks facing the Group, and the mitigation in place to manage
their impact. We consider these through a stakeholder lens as set out on
pages 50 to 54.

• The Group General Counsel and Company Secretary references relevant
s.172 factors against each agenda item in the minutes to ensure they
remain at the forefront of Directors’ minds when reflecting on discussions.

• The rolling Board agenda includes standing items to ensure that

stakeholders are fully considered, including investor roadshow feedback,
updates on people matters, the annual health and safety presentation,
modern slavery and anti-bribery reporting and sustainability updates.

• There is a formal review of many of these topics through standard Audit
and Risk Committee and Remuneration Committee agenda items, as
described later in this report.

• The Board considers impact on key stakeholders when it reviews Group

KPIs and requests additional information as appropriate.

Dunelm Group plc Annual Report and Accounts 2023

FY23 Board activities
At each meeting the Board receives a report on strategic progress and operational
and financial performance from the CEO and CFO as explained on the opposite page.
We have set out below some of the other key activities, presentations and discussion
points for the Board in FY23.

• Tour of Daventry warehouse
and hub, which opened in
January 2022

• Customer operations1

• External FY22 Board
evaluation output

July
2022

• Sustainability (see page 26)1

• Brand

•

Investor feedback

• Modern Slavery Act statement

Oct
2022

• Annual H&S presentation

• Technology1

• Capital allocation framework

• NCV2 – colleague safety

• NED presentation on
consumer landscape

• Product mastery1

• Customer operations1

• Sustainability1

• NCV2 feedback – sustainability

Jan
2023

Mar
2023

• FY24 Budget

• Competitor landscape

• FY23 Board evaluation outcome

June
2023

1 Indicates presentation by Executive Team/senior leadership.

2 NCV – National Colleague Voice.

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2022

• Product, choice & value and

Commercial initiatives1

• Principal risks

• Approved FY22 Annual Report
and Accounts (inc TCFD report)

• NCV2 feedback – financial

wellbeing

• Approved appointment of

Chair Designate

• Total retail system1

• Colleagues1

Nov
2022

• NCV2 feedback – community

& charity

November 2022 – AGM

Feb
2023

• Approved interims

announcement and dividend

• Principal risks

• Tax strategy

May 2023 – Board Strategy Day
See page 70 for more information

May
2023

• Strategy day reflections

• NCV2 feedback – reward

(see page 118)

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Board activities continued

Board in action

Strategy review
The Board met in May 2023 for its
annual strategy review. This year,
key topics included consumer
mega-trends, customer insights and
market analysis, brand development
and personalisation, the evolution
of our store and furniture plans
and reviewing our digital and
data roadmaps.

Presentations were given by the
Executive Team and members of the
leadership team. This provided the
opportunity for detailed discussions
and a deeper understanding by the
Board of our growth plans. It also
enabled the Board to consider the
strength of connections between
the different parts of our business

and ensure that we keep appropriate,
continued focus on operational grip
to support our overall customer
value proposition.

The Board challenged management,
amongst other things, on the extent of
our headroom for continued growth
and the plans to achieve it, whether
even more can be done to improve our
customer offer, the opportunities and
risks presented by future trends, the
role of our suppliers in delivering our
ambitions and whether we can leverage
technology further (and accelerate
it) to drive business change and
efficiencies. The Board acknowledged
the importance of continued investment
in technology, insights and data as key
drivers to sustainable growth, as well as
the value of ongoing engagement with

our key stakeholders so as to ensure
we really understand their views,
how our actions are likely to impact
them and consider this within our
decision-making.

The Board welcomed management’s
refresh of the ‘Plan on a Page’ (see
below), participated in a lively
discussion on the importance of
protecting our culture and identity
and confirmed its support for an
ambitious five-year growth plan.
The agreed actions and takeaways
for management were noted with
updates to be provided by way of
further presentations and deep dives
by business area built into the Board
agenda over the course of the next
12 months.

‘Plan on a Page’
refresh
At its strategy review, the Board was
presented with a refreshed ‘Plan on a
Page’, developed with input from the
senior leadership team, and aimed at
maintaining our focus on delivering
long-term growth and creating
value for our stakeholders. This year,
there has a been an emphasis on
understanding how we can seize the
opportunities afforded by the post-
pandemic world, whilst also being
mindful of the current economic
climate and challenges that it brings.

The Board considered that our
purpose remains strong, influencing
our Board and our colleagues in

their decision-making and maintaining
our focus on a sustainable business
“for generations to come”. The Board
also considered that our Customer 1st
focus and proposition continues to
resonate strongly. However, it agreed
with management’s view that there is an
opportunity to raise the bar on ‘value’
and ‘joy’ across all products, services
and experiences that we offer to our
customers. The Board also discussed
the evolution of our previous focus
areas into foundational strategic drivers
that enable the customer offer, namely
product mastery, a thriving total retail
system which combines the advantages
of both physical and digital retail, and
our culture and identity.

The Board discussed the manner in
which the refreshed plan took into

account the different considerations
of our key stakeholders, noting their
respective interests and recognising the
extent to which they are all represented.
Further to this, the Board approved
the refreshed ‘Plan on a Page’, noting
that the effect of a clear articulation
of strategy that resonates with all
stakeholders creates a strong vision,
and positions us well to create long-
term value and sustainable growth.

Following the Board’s review and
approval, the CEO presented the
refreshed plan to colleagues by way
of a series of in-person and hybrid
‘huddles’, which formed part of a series
of colleague events to reflect on the
achievements of FY23 and look ahead
to the opportunities for the business in
the forthcoming year.

Dunelm Group plc Annual Report and Accounts 2023

f e

d - o
Develo p e
n
soluti o

Improv
e p
desig
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Product
circularity

P
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l
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s
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Reduce im p a c
during manu f a c t u r i

m
p
a
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S
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t m
e lo
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wer-

Sustainability –
pathway to zero
update
We remain fully committed to
making a positive social impact and
reducing environmental damage in
our communities and supply chains.
In October 2022 and March 2023,
the Board received detailed updates
on our progress during the year
from the Head of Climate Change
and other members of senior
management on the three key areas
of our pathway to zero roadmap:
circularity, carbon, and community/
customer, as well as an overview
on our approach to governance
and reporting.

The Board discussed targets and
challenged progress made during
the year. The Board also reflected
on the views of and impact on our
key stakeholders, recognising the
need to continue to communicate,

in the most meaningful and easily
understood way, how we think
about sustainability at Dunelm, our
plans and our progress. The Board
concluded that our sustainability-
linked goals and activities remain
aligned with our Group vision,
purpose and strategy. However, we
acknowledge that this work involves
ongoing discovery, monitoring and
horizon-scanning, and therefore
discussion on a regular basis at
Board level and by the senior
leadership.

The Board will continue to receive
KPI updates, reflections on feedback
from stakeholder engagement
and presentations and updates on
regulatory developments in this area.
Our CEO will continue to take the
lead as Chair of our Pathway to Zero
Steering Group.

More information can be found in our
Sustainability Report 2023, available
at corporate.dunelm.com.

Circularity
•

Increased focus on designing
products to be more circular.

• Environmental performance

information received on over 80%
of Tier 1 manufacturing suppliers.

Carbon
• Continued reduction in Scope 1

carbon emissions.

• Commenced transition of our

HDN trunking vehicles to lower
carbon fuel and trial for electric
Made to Measure fitter vans.

• Scope 3 FY19 baseline and

FY30 carbon reduction targets
submitted to SBTi for verification¹.

Community/Customer
• Rolled out customer textile take-
back service to 96% of stores.

• Launched ‘Home to Home’ trial

for customers to donate pre-loved
homewares for redistribution to
those in need.

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FY23 colleague
support
Well-documented increasing cost-
of-living pressures in FY23, which
have been felt by all stakeholders,
have been an important theme across
Board discussions this year. They were
particularly relevant to discussions on
colleague pay, reward and support.
The Board received a ‘People’ update
at every meeting from the CEO
and more detailed presentations
during the year from the People
and Stores Director, which provided
additional context. Feedback from
National Colleague Voice generally
and following deep dive discussions
on pay and reward, as well as the
outcomes from our colleague
engagement survey were also
considered in our decision-making.

This year, we continued to focus on
the large number of hourly-paid
colleagues who work in our stores
and distribution centres, and who
were more likely to feel additional
pressure. The Board supported the

proposal to again implement the
annual pay review for our warehouse
and distribution colleagues early,
in October 2022. For our other
hourly-paid colleagues, we awarded
a median increase of 9.6% in April
2023 so that we remain aligned to the
National Living Wage rate set by the
UK Government.

For monthly-paid colleagues, the
annual pay review took place as usual
in August 2023. The Board welcomed
the continuation of last year’s tiered
approach, awarding the highest level
of increases to colleagues on lower
salaries and/or at more junior grades
and the introduction of an annual
bonus entitlement for the first time in
FY24 for our most junior grade.

The Board was keen to ensure that
other forms of support continued to
be available to colleagues. In recent
years, we have invested heavily
in wellbeing benefits, such as the
Dunelm Colleague Support Fund and
mental health initiatives. Feedback this
year provided a reminder that good
communication of the availability of

benefits and support is as important
as having them in place. Further to
this, the Board welcomed a significant
uplift in the communication of
assistance that is available, including
the launch of a new personalised
benefits portal to provide ease of
visibility and access to the support
that we offer. We also welcomed new
initiatives, such as the Retail Trust’s
financial education tools, a Cost of
Living hub on our colleague intranet
offering financial tips and guidance
and additional one-to-one wellbeing
meetings for all colleagues.

In supporting this year’s proposed
pay increases, reward and support
initiatives, the Board considered our
purpose and values and the balance
of short-term impact with long-term
value creation. It concluded that
the steps taken were essential to
improving colleague engagement
and supporting financial wellbeing
and key factors towards improving our
customer proposition, improving our
ability to attract and retain talent and
ultimately drive long-term benefit for
all stakeholders.

1 We received confirmation after the year end that our near-term and net zero targets were approved.

Our targets can be viewed on our corporate website: corporate.dunelm.com

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Culture and values

Culture
Dunelm has an open and straightforward
culture, with a focus on doing the right
thing and taking decisions for the long
term. This reflects the shared values
instilled by the Adderley family, who
founded our business over 40 years ago
and are still our major shareholders. The
Board has always been careful to ensure
that we protect and retain this culture
as the business grows and becomes
more complex.

Our purpose is ‘To help create the
joy of truly feeling at home, now and
for generations to come’. It informs
our strategy, is underpinned by our
shared values and is supported by our
approach to sustainability (see our
Sustainability Report 2023 for more
information). We are committed to
ensuring that the Company’s actions are
in keeping with our culture, values and
purpose to drive long-term success.

Our shared values
Our shared values have inevitably
evolved over time from the business
principles formulated by Sir Will
Adderley, our Deputy Chair, over a
decade ago. However, that they have
not changed significantly is testament
to their strength and importance to
the business.

We very much believe in setting the
tone from the top and consider it the
Board’s responsibility to instil and
maintain a culture of openness, integrity
and transparency. We also expect our
Directors and senior leadership team
to role model our shared values and
consider them within our decision-
making and how we communicate
with our stakeholders.

We believe that our shared values are
an essential contributor towards driving
the right behaviours and maintaining a
positive culture of mutual respect, trust
and constructive challenge.

Codes of Conduct, anti-bribery
and other policies
Our shared values are also reflected
in our Group policies, which are an
important expression of how we
look after our colleagues and how
they should expect to be treated by
others. These policies include a Code
of Business Conduct and Colleague
Code of Conduct, which set out specific
standards of ethics and behaviour.
These Codes make reference to
a number of other policies and
procedures that have to be followed,
including Equality & Diversity, Health &
Safety, Slavery and Human Trafficking
Statement and Prevention of Modern
Slavery, Ethical Code of Conduct for
Suppliers and Partners, Tax Strategy,
Whistleblowing and our privacy notices.
Mandatory training is provided on all
high-risk areas as part of induction and
on an annual basis.

We are strongly opposed to any form
of corruption or bribery and have
controls in place that have been built
around a clear understanding of how
and where bribery risks could affect our
business. This includes policies (such
as our Anti-bribery & Anti-corruption
policy), procedures such as conducting
due diligence on suppliers, annual
training for colleagues on bribery risks
and an ongoing audit and assurance
programme in respect of our suppliers.
Bribery risk management is discussed at
senior leadership meetings, including at
the Risk and Resilience Committee, and
also at the Audit and Risk Committee.

We also encourage any colleagues
and other stakeholders with concerns
to speak out and have facilitated this
through our Whistleblowing policy,
which enables reports to be submitted
on a named or anonymous basis.
Reports are kept strictly confidential
and concerns identified are referred to
appropriate managers within the Group
for investigation. An analysis of reports
is provided regularly to the Audit and
Risk Committee.

Monitoring our culture
We aim to provide an environment
that inspires, engages and develops
all of our colleagues to reach their full
potential. The Board engages directly
with our colleagues in a number of ways
that assist it in monitoring our culture as
described below, including by means
of our colleague representative body,
National Colleague Voice (see page 32
for more information).

People and culture is one of our
principal risks, which are considered
formally by the Executive Team and
Board of Directors twice a year with
relevant trends tracked and discussed
as appropriate. For more information
on our People and Culture risk see
page 52.

Culture is also monitored by way of
regular reporting to the Group Board
and Executive Team, by way of specific
‘People’ reports (covering engagement,
retention, gender pay and diversity,
amongst other things) and others that
are indicative of culture, such as health
and safety and whistleblowing. The
Nominations Committee supports the
Board in reviewing culture, diversity,
inclusion and talent management
and the Remuneration Committee in
assessing executive performance.

Finally, we encourage our Directors,
Executive Team and senior leadership
to ensure that they regularly interact
in-person with colleagues working in all
areas of our business. By engaging with,
listening to, respecting and responding
to our colleagues, we inspire them to
be the best that they can, deliver the
best experience to our customers and
deliver our strategy.

Dunelm Group plc Annual Report and Accounts 2023

Our shared values in action

Act like owners
• Sharesave and incentive plans

• Own growth talent pool

• Risk management and governance frameworks

• Delegation of authority

Stronger together
• Diversity networks

• Codes of Conduct (Business, Colleague and Ethical)

• Colleague development fund

• Cost of living hub in Home Comforts

• Wellbeing buddies

• Colleague Support Fund

Keep listening and learning
• National Colleague Voice

• Colleague engagement survey and pulse

• Monthly CEO-led and weekly team huddles

• Events organised by our four Diversity Networks

• Whistleblowing helpline

• Regular communications and updates via Home

Comforts intranet

• Mentorship programme

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Longer term thinking
Investment in technology
•

• Digitalising the business

• Focus on succession planning

• Leadership development programme

• Net Zero commitments and plans

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Composition, succession
and evaluation

Nominations
Committee report

Role and principal duties
The Nominations Committee
is responsible for leading
the process for Board
appointments, ensuring
appropriate succession plans
are in place, and overseeing
the development of a diverse
talent pipeline. Its principal
duties include:

• Reviewing the structure,
size and composition
(including the skills,
knowledge, experience
and diversity) of the
Board, ensuring it remains
effective and suited to
the Company’s strategic
priorities.

• Ensuring plans are in place
for an orderly succession
to Board and senior
management positions
and overseeing the
development of a diverse
pipeline for succession.

• Keeping under review
the leadership needs
of the business with a
view to ensuring its
continued ability to
compete effectively
in the marketplace.

•

Identifying and nominating
for the approval of the
Board, candidates to fill
Board vacancies as and
when they arise.

• Leading a rigorous and
transparent process for
Board appointments.

• Keeping under review
demands on Directors’
time.

The Committee’s full terms of
reference can be found at:
corporate.dunelm.com.

Alison Brittain
Chair of the Nominations
Committee

Committee membership
Alison Brittain (Chair)

Sir Will Adderley

Ian Bull
Kelly Devine
William Reeve
Peter Ruis

Marion Sears

Arja Taaveniku
Vijay Talwar

See page 60 for meeting attendance.

On behalf of the Nominations
Committee (‘Committee’), I am pleased
to present the Nominations Committee
report for the year ended 1 July 2023,
my first as its Chair. It has been a busy
year for the Committee, with a strong
emphasis on reviewing skills and
succession planning.

Board skills review
We believe that Directors should bring
a mix of skills, experience and a variety
of perspectives to our Board; this
helps facilitate constructive discussion
and effective, balanced decision-
making. Having made four new Board
appointments in the last two financial
years, we felt it important this year
to conduct a detailed skills review
exercise. Our conclusion was that the
Board is well-balanced, providing an
appropriate blend of executive and
non-executive skills and a collective
competence to meet the Company’s
needs and deliver its strategy.

Succession planning
We are committed to reviewing
and updating our succession plans
on a regular basis to support the
development of a diverse pipeline of
talented people to ensure the long-
term success of the Company.

Dunelm Group plc Annual Report and Accounts 2023

Committee composition
and governance
The majority of the Committee is
independent, with its members
comprising six independent Non-
Executive Directors, the independent
Chair of the Board, one non-
independent Non-Executive Director
and the Board’s non-independent
Deputy Chair. Alison Brittain took over
as Chair on 1 January 2023 following
the retirement of Andy Harrison from
the Board.

Only members of the Committee
have the right to attend Committee
meetings. Other individuals, such
as the CEO and People and Stores
Director are invited to attend all or part
of the meetings as appropriate. No
Director attends that part of a meeting
during which his or her own position is
discussed. The Group General Counsel
and Company Secretary acts as
secretary to the Committee and
attends all meetings.

During FY23, the Committee met
formally four times, with a further two
meetings taking place specifically in
relation to Alison Brittain’s appointment
as Chair Designate and then Chair. The
agenda for each meeting is based on a
standing agenda for the financial year
but tailored and updated throughout
as appropriate.

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We conducted a full review during
the year, with a particular focus on
our leadership team plans and the
talent pipeline for senior management
positions.

We also focused on succession
planning for Non-Executive Directors,
mindful that each of William Reeve
(who is also our Senior Independent
Director and Chair of the Remuneration
Committee) and Peter Ruis will have
completed nine years on the Board in
2024. We continue to believe that the
optimal size of our Board is between
nine and eleven Directors; this
enables us to meet our requirements
for governance, independence and
diversity, while fostering a cohesive
culture that enables all Board members
to contribute fully. Further to this and
taking into account the in-depth skills
review work undertaken during the
year, we will commence a search for at
least one new Non-Executive Director
this autumn.

Diversity and inclusion
We continue to develop our diversity
and inclusion policy and are committed
to enhancing diversity within our
talent pipeline and the business more
generally. We expect everyone to play
their part in ensuring we are both a
truly diverse and inclusive business
where differences are respected, and
everyone’s contributions are valued.
We aspire to achieve a colleague
base that is reflective of society, and
provides opportunity for all, regardless
of background, ethnicity, gender, sexual
orientation, disability or age.

The Committee has welcomed the
ongoing development of our four
colleague networks this year: disability
& neurodiversity, ethnicity & race,
LGBTQ+ and gender equality. It is
evident that our networks empower
our colleagues, who can see how
they can and are making a difference.
Their work is supported by a range of
initiatives that have continued to take
place across the business and has
resulted in demonstrable action and
change, including the introduction of

new parenthood and menopause
policies, new tools and equipment
to enable greater accessibility and
events that celebrate our differences.
More details on our colleague
networks and FY23 initiatives
can be found in our Sustainability
Report 2023.

From a Board perspective, I am
pleased to report that we comply
with the targets set out in the
Listing Rules, with 45% of the Board
being women, two senior Board
positions held by women and one
member of the Board from an ethnic
minority background. We are also
in alignment with the requirements
of the FTSE Women Leaders Review
and Parker Review. Nevertheless, we
continue to reflect on our approach
to diversity and inclusion at a Board
level, including in respect of each
Board Committee. Please see page
79 for our first annual statement on
Board and management diversity
metrics.

Board evaluation
Finally, having conducted a full
external evaluation process last year,
this year’s Board and Committee
evaluation was undertaken internally.
Further details of the process and a
summary of the Board outcome can
be found on page 78, and in respect
of the Committee on page 79.
Overall, I am pleased to confirm the
view of the Directors that the Board
and each Committee is operating
effectively.

I look forward to meeting
shareholders at our Annual General
Meeting on 16 November 2023.

Alison Brittain
Chair of the Nominations
Committee
20 September 2023

Dunelm Group plc Annual Report and Accounts 2023

Board appointment process
For Board appointments we generally
follow a well-established process,
adapted where necessary to account
for specific skills required and
circumstances, as follows:

• Detailed role and person

specification drawn up by the
Nominations Committee.

•

Independent external search
consultant appointed to conduct
the process.

• Equal number of male and female
candidates feature on the longlist
as standard practice, and emphasis
placed on presentation of a diverse
candidate list.

•

Initial candidates meet with Chair
and at least one other Board
member. Shortlisted candidates
meet with other Board members
as appropriate.

• Extensive references taken and,
for Non-Executive Directors, an
assessment of candidates’ other
commitments to ensure that they
have sufficient time to dedicate to
Board member duties.

• Nominations Committee makes
recommendation to the Board
for final approval.

GOVERNANCE REPORT

Nominations Committee report continued

Director appointment in FY23
Alison Brittain was appointed to the
Board in FY23, joining in September
2022 as an independent Non-Executive
Director and Chair Designate. She
succeeded Andy Harrison as Chair
of the Board and this Committee on
1 January 2023.

The process for Alison’s appointment
was led by William Reeve, the Senior
Independent Director. An external
search firm, Russell Reynolds, was
appointed to assist with the search.
Russell Reynolds has no other
connection with the Company or any
Director. They sought the input of
the Directors before drawing up a
role specification that was approved
by the Committee. The brief was
for an experienced business leader,
who has worked in a range of large,

consumer-facing businesses and has a
track record of delivering growth. The
Committee also sought an individual
whose personal values are aligned
to our own. William Reeve and other
Committee members interviewed
shortlisted candidates, and all members
of the Board met with the preferred
candidate and gave their unanimous
support. The Committee therefore
recommended to the Board that Alison
Brittain be appointed to join the Board
in September 2022, with the aim of
succeeding Andy Harrison as Chair
early in 2023. In November 2022, the
Committee (without Alison Brittain or
Andy Harrison present) confirmed its
recommendation to the Board that
Alison be appointed Chair with effect
from 1 January 2023.

Alison Brittain’s biography can be found
on page 61.

Induction of Chair Designate
Each new Board Director receives a full and tailored induction, led by the Chair
and Group General Counsel and Company Secretary. Alison Brittain’s induction
when she joined the Board on 7 September 2022 included the following:

Meetings with all members of the Board.
• Chair provided an overview of the Board and its annual programme

of meetings.

• CEO discussed the strategy and ‘Plan on a Page’.

• Committee Chairs discussed how the Committees operate and matters

of significance.

• CFO provided a summary of the Group’s financial performance and

future plans.

Meetings with Executive Team and senior leadership team.
•

Introduction to management structure, business operations, focus areas
and performance.

•

Introduction to key opportunities and risks in each area of the business.

• Group General Counsel and Company Secretary provided an overview

of the governance framework and corporate structure.

Meetings with other colleagues and site visits.
• Deep dives with the Finance and Tech leadership teams.

• Visits to our logistics and manufacturing centres.

• Visits to stores and introductions to key suppliers.

• Attended National Colleague Voice meeting to develop an understanding

of the views of colleagues.

• Engaged more broadly with colleagues by participating in a Q&A

session for the INSPIRE Programme, set up for colleagues with strong
growth potential.

Key advisers
• Meetings with external and internal auditors, brokers and other advisers.

Dunelm Group plc Annual Report and Accounts 2023

Succession planning
Non-Executive Director succession
During the year, the Committee
undertook a detailed skills review.
Amongst other things, it considered
the knowledge, experience, length of
service and performance of Directors,
our diversity and inclusion policy and
the balance of skills on the Board as
a whole. This work has provided a
framework for considering the skills
on which there should be more focus
in considering new appointments to
the Board.

Executive Director succession
In line with best practice, the
Committee continued to review and
refresh its CEO and CFO succession
plans. The Committee determined
during the year to set up working

groups, facilitated by the People and
Stores Director, to undertake this work,
which included a market mapping
exercise. This was presented back to the
Committee and will form the basis for
reviews of these plans in the future.

Senior leadership succession
During the year, the Committee
considered succession plans for
the Executive Team and the talent
pipeline for senior leadership roles.
The Committee also received updates
on the progress of our ‘Know-Grow-
Flow’ programme, which is designed
to ensure that talented individuals with
diverse skills and backgrounds can
thrive and offering them opportunities
to progress within the Group. This work
has resulted in a clearer understanding
of capabilities and a stronger pipeline
for succession.

Board effectiveness review
An evaluation of the Board, its
Committees and individual Directors
is carried out each year. The review
helps to identify areas for improvement,
informs training plans for our Directors
and identifies areas of knowledge,
expertise or diversity which should be
considered in our succession plans.
Each Director also goes through a
performance review process with the
Chair on an annual basis. The Senior
Independent Director and Deputy Chair
review the performance of the Chair.

The progress made against our FY22
evaluation is set out below.

The approach taken to our FY23
evaluation and a high level summary
of the key actions agreed following
the Board review are set out on the
following page.

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FY22 Board evaluation
The FY22 Board evaluation was externally facilitated by Lorna Parker, a Board evaluation specialist who had facilitated such
reviews for the Company previously. As set out in last year’s report, the Board agreed on a number of areas that it wished to
focus on as a result of the review, progress against which is set out in the table below.

Topic

Outcome and recommendations from FY22 evaluation

Actions implemented in FY23

Strategy
development

• Continue to carefully balance time spent on activities

• Standing agenda items and

promoting ‘value creation’ with the ‘value protection’ role
of the Board.

allocation of time to topics at each
meeting reviewed.

• Ensure that more time is set aside to discuss long-term,
strategic topics, in the context of the risk appetite and
ambition of the Board.

• Directors provided with

opportunities during the year for
less formal discussions.

•

Increase the amount of time available for less formal,
discursive interactions.

• Continue to invite external speakers, to build knowledge

on strategic topics and stimulate discussion.

• External speakers invited to
present to the Board during
the year.

• Set aside agenda time for NEDs to share their experiences

• NEDs presented on specific topics

on a topic of mutual interest.

• NEDs are encouraged to spend more time interacting with
colleagues in the business outside of formal meetings, for
example through attendance at National Colleague Voice
meetings and on-site meetings with the leadership team.

• Continue to build visibility of talent management and
succession for the Executive Team and other senior
roles through the Nominations Committee and Board
discussions.

to the Board during the year.

• NEDs committed to spending
more time with senior leaders
to facilitate their development
and have attended National
Colleague Voice meetings during
the year.

• Presentations received on talent
management and refreshed
approach to succession planning
implemented.

• Adapt the meeting schedule to have fewer and longer ‘in

• Board meetings now a

person’ meetings focused on strategy development, using
remote meetings for more routine or transactional matters.

mix of in-person and online
meetings, with agendas
tailored appropriately.

NED involvement
in the business

Talent and
succession

Meetings
and other
interactions

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Nominations Committee report continued

FY23 Board evaluation
Given that an external evaluation was carried out last year, this year the review was conducted internally. Each Director
completed a questionnaire in respect of the Board and each Committee of which they were a member or otherwise
attended meetings on a regular basis. The Group General Counsel and Company Secretary collated the responses
and shared them with the Chair and each respective Committee Chair. An executive summary with the key findings was
then shared, alongside each report, with the Board and each Committee’s members for discussion. The key themes and
outcomes from the Board review were as follows:

Theme

Outcomes

Succession
planning

• Acknowledgement that the appointment of new NED(s) to the Board, and to the roles of

Senior Independent Director and Chair of the Remuneration Committee when William Reeve
and Peter Ruis step down in 2024, is a priority.

Stakeholder
engagement
ESG-related
risks and
opportunities
Testing the
Company’s
strategy and
ambitions

• Continue to focus on succession plans and capability development for key senior positions.

• Undertake a more detailed review of supplier relationships and consider increased supplier
engagement at Board level to further develop understanding of opportunities and risks.

• Continue to support management in refining our ESG strategy and approach and ensure that it
remains relevant to our strategy. Provide feedback on reporting and share wider learnings and
experience.

•

Include key topics raised by the Board at the Strategy Day in May on the agenda for the
forthcoming year.

• Continue to constructively challenge the Executive Team in order to maintain our focus on driving

long-term growth.

This is encapsulated in our ’stronger
together’ shared value and the
inclusion of ‘Culture and Identity’
(being an ambitious and inclusive
brand and organisation) as one of
our three strategic drivers to deliver
further growth.

In order to achieve this aim, we remain
focused on three broad principles:

• refining the way we recruit.

•

identifying, supporting and
mentoring existing diverse talent
in the business.

increasing diversity amongst senior
appointments as they are made,
including to our Board and each
of its Committees.

Overall, the results of the FY23
evaluation were very positive, with no
major concerns or issues raised. High
scores reflected a strong and positive
culture and an effective and well-
managed Board, and the comments
are being used to help shape the
Board agenda and its priorities in
FY24. It was also confirmed that
each Director continues to make an
effective contribution to the Board,
is well-prepared and demonstrates
commitment to their role.

Diversity & inclusion
Policy
Our overriding aim is to ensure that
the Board and Company comprise
outstanding people and teams who
can lead the business effectively in
a manner aligned to our purpose,
shared values and strategy. We believe
that the Group’s best interests are
served by ensuring that our people
represent a range of skills, experiences,
backgrounds and perspectives.

In line with this approach, the
Committee:

•

is committed to ensuring that the
Board is at least 40% female, that
at least one of the Chair, Senior
Independent Director, CEO and CFO
positions is held by a woman and at
least one Board Director is from an
ethnically diverse background.

• receives update on our approach
to recruitment at all levels of the
business as part of its oversight of
colleague policies and practices.

• continues to require that specific
effort is made to bring forward
diverse candidates for senior
management and Board
appointments.

• monitors the Group’s approach

to people development to ensure
that it continues to enable talented
individuals, regardless of gender,
marital status, sexual orientation,
disability, race, religion, colour,
nationality, ethnic origin, or age
to enjoy career progression
within Dunelm.

Dunelm Group plc Annual Report and Accounts 2023

Board
At a Board level, the Listing Rules
prescribe diversity targets, which are
met as follows:

Target

Compliance

At least 40% of the
Board are women

45% of our Board
are women

At least one of the
senior Board
positions is held
by a woman

At least one
member of the
Board is from a
minority ethnic
background

Alison Brittain is our
Chair and Karen
Witts is our CFO

Vijay Talwar joined
the Board in
October 2021

Group
At a senior leadership level, we have
strong representation of women with
62% of our Executive Team and 41%
of our senior leadership roles being
held by women. Dunelm published its
sixth Gender Pay Gap Report in April
2023, and an overview is provided in
our Sustainability Report 2023. Both
documents are available to download at
corporate.dunelm.com.

In order to ensure appropriate focus on
ethnic representation and to continue
to drive greater ethnic representation
in leadership roles, work has continued
to collect ethnicity data. In addition,
we have introduced an ethnic diversity
target of 8% of our role-model leaders
into this year’s LTIP grant (see page
116 for more detail). The Committee
supports management’s commitment
to achieve this target and will track
progress.

Our equality and diversity policy can be
found at: corporate.dunelm.com.

Committee effectiveness
The effectiveness of the Committee
was considered as part of this year’s
Board evaluation process, more details
of which can be found opposite on
page 78. The review concluded that
the Committee continues to operate
effectively and having considered the
findings, it was agreed that particular
areas of focus during the forthcoming
year should be:

1. Continuing to assess the

appropriateness and effectiveness
of succession plans;

2. Reviewing information provided to
the Committee to further enhance
visibility of talent management and
development; and

3. Reviewing emphasis placed
on diversity and inclusion in
appointment and succession plans.

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Annual statement on Board and Executive Team diversity targets
Our Board and Executive Team gender and ethnicity data is provided below in accordance with UK Listing Rule 9.8.6R(10)
as at 1 July 2023. Diversity data is collected for Executive Team members via the engagement survey. At the end of the
financial year, the Board was asked to confirm which ethnicity category they identified with in the table below.

Gender

Men
Women

Not specified/prefer not to say

Ethnicity

White British or other white groups
(including minority-white groups)
Mixed/multiple ethnic groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic groups including Arab

Not specified/prefer not to say

1 Both the CEO and CFO are members of the Executive Team.

Group Board

Executive Team¹

Number of
Board members

Percentage on
the Board

6
5

—

55%
45%

—

Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)

2
2

—

Number in
Executive Team

Percentage of
Executive Team

3
5

—

38%
62%

—

Group Board

Executive Team¹

Number of
Board members

Percentage on
the Board

Number of
senior positions
on the Board
(CEO, CFO, SID
and Chair)

Number in
Executive Team

Percentage of
Executive Team

10
—
1
—
—

—

91%
—
9%
—
—

—

4
—
—
—
—

—

8
—
—
—
—

—

100%
—
—
—
—

—

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Audit, risk and internal control

Audit and Risk
Committee report

Role and principal duties
The role of the Audit and
Risk Committee is to support
the Board in fulfilling its
corporate governance and
reporting obligations as to the
effectiveness of Dunelm’s risk
management systems, internal
controls and financial reporting
Its principal duties include:

• Monitoring the integrity
of the Group’s financial
statements and public
announcements relating to
financial performance.

• Reviewing and challenging
key accounting policies and
judgements.

• Monitoring the effectiveness
of internal controls and the
process for identifying and
managing risk.

• Reviewing and approving
statements in the annual
report concerning internal
control, risk management
(including the assessment
of principal risks), and the
viability statement.

• Approving and overseeing
delivery of the internal
audit plan. Monitoring and
reviewing the role and
effectiveness of the internal
audit function and process,
ensuring its ability to exercise
independent judgement.

• Overseeing the relationship
with the external auditor,
agreeing the audit fee and
terms of engagement.

• Reviewing and monitoring

the external auditor’s
reports, performance,
effectiveness and
independence.

The Committee’s full terms of
reference can be found at:
corporate.dunelm.com.

Ian Bull
Chair of the Audit and
Risk Committee

Committee membership
Ian Bull (Chair)

Kelly Devine

William Reeve
Peter Ruis
Vijay Talwar
Arja Taaveniku

See page 60 for meeting attendance.

On behalf of the Audit and Risk
Committee (‘Committee’), I am
pleased to present the Audit and
Risk Committee report for the year
ended 1 July 2023. The report explains
how the Committee has discharged
its responsibilities and provides an
overview of its main activities during the
year, the key highlights of which are set
out below.

Consideration of significant
issues and judgements
During the year, the Committee
examined the application of current
and likely accounting and reporting
standards. Careful scrutiny was given
to judgemental items, assessing their
appropriateness and consistency over
time as noted on page 82. As part of
our work, we considered and reflected
on the previous year’s external audit
control observations, ensuring that any
relevant recommendations were acted
upon by management as agreed with
the Committee.

Dunelm Group plc Annual Report and Accounts 2023

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Risk management and
internal control systems
The Board has overall responsibility for
our risk management framework, but
delegates authority to the Committee
for the effective management of risk
across the Group and monitoring of
material internal controls. During the
year, the Committee received regular
updates on work to further improve
and strengthen our risk management
processes and internal control
environment.

We received regular updates on the
Group’s principal and emerging risks
and mitigation strategies via a suite
of Key Risk Indicators (‘KRI’), enabling
the Committee to oversee enterprise
risk and focus its attention on key
risk areas and movements. We also
received updates from the CFO as chair
of the Risk and Resilience Committee,
which provided the Committee with
an additional level of assurance and
deeper insight at an operational level.

Management also provided the
Committee with updates throughout
the year on internal control
enhancements and we have welcomed
the implementation of new software to
enable balance substantiation, updated
controls mapping of key financial
processes and continued investment
in our cyber security capabilities.
Our ongoing multi-year project to
improve processes and controls in the
commercial function has continued to
make solid progress, with dedicated
resource and governance.

Internal audit reviews
KPMG have completed their third
year as our internal auditor. During
the year they completed reports
on supply chain, stock returns and
ESG processes, amongst others.
Management is working through the
various recommendations, as well as
those from previous reports, and an
update on progress is provided at
every Committee meeting. We seek
to ensure that each year the internal
audit plan is aligned with the Group’s

strategic priorities and key risks and
were pleased that there were no “high”
findings in any of this year’s reports.
We continue to review our strategy and
assurance map to prioritise our internal
audit approach.

See page 86 for more information
on work undertaken this year by our
internal auditor.

External audit tender
As reported last year, and in line with
our audit rotation policy, we undertook
a competitive audit tender process
during the year. The process was
informed by the Financial Reporting
Council’s (‘FRC’) guidance on audit
tendering and, with due regard to
the Government’s proposed audit
reforms, we invited five firms, including
three challenger firms, to participate.
Following the conclusion of the tender,
the Board approved the reappointment
of PwC as our external auditor and
PwC has expressed its willingness
to continue in role. This appointment
is subject to shareholder approval
at the Company’s 2023 Annual
General Meeting.

See page 84 for more information on the
external audit tender process.

Following completion of PwC’s FY22
audit, the Committee was informed that
the FRC’s Audit Quality Review team
had chosen the Group’s audit for its
review. The Committee has received
a copy of the review and was pleased
to note that it did not identify any key
findings and only a limited number of
improvements were required.

Sustainability reporting
We continue to focus on progress
against existing and forthcoming
sustainability-related reporting
requirements, including those of the
International Sustainability Standards
Board (‘ISSB’). In particular, the
Committee has had oversight of
management’s planning for this year’s
disclosure requirements, including work
to progress our understanding and

improve the data quality inputs into
the Scope 3 calculations. This has
led to a revised baseline, described
in more detail on page 85 and we
are pleased to confirm that we are
reporting this year on all areas of
the Task Force on Climate-related
Financial Disclosures (‘TCFD’)
framework.

Developments in
corporate reporting
The Board and the Committee
support measures that increase
the quality of governance, audit
and transparency for the benefit
of our shareholders and other
stakeholders. We have continued
to consider matters that are likely
to be implemented as part of
the corporate governance and
audit reforms now being led by
the Department for Business and
Trade (including our approach to
the implementation of an audit
and assurance policy and the other
requirements set out in the Draft
Companies (Strategic Report and
Directors’ Report) (Amendment)
Regulations 2023), whilst maintaining
a watching brief as we wait to see
how the proposals and timelines for
their implementation unfold.

It has again been a busy year, and
I would like to take this opportunity
to thank my fellow Committee
members for their hard work
and support and our Executive
Team and senior leadership for
their constructive engagement.
I look forward to answering any
shareholder questions on the
activities of the Committee at
the AGM.

Ian Bull
Chair of the Audit and Risk
Committee
20 September 2023

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Audit and Risk Committee report continued

Committee composition
and governance
The Committee is composed solely of
independent Non-Executive Directors,
and was throughout FY23. The Board
is satisfied that they demonstrate a
breadth of knowledge and experience,
including sector expertise, to enable
the Committee to fulfil its duties. Both
Ian Bull and Vijay Talwar are considered
by the Board to have recent and
relevant financial experience and to be
competent in auditing and accounting.
Ian, who has chaired the Committee
since he joined the Board in 2019, is
a Fellow of the Chartered Institute of
Management Accountants with over 20
years’ business and financial experience
in leading consumer-facing businesses.
Vijay, who joined the Committee in
October 2021, is a Certified Public
Accountant.

Only members of the Committee
have the right to attend Committee
meetings. Other Board Directors, as
well as the Group Finance Director,
Chief Technology and Information
Officer, Head of Cyber Security,
representatives of PwC (external audit)
and representatives of KPMG (internal
audit) are invited to attend all or part
of meetings, as appropriate. The
Group General Counsel and Company
Secretary acts as secretary to the
Committee and attends all meetings.

During the year, the Committee
met three times (with a minimum of
four meetings scheduled for FY24).
Meetings are generally scheduled in
line with key times in the Company’s
financial reporting calendar. The
Committee maintains a rolling calendar
of items for consideration at each
meeting and reviews and updates it
regularly. The external auditor and
the internal auditor are provided with
the opportunity at each meeting to
discuss matters without the presence
of management. Furthermore, the
Committee Chair meets with the
external audit and internal audit
partners outside of meetings.

Key judgements and financial
reporting matters
A key aspect of the Committee’s work
is monitoring the integrity of the annual
and interim reports, including a review
of the significant financial reporting
matters and judgements contained
in them. Key accounting judgements
considered, conclusions reached and
their financial impacts during the year
under review are set out below.

Provisions for inventory
The Committee discussed in detail
the approach taken by management
to provisions for inventory. Particular
attention was given to reviewing the
provision for obsolete, slow-moving
or discontinued inventories including
the utilisation of provisions reported
in prior periods. The Committee
noted that there was a high degree
of consistency in the methodology
applied by management, with updated
inputs based on trading experience.
The Committee concurred with
management’s conclusions that
the values recorded in the financial
statements are appropriate.

Other accounting matters
The Committee received regular
updates on management’s assessment
of impairment triggers as required
under IFRS and it was noted that there
have been none identified in FY23. The
Committee also noted that there is no
material change in deferred tax assets
and the Group has no uncertain tax
provisions.

Going concern and
viability statement
The Directors must determine that
the business has adequate resources
to continue in operational existence
and as such can continue to adopt the
‘going concern’ basis of accounting.
Furthermore, the Directors are required
to make a statement in this Annual
Report as to the longer-term viability of
the Company.

The Committee conducted an
assessment pursuant to which the
Directors were able to conclude that it
is appropriate to prepare the financial
statements on a going concern basis.

They reviewed financial models
(including downside scenarios and
a reverse stress test), taking time to
understand and challenge, where
necessary, significant judgements
and assumptions in the modelling, the
reverse stress test model and covenant
and liquidity headroom.

The Committee also evaluated
management’s work in conducting a
robust assessment of the Company’s
longer-term viability. It affirmed the
reasonableness of the assumptions,
considered whether a viability period
of five financial years remained most
appropriate, and confirmed that it
was as part of a recommendation
to the Board.

See page 55 for going concern and
viability statements.

Fair, balanced and understandable
The Committee reviews the financial
statements set out in the Company’s
annual and interim results and reports
its findings and recommendations to
the Board. The Board considers the
recommendations of the Committee,
the representations made by
management and the views of the
internal and external auditors in order
to satisfy itself of the integrity of the
narrative and financial statements and
to determine whether the financial
and narrative statements when taken
together present a fair, balanced and
understandable assessment of the
Company’s position and prospects.

Robust year-end governance processes,
performed in parallel with the formal
process undertaken by the external
auditor, are in place to support this
and include:

• Project management by the Head
of FP&A and Investor Relations,
working with a cross-functional
team including the Group General
Counsel and Company Secretary
and communications specialists, and
overseen by the CFO.

•

Internal verification by the finance
team of non-financial factual
statements, key performance
indicators and descriptions used
within the narrative.

• Engagement with, and feedback
from, senior management on
proposed content and changes.

Dunelm Group plc Annual Report and Accounts 2023

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• Feedback from external parties

(including remuneration advisers
and the external auditor) to enhance
the quality of reporting.

• Opportunities for the Committee

to challenge management and the
external auditor on the process and
content of the report before it is
tabled to the Board for approval.

The Board considers that, taken
as a whole, the Annual Report and
Accounts 2023 is fair, balanced and
understandable. The Board further
believes that the Annual Report and
Accounts 2023 provides the necessary
information for shareholders to
adequately assess the Company’s
position and performance, business
model and strategy.

External auditor
The Committee is responsible for
overseeing the relationship with
the external auditor, including
recommending to the Board their
appointment, reappointment and
removal, assessing their independence
on an ongoing basis, and approving the
statutory audit fees. The Committee
notes the publication in May 2023 of
the FRC’s Audit Committees and the
External Audit: Minimum Standard.

PwC have been the Company’s
external auditor since 2014. The lead
audit partner, Mark Skedgel, has been
in post since the FY19 audit and is
stepping down in September 2023 after
completion of the FY23 audit, with Gill
Hinks taking over in respect of FY24.

There are no contractual obligations
that restrict the Committee’s choice of
external auditor.

The external audit
PwC is engaged to express an opinion
on the financial statements. It reviews
the data contained in the financial
statements to the extent necessary
to express its opinion. It discusses
with management the reporting of
results and the financial position of
the Company and presents findings
to the Committee. Where it makes
recommendations in its report to the
Committee, the Committee reviews
them and agrees with management the
manner and extent to which they should
be implemented.

Each of the Directors in office at the
date of this report is not aware of
any relevant information that has not
been made available to PwC and each
Director has taken steps to be aware
of all such information and to ensure it
is available to PwC. PwC’s audit report
is published on pages 126 to 131. Fees
paid to PwC for its FY23 audit work
were £327,000 (2022: £301,500).

Auditor effectiveness
It is the responsibility of the Committee
to assess the effectiveness and
independence of the external audit
process. The assessment is conducted
in accordance with a process agreed
with the Committee, which involves
seeking the views of the Committee, as
well as those of colleagues who have
regular interactions with the external
auditor. The Committee was provided
with a summary of the responses
received in respect of the FY22 audit
to assist with its considerations.

Feedback overall was positive. It was
agreed that the audit partner provided
effective leadership and the audit team
demonstrated a good understanding
of Dunelm, the retail sector, and the
challenges that we face. A common
theme was the ongoing development
of ways of working and use of new
digital tools to assist in the efficient and
timely completion of actions arising,
in particular from ad hoc or follow
on requests.

Having conducted its review, and
also bearing in mind the quality of
interactions during the year, the
Committee concluded that PwC
had applied appropriately robust
challenge and professional scepticism
throughout the audit to demonstrate
independence, that it possessed the
skills and experience required to fulfil
its duties effectively and efficiently,
and that the audit was effective.

The Committee will formally assess
PwC’s performance in relation to the
FY23 audit following its completion.
The FY23 assessment will include the
review of a number of defined Audit
Quality Indicators agreed between
management and PwC and approved
by the Committee during the year in
order to assist the Committee in its
assessment of the quality of the audit
going forwards.

Safeguarding auditor
independence and objectivity
The Committee recognises the
importance of ensuring that the
independence and objectivity of the
external auditor is not impaired through
the provision of non-audit services. We
have in place robust policies on the use
of auditors for non-audit work and the
recruitment of former employees of the
external auditor, which can be found on
our website at corporate.dunelm.com.
These include the following:

• Fees for non-audit services provided
by the statutory auditor in any year
may not exceed 70% of the average
fees for the Group statutory audit in
the three previous years.

• The auditor is prohibited from

providing certain non-audit services,
including almost all tax work,
internal audit, corporate finance,
and involvement in management
activities.

• The external auditor may not be

engaged to provide any non-audit
services without the approval of
the Committee.

• Restrictions apply to the employment
of senior members of the audit team
by the Company.

During the period we paid PwC
£46,000 (2022: £42,000) for their review
of the interim financial statements
(considered to be a non-audit service).
This was 12.3% of the total audit fees,
and the three-year average is 12.7%. No
other non-audit services were provided
by the external auditor.

The Committee can confirm that
the policies referred to above were
complied with throughout the year
and, in its opinion, the external auditor
remains independent.

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Audit and Risk Committee report continued

External audit tender
Our auditor rotation policy is that we
will tender the audit at least once every
ten years, we will change auditor at
least every 20 years, and we will invite
at least one firm outside the ‘Big Four’
to participate. Further to this, and
consistent with the proposal set out
in last year’s report, the Committee
commenced a competitive tender
process in H1 FY23 for the FY24
statutory audit.

The Committee agreed to undertake
the tender at its meeting in June 2022
and established a working group
comprising the Committee Chair,
Arja Taaveniku, Vijay Talwar, the CFO
and the Director of Group Finance.
The working group determined the
process, with due regard to the FRC’s
guidance on audit tendering and the
Government’s response in May 2022
to the BEIS March 2021 consultation
paper ‘Restoring Trust in Audit and
Corporate Governance’. It considered
a range of firms and sent a request
for proposal (‘RFP’) to five (of which
three were challenger firms, and from
which one challenger and one non-
challenger firm declined to participate).
All participating firms then met with key
internal stakeholders.

Following review of the RFP responses
and scorecard for each firm, together
with a review of recent FRC inspection
results, the working group presented
its recommendation to the Committee.
After due consideration, in November
2022 the Committee recommended to
the Board that PwC be reappointed as
Dunelm’s statutory auditors from FY24,
subject to shareholder approval.

The Committee considers that the
Company has complied with the
Competition and Markets Authority’s
Statutory Audit Services for Large
Companies Market Investigation
(Mandatory Use of Competitive Tender
Processes and Audit Committee
Responsibilities) Order 2014 for the
financial year under review.

Tender scorecard criteria
The objective was to appoint the audit firm that would provide the highest
quality, most effective and efficient audit for the Company. To support this,
the participating firms were scored utilising the following criteria:

• Firm level quality: assessed with reference to AQR reports and progress

made against findings.

•

Individual engagement team quality: based on internal metrics and
references.

• Use of technology to drive speed of delivery, quality, and value: assessed

based on RFP responses and demonstration.

• Ability of senior team to build relations and communicate complex

messages clearly: assessed via technical challenges and presentation.

• Ability of the firm to provide holistic assurance across both financial and
non-financial metrics e.g. ESG reporting: assessed on RFP response.

• Ability to deliver an efficient audit and value for money: assessed based

on commercial terms and in the context of scores for other scorecard items.

• Tender quality and experience: assessed based on RFP response and

presentation.

Overview of the tender process

June
2022

July
2022

Aug
2022

Sept
2022

Oct
2022

Nov
2022

Dec
2022

• Committee agreed to undertake a tender process for the

FY24 statutory audit.

• Working group established to manage tender process.

• Working group determined process and agreed objectives.

• Contact made with five potential firms, two of which

declined to participate.

• Meetings arranged with three firms selected to tender.

• Tender scorecard developed.

• Timetable agreed with management.

• RFP document issued to firms.

• Announcement that formal audit tender process had

commenced.

•

Information shared via data room.

• RFP responses received from firms.

•

Initial review of responses undertaken.

• Audit firm presentations.

• Assessment of each firm’s presentation and criteria scoring.

• Recommendation by working group to the Committee and

thereafter from the Committee to the Board.

• Feedback to all audit firms.

• Announcement of the outcome of the audit tender process.

Dunelm Group plc Annual Report and Accounts 2023

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Sustainability reporting
The Committee’s role is to gain
assurance that the effects and
consequences of climate change are
being adequately reflected in our
financial statements and valuations.

Last year we reported on all areas
of the TCFD framework other than
under the ‘Metrics and Targets’ b)
recommendation. This year, with the
support of a third-party specialist
partner, management has made
further progress on understanding and
improving the data quality inputs into
the Scope 3 calculations which has led
to a revised baseline. We are reporting
for FY23 on carbon emissions on a
basis that is consistent with the revised
baseline and are in full compliance with
the TCFD recommendations.

During the year, the Committee
received regular updates on
progress against forthcoming
sustainability-related reporting
requirements including the first
two IFRS Sustainability Disclosure
Standards issued by the ISSB: IFRS S1
General Requirements for Disclosure
of Sustainability-related Financial
Information and IFRS S2 Climate-related
Disclosures. This included horizon
scanning to proactively consider
timelines and the steps required to
achieve compliance for each new
disclosure requirement as it comes into
force. We also welcomed the inception
of a new ESG-specific reporting team
to support the various sustainability-
related workstreams across the
business and ensure ongoing efficiency
and clarity of reporting for disclosure
purposes.

The Committee will continue to monitor
developing best practice, and seek
training/professional guidance when
required, to ensure that it continues to
effectively oversee our reporting in
this area.

See pages 40 to 47 for our TCFD report.

Risk management and
internal controls
Risk management
Whilst the Board has overall responsibility
for risk management, it delegates to the
Committee responsibility for assessing
the effectiveness of the systems
established by management to identify,
assess, manage and monitor financial
and non-financial risks.

During the year, the Committee
undertook the following risk
management activities, which enabled
it to maintain oversight and discuss risks
and challenges faced by the Company:

• Reviewed principal risks and the
Company’s formal risk appetite
statement ahead of submission
to the Board for approval.

• Considered and challenged

management’s KRIs.

• Received regular reports and

updates from the CFO as chair of the
Risk and Resilience Committee on
its activities during the year and on
any specific matters that impacted
internal controls.

• Received reports from management
on developments and improvements
to the control environment during
the year, including implementation
of a new balance substantiation
system, updated controls mapping
of key financial processes and
continued investment in our cyber
security capabilities.

• Reviewed internal and external audit
reports and progress on delivering
management actions.

• Received updates on improvements
to fraud monitoring and reporting
following the conclusion of the
annual fraud risk assessment.

• Reviewed progress on improving

business continuity plans.

• Received updates on data

protection, anti-bribery, material
litigation, business continuity
and whistleblowing (see page 72
for more information about our
Whistleblowing policy).

• Noted that a satisfactory insurance

programme is in place.

In addition, there was continued focus
on IT systems, cyber security and data
protection by way of presentations
to the Committee from the Chief
Technology and Information Officer and
Head of Cyber Security. The Committee
welcomes the ongoing improvements
in these areas in line with the priorities
previously identified as requiring focus.

The Committee considers that the
processes in place to manage risk by
the Board and management are robust
and working effectively.

Internal control framework
Management is responsible for
establishing and maintaining an
effective system of internal controls
and the Committee has responsibility
for ensuring the effectiveness of
those controls.

In the last two years there has
been a continuous improvement
in the effectiveness of our control
environment, which commenced
following an internal controls ‘health
check’ completed by KPMG in FY20. We
continue to invest in the modernisation
of our key business systems to ensure
that we have the right foundations in
place to support our ambitious strategic
growth plans and the Committee
continues to monitor progress.

The Group has established internal
controls and risk management systems
in relation to the process for preparing
consolidated financial statements.
Examples of the controls in operation
include regular balance sheet
reconciliations, monthly analysis and
reviews, technical accounting papers
and review and approval of externally
reported financial information.

Internal audit
The internal audit function provides
independent and objective assurance
to all levels of management up to the
Board. Its responsibilities include
evaluating and reporting on the
adequacy and effectiveness of the
systems of risk management and
internal controls. Since December
2019, the function has been outsourced
to KPMG.

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Audit and Risk Committee report continued

KPMG’s purpose, scope and authority
are defined within its charter which is
approved by the Committee annually.
The team develops an internal audit
plan for the year, with input from
management, that is structured to align
with the Group’s strategic priorities
and key risks and is approved by the
Committee. The plan is reviewed
periodically throughout the year to
confirm it remains relevant.

Each review concludes with a formal
report with graded recommendations,
management responses and actions.
These are communicated to the
Committee by KPMG, and rigorously
tracked through to completion.
The Committee as a whole and the
Committee Chair each meet with
KPMG without management present
on a regular basis to allow for open
discussion.

During the year the Committee carried
out a review of the effectiveness of
the internal audit function. This was
undertaken by way of a questionnaire,
and feedback was sought from
members of the Committee and
senior management. The Committee
concluded that the function continues
to operate effectively.

FRC review of annual report
and accounts
The FRC’s Corporate Reporting Review
team carried out a review of the FY22
Annual Report and Accounts during
the year, with no queries raised. The
FRC noted some matters that could
be improved in future reporting, and
these have been duly considered and
addressed as appropriate.

Internal audit reviews undertaken in FY23
KPMG conducted the following risk-based internal audit reviews in FY23:

Internal audit review
General IT controls Reviewed general IT controls processes and an

Overview of scope

Purchase to pay

Supply chain
Stock return

Review of ESG
processes – phase 1
Code of Conduct

Independent
programme
assurance

assessment of their effectiveness.
Considered purchase to pay processes to help ensure
that the risks in this area are appropriately managed.
Focused on core risks in the stock supply chain.
Reviewed the processes and controls designed to
manage risks related to stock returns.
Considered our ESG processes and controls relating
to strategy, materiality and target setting activities.
Assessed the existing controls around employee
behaviours.
Focused on delivery of projects during the year
specific to internal control improvements.

The FRC requests that in reporting
on this engagement we make clear
the limitations of their review, namely
that it was based solely on the Annual
Report and Accounts and did not
benefit from a detailed knowledge of
our business, or an understanding of
the underlying transactions entered
into. They also noted that their review
provided no assurance that the report
and accounts are correct in all material
respects and that the FRC’s role is not
to verify the information provided but
to consider compliance with reporting
requirements. Finally, it is noted that
none of the FRC, its officers, employees
or agents accept liability for reliance
on their letter by the Company or any
third party, including but not limited to
investors and shareholders.

Committee effectiveness
The effectiveness of the Committee
was considered as part of this year’s
Board evaluation process, more details
of which can be found on page 78. The
review concluded that the Committee
continues to operate effectively and
having considered the findings, it was
agreed that particular areas of focus
during the forthcoming year should be:

1. Continuing to assess our approach to

internal audit;

2. Continuing to focus on assurances
around internal controls, fraud
and non-financial KPIs, including
sustainability;

3. Building a strong relationship with
the new external audit partner.

Dunelm Group plc Annual Report and Accounts 2023

Remuneration – At a glance

Remuneration Principles

Simple and
transparent

Consistently applied
throughout business

Aligned to shared
values and ownership
structure

Rewards strong
performance and
sustainable growth
over the long term

Pay fairly for an
individual’s role and
responsibilities

Enshrined in
Remuneration Policy

Summary of Executive Remuneration Structure under 2023 Policy

Base Pay
➔ Median or below

Pension
➔ Aligned to workforce average

Benefits
➔ Median

Variable pay – annual cash bonus and LTIP
➔ Maximum opportunity 375% for

CEO and 325% for CFO

Annual cash bonus
➔ Median
➔ Up to 150% of salary*
➔ Linked to performance: sales,
profit, strategic/personal
➔ Clawback and malus apply

Lifetime lock-in
➔ Two-thirds of bonus and LTIP

outcome retained in shares for the
duration of employment

Shareholding requirements
➔ During employment retain shares
worth maximum LTIP opportunity

➔ Two-year post-employment

holding requirement

LTIP
➔ Upper quartile
➔ Up to 250% of salary*
➔ Three-year performance period
➔ Two-year retention period
➔ Mix of financial and non-financial

performance conditions
➔ Clawback and malus apply

*Subject to maximum variable pay opportunity.

Dunelm Group plc Annual Report and Accounts 2023

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GOVERNANCE REPORT

Remuneration

Remuneration
Committee report

Role and principal duties
The Committee is responsible
for determining the policy
for Directors’ remuneration
and setting the remuneration
for the Chair of the Board,
Executive Directors and
members of the Executive
Team in accordance with the
Principles and Provisions of
the Code. Its other principal
duties include:

• Establishing remuneration
schemes that support
alignment with long-term
shareholder interests;

• Designing remuneration
policies and practices
to support strategy
and promote long term
sustainable success;

• Reviewing the design of
all share incentive plans
for approval by the Board
and for any such plans
determine whether awards
will be made each year; and

• Reviewing workforce
remuneration and
related policies.

The Committee’s full terms of
reference can be found at:
corporate.dunelm.com.

William Reeve
Chair of the Remuneration
Committee

Committee membership
William Reeve (Chair)

Alison Brittain

Ian Bull
Peter Ruis
Vijay Talwar
Arja Taaveniku
Kelly Devine

See page 60 for meeting attendance.

On behalf of the Remuneration
Committee (‘Committee’) I am
pleased to present the Remuneration
Committee report for the year ended
1 July 2023. This includes:

• My Annual Statement as Chair of
the Committee (pages 88 to 91);

• Our new Directors’ Remuneration
Policy which will be subject to a
binding shareholder vote at the
2023 AGM (pages 92 to 102); and

• The Annual Report on Remuneration

(pages 103 to 118), describing
how the existing Remuneration
Policy has been applied for the
year ended 1 July 2023 and how
we intend to implement policy for
FY24. The Remuneration Committee
report (excluding the Directors’
Remuneration Policy) will be subject
to an advisory shareholder vote at
the 2023 AGM.

FY23 business performance
and incentive outcomes
Our Executive Team performed strongly
throughout the year, delivering another
good performance in a challenging
environment for UK consumers and
businesses, and resulting in record
sales of £1.6bn, and profit before tax
of £193m. The Committee’s decision-
making on the remuneration outcome
for our Executive Directors has
been shaped by this year’s financial
performance, as well as recognition
of the opportunities and challenges
for our business that lie ahead.

We remain committed to ensuring
that we reward sustainable, profitable
growth over the longer term on a
consistent basis and aligned with our
shared values.

The overall formulaic vesting level for
the annual bonus is 46% of maximum
opportunity for Nick Wilkinson and
45% of maximum opportunity for Karen
Witts. Full details of performance
against the FY23 objectives are set out
on pages 105 and 106. In addition, Nick
Wilkinson was granted an LTIP award
in November 2020 with vesting subject
to performance conditions assessed
over the three year period FY21–23. This
award has vested at 83% as set out on
page 107. The Committee considered
whether to use its discretion to adjust

Dunelm Group plc Annual Report and Accounts 2023

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either the bonus outcomes or the LTIP
award outcome. We concluded that the
outcomes of the annual bonus and LTIP
were fair and well-deserved and reflect
both the performance of the business
and the overall stakeholder experience,
including the wider workforce, and
therefore no discretion should be
applied.

However, having completed the
review, we determined that specific
amendments would be appropriate in
order to ensure that the Policy continues
to reflect our long-standing approach
of aligning executive and shareholder
interests via performance-based pay
and executive equity holdings. The key
changes are as follows:

At least two-thirds of Nick and Karen’s
respective cash bonuses (after
payment of tax and National Insurance
contributions) must be invested in
shares and retained in accordance
with our in- and post-employment
shareholding guidelines. Two-thirds
of Nick’s vesting LTIP award (after
payment of tax and National Insurance
contributions) must similarly be retained,
and it is, in any event, subject to a two-
year hold on the full amount.

Remuneration Policy review
We are grateful for the support for our
current Directors’ Remuneration Policy,
which was approved by shareholders
at the 2020 Annual General Meeting
with over 99% of votes cast in favour.
In line with the usual timetable, we
will be seeking shareholder approval
for a new Policy at the 2023 AGM.
Therefore, during FY23, the Committee
undertook a detailed review of the
executive remuneration framework
which included consultation with 18
major shareholders (including the major
shareholder) representing c.70% of
our issued share capital and the major
proxy agencies.

We reviewed the current policy against
UK Corporate Governance Code
(‘Code’) requirements and, in addition
to consulting with our biggest investors,
we considered (i) the views of the Non-
Executive Directors and management;
(ii) feedback on Executive Director pay
given by the National Colleague Voice
(‘NCV’); (iii) the Group’s strategy; and
(iv) market practice. We concluded that
the current Policy’s overall structure
remains appropriate for Dunelm and
continues to support the delivery of
our strategy and the generation of
shareholder value.

Increase in maximum variable pay
from 325% of salary to 375% of
salary for the CEO
Since the current Policy was approved,
the size and complexity of the Company
has continued to increase. As noted
in our FY22 Remuneration Report,
our CEO, Nick Wilkinson, asked for no
base salary increase in FY23. Due to
the significant and profitable growth
of the Group over the last five years in
particular, our CEO’s base salary is now
at the lower quartile versus our peers,
and the bonus opportunity of 125% of
salary is now below the lower quartile
compared to companies of a similar
size and complexity. This is not aligned
with our stated philosophy which is for
the fixed pay of our top executives to
be positioned at median or below and
for variable (performance-based) pay
to be median for the annual bonus and
upper quartile for the LTIP. Therefore,
taking into account our strategic growth
ambitions which will create real value for
shareholders, the new policy provides
for an increase in the CEO’s potential
performance-related pay, in line with
stretching performance targets.

For the incumbent CEO increasing the
annual bonus to 150% of salary and
the LTIP to 225% of salary allows us to
combine below median fixed pay with
the opportunity to earn a competitive
proportion of variable pay if performance
justifies it. This is aligned with our culture
of pay for performance. These increases
in variable pay recognise the growth and
increase in the scale of the Company over
the last three years and are intended to
ensure that the FY24 overall package is
competitive and aligned with our stated
remuneration philosophy. For the CFO,
the new policy maintains the maximum
variable pay award levels at the 325% of
salary aggregate, consisting of an annual
bonus of 125% of salary and an LTIP of
200% of salary.

In proposing this change for the CEO,
and in line with feedback received from
shareholders during the consultation
process, the Committee will ensure that
the stretch in the performance targets
is commensurate with the increased
opportunity arising from the proposed
increase in quantum.

Flexibility with the overall maximum
variable opportunity
The new policy introduces the potential
for flexibility for the future to enable us
to adjust the weighting between bonus
and LTIP for Executive Directors. This is
subject to a limit of 150% of salary for
the annual bonus and 250% of salary
for the LTIP, and the overall maximum
variable opportunity is limited to 375%
of salary for the CEO and 325% of
salary for the CFO. Any utilisation of
this flexibility would be accompanied
by clear rationale and continue to have
regard to our long-standing ethos of
alignment via executive equity holdings.

Threshold and target vesting levels
We are proposing to align our vesting
schedules for bonus with LTIP and
to introduce an element of flexibility
(which would not be utilised without
clear explanation). Under the new policy:

• the annual bonus vesting levels will
be stated as typically up to 10%
of maximum at threshold and up
to 50% of maximum for on-target
performance (compared to typical
market practice of up to 20% of
maximum for threshold and up
to 50% of maximum for on-target
performance); and

• the LTIP will be stated as typically

up to 10% of maximum for threshold
performance (compared to typical
market practice of up to 25% of
maximum) and up to 50% for on-
target performance.

Other key changes
In proposing the above changes to
incentive opportunities, we were
keen to ensure this was appropriately
balanced as follows:

•

In-service shareholding guideline:
This will match the LTIP opportunity,
meaning that for the CEO it will
increase to 225% of salary, remaining
at 200% of salary for the CFO.

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Remuneration Committee report continued

• Post-employment shareholding

guideline: This will be aligned with the
proposed changes to the in-service
guideline such that 100% of the
in-service requirement (i.e. 225% of
salary for the CEO and 200% of salary
for the CFO) or the actual holding if
lower must be retained for two years
post cessation of employment.

• Lifetime lock-in: Two thirds of

variable pay will continue to be
invested in Dunelm shares, to be
held for the duration of employment.
However, we will introduce flexibility
in the new Policy to permit share
sales once the in-service guideline
is achieved, at the discretion of the
Committee. This is aligned with our
long-standing ethos of alignment via
executive equity holdings but retains
flexibility to attract and support
individuals with diverse backgrounds
and circumstances.

• Other changes have been made to

reflect the changes described above
and/or to introduce operational
flexibility – such as permitting the
deferral of bonuses on a gross basis.
Flexibility is included in the new
Policy to pay ‘dividend equivalents’
in respect of all dividends and not
just special dividends. We have
also made other minor changes for
operational reasons and to reflect
changes in practice.

The Committee is grateful to
shareholders for the time taken to
engage in relation to the proposed new
policy and is appreciative of the support
received during the consultation
exercise.

LTIP and Sharesave rules
Shareholders will note that we are also
seeking approval at this year’s AGM for
the extension of the term of each of our
Long-Term Incentive Plan (alongside
other updates) and Sharesave Plan,
which are otherwise due to expire in
2024. Details are set out in our 2023
AGM Notice of Meeting.

Remuneration for FY24
Our review of salaries for Executive
Directors in FY23 and intended
operation of the new Policy for the
financial year ending 1 July 2024
is as follows:

Salary
When considering salary increases,
the Committee was mindful of Director
performance, our remuneration
principles as set out on page 87 and the
wider colleague experience. We also
considered feedback on Executive pay
received from our National Colleague
Voice. Further to this, we reviewed the
salary levels of the Executive Directors
and approved a 5% increase in base
salary for each of Nick Wilkinson and
Karen Witts in line with the increases
given to senior management. This is
below the median pay award made
to the wider colleague population of
9.6%. In implementing the increase,
Nick’s base pay remains positioned
around the lower quartile versus our
peers and Karen’s base pay remains
positioned around median for the top
50 companies in the FTSE 250. The
Committee will consider a further
review of Executive Director base
salaries at the appropriate time in
the forthcoming year.

Variable pay/incentives
We apply a consistent pay structure
throughout the business, with the
remuneration of Executive Directors
more heavily weighted towards variable
pay and share-based incentives than
other colleagues, so that a greater
part of their pay is linked to successful
delivery of strategy and aligned with
shareholders. As set out above, we
are proposing to increase the annual
bonus opportunity for Nick Wilkinson to
150% of salary and his LTIP opportunity
to 225% of salary. This positions the
annual bonus opportunity around
median and the LTIP opportunity
around upper quartile for the CEO
compared to companies of a similar size
and complexity (in line with our stated
principles and our pay for performance
culture). Our CFO, Karen Witts’ bonus
opportunity will be at 125% of salary
and her LTIP opportunity at 200%
of salary.

Targets for the annual bonus will be
based on our annual budget and are
75% financial and 25% strategic and
personal. We have also set targets
for awards to be made under our
Long-Term Incentive Plan, expected
to be made after the 2023 AGM,
and these are 80% financial and
20% non-financial, with the non-
financial measures being based on
environmental and social targets.
As noted above, the Committee
has reviewed the stretch in the
performance targets to ensure that
the proposed increase in quantum is
commensurate with the increase in
opportunity.

Two-thirds of variable pay will
continue to be invested in Dunelm
shares, to be held for the duration
of employment.

Further details are set out on pages
115 and 116 of the Annual Report on
Remuneration.

Board changes in the year
As anticipated in my statement last
year, Alison Brittain was appointed
Chair with effect from 1 January
2023 on a base fee of £322,400 per
annum, inclusive of all Committee
chair fees. The base fee was set
at median for companies in the
FTSE 50-150, reflecting the growth
ambition of the Group over Alison’s
likely tenure as Chair.

Further engagement
I look forward to receiving your
support at our 2023 AGM where I
will be available to respond to any
questions that shareholders may
have on this report or in relation
to the Committee’s activities. In
the meantime, if you would like to
discuss any aspect of our approach
to remuneration, please feel free
to contact me via our Company
Secretary.

William Reeve
Chair of the Remuneration
Committee
20 September 2023

Dunelm Group plc Annual Report and Accounts 2023

The table below summarises the changes between the policy approved in 2020 and the policy for which approval will be sought
at the 2023 AGM.

Proposed change

Total variable pay

Proposed Remuneration Policy changes

Rationale

Increase in the overall maximum incentive
opportunity from 325% of salary to 375% of
salary for the CEO.

For Nick Wilkinson, annual bonus will be
increased to 150% of salary and the LTIP to
225% of salary.

For the incumbent CEO, increasing the
annual bonus to 150% of salary and the LTIP
to 225% of salary allows us to combine below
median fixed pay with the opportunity to earn
a competitive proportion of variable pay if
performance justifies it. This is aligned with
our culture of pay for performance.

For the CFO, the new policy maintains the
maximum variable pay award levels at 325% of
salary aggregate, consisting of an annual bonus
of 125% of salary and an LTIP at 200% of salary.

The increases in variable pay for the CEO
recognise the growth and increase in scale
of the Company over the last three years and
are intended to ensure that the FY24 overall
package is competitive and aligned with our
stated remuneration philosophy.

The Committee will review the stretch
in the performance targets to ensure
that the proposed increase in quantum
is commensurate with the increase in
opportunity.

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Flexibility with the overall
maximum variable
opportunity of up to 375% of
salary for the CEO and up to
325% of salary for the CFO.

The new policy introduces the potential for
flexibility for the future to enable us to adjust
the weighting between bonus and LTIP for
Executive Directors, subject to a limit of 150% of
salary for the annual bonus and 250% of salary
for the LTIP.

To ensure the new policy has appropriate
flexibility. Any change to weightings in the
future would be accompanied by clear
rationale and would continue to have regard
to our long-standing ethos of alignment via
executive equity holdings.

Threshold and target
vesting levels

Under the new policy:

• the annual bonus vesting levels will be

stated as typically up to 10% of maximum
at threshold and up to 50% of maximum for
on-target performance (compared to typical
market practice of up to 20% of maximum
for threshold and up to 50% of maximum for
on-target performance); and

• the LTIP will be stated as typically up to 10%
of maximum for threshold performance
(compared to typical market practice of
up to 25% of maximum) and up to 50% for
on-target performance.

We are proposing to align our vesting
schedules for bonus with LTIP and to
introduce an element of flexibility (which
would not be utilised without clear
explanation).

This provides greater consistency and brings
the vesting levels more in line with the market.

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Directors’ Remuneration Policy 2023

Introduction to Directors’ Remuneration Policy
Our current binding Remuneration Policy was approved by shareholders at the Annual General Meeting on 17 November 2020
with over 99% of votes in favour (see FY22 Annual Report and Accounts for a copy of the current policy). It expires this year.
Therefore, during FY23, the Committee reviewed the Group’s overall remuneration philosophy and structure to ensure that the
framework remains effective in supporting the Group’s strategic objectives and long-term, sustainable growth. It considered
the ongoing need to maintain alignment of the Remuneration Policy with our strategic goals, investor sentiment and market
practice, as well as our shared values, which include ‘long-term thinking’ and to ‘act like owners’, in keeping with the family origin
of the business.

The Chair wrote to the Company’s largest shareholders in respect of proposed changes and took shareholders’ feedback into
account when finalising the new Policy (more details of which are set out in the Chair’s Annual Statement on page 88). The
Committee concluded that whilst the overall structure of the Policy should be maintained, some changes were desirable, and a
summary of the key changes is set out on page 91. Shareholders are being asked to approve the new Policy, which is intended to
apply for three years from the date of approval, at our FY23 AGM on 16 November 2023.

The Committee has ensured that the new Policy and practices are consistent with the factors set out in Provision 40 of the UK
Corporate Governance Code:

Clarity and
simplicity

• We operate a simple, sustainable and transparent remuneration structure.

• Performance targets for variable pay are linked to our strategy.

• Performance requirements are clearly disclosed and transparent and we provide detailed disclosures

of the relevant performance assessments and outcomes for our stakeholders to consider.

• Engagement is welcomed from stakeholders throughout the year.

• A National Colleague Voice meeting (see pages 32 and 118) is dedicated to providing clarity

to colleagues, and inviting discussion on our approach to executive pay.

Risk

• The Committee is comfortable that the Company’s incentive arrangements do not encourage

inappropriate risk-taking.

• Our Policy includes (i) balanced use of short- and long-term incentives, (ii) the ability for the Committee to
apply discretion and judgement to outcomes, (iii) malus and clawback provisions, and (iv) the majority of
the variable remuneration of the Executive Directors is paid in shares which are subject to in-employment
and post-employment shareholding requirements.

• Our variable pay arrangements include the ability on the part of the Committee to adjust formulaic

vesting outturns so that vesting levels can be aligned with overall performance.

• Shareholding requirements apply both during and after employment to promote alignment with the

longer-term interests of shareholders and longer-term performance.

• Variable pay arrangements include malus and clawback provisions.

Predictability

• The remuneration scenarios for Executive Directors on page 98 and 99 indicate the potential values that

may be earned through the remuneration structure.

• Where discretion may be exercised, this is clearly stated in the Policy.

Proportionality

• Our Policy is drafted with clear consideration of the need to ensure that total remuneration fairly reflects
performance and enables meaningful and appropriate targets to be set with a significant proportion
linked to long-term shareholder value.

• A significant proportion of the Executive Directors’ remuneration is subject to performance conditions

and awarded in shares to ensure alignment with shareholders’ interests.

Alignment to
culture

• The Committee ensures that our incentive structure drives the right behaviours and reinforces the

Group’s purpose and shared values.

• Alignment is reflected in the approach to performance measures used in our incentive schemes, for example
(i) financial targets under the annual bonus and targets for the LTIP are the same for all management,
regardless of seniority, linking everyone’s contribution to a shared Group financial outcome, (ii) strategic
targets require our Executive Directors and senior leadership to work together to deliver growth and
value to the benefit of our stakeholders, and (iii) non-financial performance measures continue to focus
on ensuring that participants ‘do the right thing’, including delivery of our sustainability strategy.

Dunelm Group plc Annual Report and Accounts 2023

The policy report
Future policy table
The following table sets out the structure of remuneration for Directors of the Company under the proposed new Policy
which will be presented to shareholders at the forthcoming AGM for approval by way of a binding vote. The Policy has been
determined by the Company’s Remuneration Committee in consultation with shareholders. Sir Will Adderley has requested that
he not be considered for participation in the annual bonus or LTIP.

The key differences between the policy approved at the AGM in 2020 and the proposed new Policy are summarised on page 91.

Executive Directors

Base salary

Purpose and
link to strategic
objectives

• Fixed remuneration for the role.
• To attract and retain the high calibre talent necessary to develop and deliver the business strategy.
• Reflects the size and scope of the Executive Director’s responsibilities.

Operation

• Normally paid monthly.
• Base level set in the context of:

— Pay for similar roles in companies of similar size and complexity in the relevant market.
— Scale and complexity of the role.

• Should comprise a minority of potential remuneration.

Maximum
opportunity

• Reviewed annually, with percentage increases usually in line with or below the Group-wide review

unless other circumstances apply, such as:
— A significant change in the size, scale or complexity of the role or of the Group’s business.
— Development and performance in role (for example, on a new appointment, base salary might be

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initially set at a lower level with the intention of increasing over time).

• The Committee does not consider it to be appropriate to set a monetary limit on the maximum base

salary that may be paid to an Executive Director within the terms of this Policy.

• None, although performance of the individual is considered at the annual salary review.

Performance
metrics

Retirement benefits

Purpose and
link to strategic
objectives

• To provide a competitive post-retirement benefit.
• To attract and retain the high calibre talent necessary to develop and deliver the business strategy.

Operation

• Contribution to a defined contribution plan or a cash allowance in respect of some or all of the

contribution that would otherwise be made to a pension plan.

• No element other than base salary is pensionable.

• An amount as a percentage of base salary not exceeding the maximum rate available to the majority

of the wider workforce (currently 3%).

• None.

Maximum
opportunity

Performance
metrics

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Remuneration Committee report continued

Executive Directors continued

Benefits

Purpose and
link to strategic
objectives

Operation

Maximum
opportunity

Performance
metrics

Annual bonus

Purpose and
link to strategic
objectives

• To provide a competitive benefits package.
• To attract and retain the high calibre talent necessary to develop and deliver the business strategy.

• A range of benefits are provided, which may include car or car allowance; private health insurance for
the individual and their family; permanent health cover; life assurance; mobile phone; use of a car and
driver in connection with the role or an appropriate travel allowance; and colleague discount.
• Additional benefits, such as relocation expenses, housing allowance and school fees may also be
provided in certain circumstances if considered reasonable and appropriate by the Committee.
• For non-UK Executives (none at present) the Committee may consider additional allowances in

accordance with standard practice.

• The Committee reserves the right to provide such benefits as it considers necessary to support the

strategy of the Group.

• The Committee does not consider it to be appropriate to set a maximum cost to the Group of benefits

to be paid.

• None.

• Rewards and incentivises delivery of annual financial, strategic and personal targets.

Operation

• The amount of the bonus earned is determined after the results for the financial year have been

audited, subject to performance targets having been met. The Committee has discretion to adjust
the bonus payout upwards or downwards if it considers that the formulaic outturn does not reflect its
assessment of the overall financial or non-financial performance of the participant or the Group, or is
inappropriate in the context of circumstances that were unexpected or unforeseen at the start of the
relevant year, or is inappropriate for any other reason.

• At least two-thirds of any bonus earned will be either subject to a requirement that the after-tax

amount is invested in Dunelm shares or will be granted in the form of a share bonus award on a pre-
tax basis. Any shares acquired pursuant to such a requirement are subject to retention provisions as
set out in the ’Shareholding requirements’ section below.

• Maximum opportunity: 150% of base salary per annum.
• The combined annual bonus and LTIP opportunities for any year may not exceed: (a) 375% of salary in
the case of the Company’s CEO; and (b) 325% of salary in the case of any other Executive Director.

• Where bonus awards are granted as share awards, dividend accruals may be made in respect of

dividends paid during the vesting period applicable to an award. Any such dividend equivalents will
ordinarily be paid in shares.

Maximum
opportunity

Performance
metrics

• Stretching performance targets are set each year. Performance targets for the Executive Directors
may be based on financial objectives and/or strategic objectives and/or personal goals set by the
Committee annually.

• Financial objectives may include, but are not limited to, budgeted PBT for the financial year.
• The strategic objectives will vary depending on the specific business priorities in a particular year.
• The Committee will determine the weighting of performance measures for any year based on specific
business priorities for the year. Ordinarily, at least 50% of the annual bonus for Executive Directors will
be subject to financial objectives.

• Subject to the Committee’s discretion to override formulaic outturns, for financial measures typically
up to 10% of the maximum opportunity will be earned for threshold performance, and for on-target
performance up to 50% of the maximum opportunity will be earned, and for exceeding on-target
performance up to 100% of the maximum opportunity will be earned. Bonuses will typically be earned
between threshold and on-target and between on-target and maximum on a straight-line basis.

• For strategic measures and personal goals, vesting of the bonus will be determined by the

Committee between 0% and 100% based on its assessment of the extent to which the relevant
metrics or objectives have been met.

• Awards are subject to recovery provisions (malus and clawback) as set out below.

Dunelm Group plc Annual Report and Accounts 2023

Executive Directors continued

Long-Term Incentive Plan

Purpose and
link to strategic
objectives

• Supports delivery of strategy by requiring the achievement of appropriate targets and objectives

which will normally include a measure based on EPS.

• Rewards strong financial performance and sustained increase in shareholder value over the long

Operation

Maximum
opportunity

Performance
metrics

term.

• Aligns with shareholder interests through the delivery of shares, with share retention requirements as

set out below.

• Awards (which can take the form of a conditional award, nil-cost option or nominal value option)
are made annually, with vesting subject to performance, usually assessed following the end of a
performance period of three years, followed by a ‘Holding Period’ of two years. The Holding Period
may operate on the basis of: (i) the award vesting following assessment of performance but that,
other than as regards sales of shares to cover tax liabilities, shares acquired must be retained until the
end of the Holding Period; or (ii) vesting being deferred until the end of the Holding Period.

• Shares acquired are then subject to retention provisions as set out in the ’Shareholding requirements’

section below.

• The Committee has discretion to adjust the LTIP vesting outturn upwards or downwards if it considers

that the formulaic output does not reflect its assessment of the overall financial or non-financial
performance of the participant or the Group, or is inappropriate in the context of circumstances that
were unexpected or unforeseen at grant, or is inappropriate for any other reason.

• The maximum award for an Executive Director in respect of any financial year is an award over shares

with a value (as determined by the Committee) of 250% of salary.

• The combined annual bonus and LTIP opportunities for any year may not exceed: (i) 375% of salary in
the case of the Company’s CEO; and (ii) 325% of salary in the case of any other Executive Director.

• Dividend accruals may be made in respect of dividends paid during the performance period

applicable to an award and up to the vesting date. Payment would only be made in respect of shares
vesting after applying performance criteria. Any such dividend equivalents will ordinarily be paid in
shares.

• The Committee will determine the weighting of performance measures for any year. For at least 75%
of an award, vesting will be subject to the satisfaction of one or more financial measures, which will
normally include a measure based on EPS. The balance of the award vesting will be subject to one or
more other financial, strategic, environmental, social or governance measures.

• The Committee considers the targets annually taking into account a range of factors which will

include the Group’s plans, external forecasts and the overall business environment.

• Subject to the Committee’s discretion to override formulaic outturns, for financial measures typically
up to 10% of an award will vest for threshold performance (the lowest level of performance at which
awards will vest), rising to up to 50% for achieving a stretching level of ‘on-target’ performance and to
100% for achieving or exceeding a stretch level of performance. Vesting between threshold and on-
target and between on-target and maximum will typically be on a straight-line basis.

• For strategic, environmental, social or governance measures, vesting will be determined by the
Committee between 0% and 100% based on its assessment of the extent to which the relevant
measures have been met.

• Awards are subject to recovery provisions (malus and clawback) as set out below.

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Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Remuneration Committee report continued

Executive Directors continued
All employee share plan (Sharesave)

Purpose and
link to strategic
objectives

• Promotes share ownership by all eligible colleagues (including Executive Directors).

Operation

• All UK employees with a minimum service requirement are eligible to join the UK tax qualifying

Dunelm Group Savings Related Share Option Plan (the Sharesave). Employees outside the UK are
eligible to join an equivalent plan which is not tax qualifying.

• Monthly savings are made over a period of three years (or such other period as may be permitted by
the applicable UK tax legislation) linked to the grant of an option over Dunelm shares at a discount of
up to 20% to the market price (or such other amount as permitted by the applicable UK tax legislation)
at the date of invitation to join the plan.
Invitations are normally issued annually at the discretion of the Committee, which also has discretion
to set the minimum service requirement, maximum discount, maximum monthly savings and any
other limits within the terms of the plan rules.

•

• Maximum participation limits reflect the limits prescribed by the applicable UK tax legislation from

time to time. Currently the maximum limit is savings of £500 per month.

• None.

Maximum
opportunity

Performance
metrics

Shareholding requirements
To align the interests of Executive
Directors with those of shareholders
and to promote long-term thinking, the
Committee has adopted shareholding
requirements which apply both during
employment and for a period following
employment, as set out below. The
Committee retains the right to waive
or relax the retention requirements in
respect of shares acquired pursuant to
annual bonus deferral arrangements or
following the end of the Holding Period
applying to any LTIP award granted
after 1 July 2020 if the Executive
Director meets the required level of
shareholding during employment.
The Committee also retains the
right to waive or relax any element
of the shareholding requirements in
exceptional circumstances, such as
death, divorce, ill health or severe
financial hardship.

Shareholding requirements
during employment
• Executive Directors are expected
to make a personal investment in
Dunelm shares on appointment as
an Executive Director (subject to
closed periods).

• Each Executive Director is required
to build a beneficial holding of
shares with a value (as a percentage
of salary) equal to the higher of:
(i) their normal annual LTIP grant;
and (ii) 200% of salary. Executive
Directors are ordinarily expected to
achieve this holding within five years
from appointment. Shares subject to:
(i) LTIP awards which are exercisable
but which have not been exercised;
(ii) LTIP awards for which the
performance assessment has been
carried out but for which vesting is
deferred until the end of the Holding
Period; and (iii) share bonus awards,
count towards this requirement on
a net of assumed tax basis.

• Any shares acquired pursuant to
required annual bonus deferral
arrangements must be retained
during employment, other than
any shares sold to cover associated
tax liabilities.

• Following the end of the Holding
Period applying to any LTIP award
granted after 1 July 2020, an
Executive Director must retain
at least two-thirds of the shares
acquired, other than any shares sold
to cover associated tax liabilities.

Shareholding requirements following
termination of employment
Following termination of their
employment for any reason, an
Executive Director must retain for two
years shares equal to the lower of the
shareholding requirement applicable
to them during employment, and their
actual shareholding on departure. This
is a contractual requirement set out in
each Director’s service contract. The
Company also reserves the right to
require share certificates to be lodged
in its custody.

Dunelm Group plc Annual Report and Accounts 2023

Clawback provisions apply which
enable the Committee to determine for
up to three years following the payment
of a cash bonus or the assessment of
the performance outturn for an LTIP
award, that the amount of the bonus
paid may be recovered and the LTIP or
share bonus award may be cancelled or
reduced (if it has not been exercised) or
recovery may be applied to it (if it has
been exercised).

The malus and clawback provisions may
be applied in the event of:

• A material misstatement of any

Group company’s financial results;

• A material error in assessing a

performance condition applicable
to the award or in the information or
assumptions on which the award was
granted or vests;

• A material failure of risk management
in any Group company or a relevant
business unit;

• Serious reputational damage to

any Group company or a relevant
business unit;

• Serious misconduct or material error

on the part of the participant;

• A material corporate failure as
determined by the Board;

• Fraud; or

• Any other circumstances which the

Committee in its discretion considers
to be similar in their nature or effect
to those set out above.

Salary, pension, benefits and Sharesave
options are not subject to recovery.

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Payment of fixed remuneration
in shares
The Company may deliver any element
of fixed remuneration for an Executive
Director in shares rather than in cash
or any other form in which it is usually
provided. The number of shares would
be such number as have a value at the
relevant time equal to the value of the
fixed remuneration being delivered
in shares.

Recovery provisions (malus
and clawback)
The annual bonus (including any
granted as a share award) and LTIP are
subject to recovery provisions as set
out below.

Malus provisions apply which enable
the Committee to determine before
the payment of an annual bonus or the
vesting of an LTIP award, that the bonus
opportunity or LTIP award may be
cancelled or reduced.

Non-Executive Directors

Fees and appropriate benefits

Purpose and link to
strategic objectives

To attract and retain a high calibre Chair and Non-Executive Directors by offering competitive fee
levels and, where relevant, appropriate benefits.

Operation

• Fees for the Chair are set by the Committee. Fees for Non-Executive Directors are set by the

Board. No Director participates in any decision relating to their own remuneration.

• The Chair is paid an all-inclusive fee for all Board responsibilities. The Non-Executive Directors

receive a basic fee, with supplemental fees for additional Board responsibilities.

• The level of fee reflects the size and complexity of the role and the time commitment.

• Fees are normally reviewed annually, having regard to a range of factors, including increases
in remuneration across the Group. In addition, a periodic review is undertaken against market
rates and taking into account time commitment and any change in size, scale or complexity of the
business.

• The Group’s colleague discount is available to the Chair and Non-Executive Directors. In
addition, they may receive benefits such as travel, accommodation and other reasonable
expenses incurred in the fulfilment of their duties, which may be ‘grossed up’ to reflect any tax
liabilities associated with the benefits. Additional benefits may be provided where considered
appropriate. The Chair and Non-Executive Directors do not participate in any incentive scheme.

• The maximum to be paid by way of fees to the Non-Executive Directors is set out in the

Company’s Articles of Association as amended from time to time.

• None.

Maximum
opportunity

Performance
metrics

The Committee may make minor changes to this Policy which do not have a material advantage to Directors, to aid its
operation or implementation without seeking shareholder approval, but taking into account the interests of shareholders.

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Remuneration Committee report continued

Performance measures and
how targets are set
The Committee selects performance
measures that it believes are:

• Aligned with the Group’s strategic

goals and set, where relevant, taking
into account market consensus and
individual broker expectations.
For the LTIP, financial measures will
normally include EPS which the
Committee considers to be the most
appropriate measure for medium-
term performance, aligned with our
growth ambitions and continuing to
win market share.

• Unambiguous and easy to calculate.

• Transparent to Directors and

shareholders.

For both the annual bonus and
the LTIP, the Committee reserves
the right to vary or substitute any
performance measure if justified by the
circumstances, for example if there was
a significant transaction.

Performance measures for the annual
bonus for FY24 are set out on page
115. Performance measures for the
LTIP awards proposed to be granted in
respect of FY24 are set out on pages
115 and 116.

Illustrative performance scenarios
At his request, Sir Will Adderley does not receive any remuneration apart from an annual salary, car allowance and healthcare
benefits. Therefore his remuneration has not been included in the scenarios below.

The following graphs set out what Nick Wilkinson and Karen Witts, the other Executive Directors in office at the date of this
report, could earn in FY24 under the following scenarios:

Nick Wilkinson

Karen Witts

‘

)
0
0
0
£
(
n
o
i
t
a
r
e
n
u
m
e
r

a
t
o
T

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

1,780
39%

23%

38%

In line with
exp ectatio ns

680
100%

Minim u m

Fixed pay

LTIP

3,659
19%

37%

2,972
46%

31%

25%

23%

19%

M axim u m

M axim u m plus 50 %
increase in price of
LTIP shares vestin g

‘

)
0
0
0
£
(
n
o
i
t
a
r
e
n
u
m
e
r

a
t
o
T

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

525

100%

Minim u m

1,263

37%

21%
42%

In line with
exp ectatio ns

Fixed pay

LTIP

2,060

46%

29%

25%

M axim u m

2,533

19%

37%

23%

21%

M axim u m plus 50 %
increase in price of
LTIP shares vestin g

Annual bonus

Maximum plus 50% increase
in price of LTIP shares vesting

Annual bonus

Maximum plus 50% increase
in price of LTIP shares vesting

Dunelm Group plc Annual Report and Accounts 2023

The following assumptions have been made in respect of the scenarios on the previous page:

Fixed pay (base salary, benefits and pension only)

Nick Wilkinson

Karen Witts

Performance level

Fixed pay

Annual bonus

Minimum
(performance
below threshold)

In line with
expectations

As above

Nil

As above

45% of bonus opportunity earned (67.5%
of salary for Nick Wilkinson, 56.25% of
salary for Karen Witts).

Maximum
performance

As above

100% of bonus opportunity earned (150%
of salary for Nick Wilkinson, 125% of salary
for Karen Witts).

Maximum
performance, plus
share price increase

As above

100% of bonus opportunity earned (150%
of salary for Nick Wilkinson, 125% of salary
for Karen Witts).

Base salary
£’000

Benefits
£’000

Pension
£’000

611

473

LTIP

Nil

50% of the LTIP award vests (112.5% of
salary for Nick Wilkinson and 100% of salary
for Karen Witts), based on face value of the
award at the date of grant.

100% of the LTIP award vests (225% of
salary for Nick Wilkinson and 200% of salary
for Karen Witts), based on face value of the
award at the date of grant.

100% of the LTIP award vests (225% of
salary for Nick Wilkinson and 200% of salary
for Karen Witts), plus an increase in the
value of the LTIP of 50% across the relevant
performance period to reflect possible
share price appreciation.

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Service contracts and loss
of office payments
All of the Executive Directors have
service contracts. The notice period
for termination for Sir Will Adderley
is 12 months from either party, and
for Nick Wilkinson and Karen Witts
is six months from either party. In
connection with her joining Dunelm
and as disclosed in the Directors’
Remuneration Report for the year
ended 2 July 2022, Karen Witts is
entitled to: (i) A contribution of up to
£50,000 towards the cost of purchasing
and furnishing a home close to
Dunelm’s offices in Leicester on the
understanding that the purchase
completes within two years of the
commencement of her employment.
The majority of any furnishings
should be purchased from Dunelm.
Approvable expenses will include
stamp duty and any agents’ fees plus
furnishings, fixtures and fittings;

(ii) An allowance of £1,500 per month
to cover the cost of rent on a property
close to Dunelm’s offices in Leicester
and/or other expenses and travel costs.
This will apply until Karen purchases
a home close to Leicester, or for the
duration of employment should Karen
choose not to do so (in which case the
£50,000 contribution to relocation
expenses referred to in (i) will not
be paid).

If the Company terminates the
employment of the Executive Director
it would honour its contractual
commitments. If termination was with
immediate effect, a payment in lieu of
notice may be made. The Committee
may apply mitigation in respect of any
termination payment.

Details in relation to the service
contracts for Executive Directors are
set out in Table 8 on page 110 of
the Annual Report on Remuneration.

Bonus
The Committee has discretion to
make a payment to a ‘good leaver’
(as determined by the Committee) in
respect of any annual bonus. Any such
bonus would normally be pro-rated
to the period of active service during
the relevant financial year. Ordinarily,
any bonus would be subject to deferral
into shares in the usual way; however,
the Committee retains discretion
not to apply deferral in appropriate
circumstances.

Share bonus awards will lapse on
termination of employment before
vesting other than in the event of death,
serious ill health and any other reason
at the discretion of the Committee.
If an award does not lapse, the
Committee will determine whether it
vests on termination or at the ordinary
vesting date.

Dunelm Group plc Annual Report and Accounts 2023

GOVERNANCE REPORT

Remuneration Committee report continued

LTIP
If a participant leaves the employment
of the Group, the following provisions
apply to awards granted under the LTIP:

• Awards in the form of options that
have vested but have not yet been
exercised may be exercised within six
months of cessation of employment
(12 months in the case of death).

• Except in the case of dismissal for
gross misconduct, awards which
have not yet vested, but where the
performance period has elapsed,
may vest at the relevant vesting date.
The Committee has discretion to vest
the award earlier but would only use
this in exceptional circumstances
(such as ill-health). In the event of
death, unless the Board determines
otherwise, vesting will be as soon as
practicable. In the case of an option,
the option must be exercised within
six months of vesting (or 12 months
in the case of death), to the extent
that the performance conditions
have been met.

•

If the participant leaves the Group
before an award has vested and
before the performance period has
elapsed, the award will usually lapse.
However, if the participant ceases
employment due to ill-health, injury
or disability or if the Committee
exercises its discretion to treat the
participant as a ‘good leaver’, the
award will be retained and vest
at the normal vesting date. The
Committee has discretion to vest
the award earlier, but would only use
this in exceptional circumstances
(such as ill-health). In the event of
death, unless the Board determines
otherwise, vesting will be as soon as
practicable. In the case of an option,
the option may be exercised within
six months of the relevant vesting
date (or 12 months in the case of
death). Any vesting would be subject
to assessment of the performance
conditions (and the exercise of any
discretion to vary formulaic outturns
in line with the Policy) and, unless the
Committee determined otherwise,
a reduction to reflect the proportion
of the performance period that had
elapsed at cessation.

In all cases, LTIP awards would be
subject to the applicable malus and
clawback provisions.

Sharesave
If a participant leaves the Group,
options granted under the Sharesave
will normally lapse, but may be
exercised within six months from the
cessation of employment due to injury,
disability, retirement, or redundancy (or
12 months in the case of death), or the
employing company leaving the Group
or, provided that the option has been
held for at least three years, cessation
for any other reason (apart from
dismissal by the Company).

Non-Executive Directors’
letters of appointment
Non-Executive Directors have letters of
appointment. The term is for an initial
period of three years with a provision
for termination on one month’s notice
from either party, or three months’
notice from either party in the case of
the Chair. Letters are renewed for up
to two additional three-year terms,
and then renewed annually. The letter
of appointment will terminate without
compensation if the Director is not
reappointed at the AGM.

Details in relation to the letters of
appointment are set out in Table 8 on
page 110 of the Annual Report on
Implementation.

Other payments
The Committee reserves the right to
make any other payments in connection
with a Director’s cessation of office
or employment where the payments
are made in good faith in discharge
of an existing legal obligation (or by
way of damages for breach of such an
obligation) or by way of settlement of
any claim arising in connection with
the cessation of a Director’s office
or employment or for any fees for
outplacement assistance and/or the
Director’s legal and/or professional
advice fees in connection with their
cessation of office or employment.
In appropriate circumstances, the
Committee may continue the provision
of certain benefits (for example health
insurance) for a period following
cessation.

Change of control and
other corporate events
Share bonus awards
Share bonus awards will vest on a
change of control or winding up of
the Company before the originally
anticipated vesting date.

LTIP
The following provisions apply to
awards made under the Long-Term
Incentive Plan in accordance with the
plan rules if there is a change of control
or winding up of the Company:

• Any vested but unexercised options

may be exercised.

• Any unvested awards in respect of
which the performance period has
ended and to which the performance
condition has been applied will vest
and, in the case of options, may be
exercised.

• Any unvested awards in respect

of which the performance period
has not ended may vest and, in the
case of options, be exercised at the
discretion of the Committee, subject
to any adjustment to take into
account the amount of time that has
elapsed through the performance
period (unless the Committee
decides not to apply a time-based
reduction) and the extent to which
any performance criteria have
been met (and the exercise of any
discretion to vary formulaic outturns
in line with the Policy table).

• The Executive Director may agree

that their awards are ‘rolled over’ into
shares of the acquiring company as
an alternative.

If the Company has been or will be
affected by any demerger, dividend
in specie, special dividend or other
transaction which will adversely affect
the current or future value of any
awards under the LTIP or any share
bonus awards, the plan rules allow
the Committee, acting fairly and
reasonably, to determine the extent to
which any awards should vest and the
period within which options may be
exercised.

100

Dunelm Group plc Annual Report and Accounts 2023

Sharesave
Sharesave options may be exercised
within six months following a change of
control or winding up of the Company,
using savings in the participant’s
account at the date of exercise. The
participant may agree that their awards
are ‘rolled over’ into shares of the
acquiring company as an alternative.

Operation of share plans
All discretions available under the
Company’s share plan rules will be
available under this Policy, except where
explicitly limited under this Policy. This
includes that:

• The Committee may amend the

terms of awards and options under
the Company’s share plans in
accordance with the plan rules in
the event of a variation of Dunelm’s
share capital or a demerger, special
dividend or other similar event or
otherwise in accordance with the
rules of those plans.

• Awards may be settled, in whole
or in part, in cash, although the
Committee would only settle an
Executive Director’s award in cash
in exceptional circumstances,
such as where there is a regulatory
restriction on the delivery of shares,
or in connection with the settlement
of tax liabilities arising in respect of
the award.

Executive pay and the pay
of other colleagues
The remuneration principles set out on
page 87 are applied consistently to pay
throughout the Group.

Pay for all colleagues is set at a level that
is fair for the role and responsibilities of
the individual, and is designed to attract
and retain high calibre talent that is
needed to deliver the Group’s strategy,
without paying too much.

The remuneration of Executive
Directors is more heavily weighted
towards variable pay than for other
colleagues, so that a greater part
of their pay is linked to successful
delivery of strategy and aligned with
shareholders. They are also required
to build and maintain a shareholding in
the Company as set out above.

The remuneration of colleagues below
the Board (including participation in
the LTIP) reflects the seniority of the
role, market practice and the ability
of the individual to influence Group
performance.

All colleagues with a minimum service
requirement (usually three months or
less) are encouraged to participate
in the Sharesave plan, which enables
them to become shareholders at a
discounted rate. Participation is usually
offered annually at the maximum price
discount permitted (currently 20%), at
the discretion of the Committee.

In setting the policy for the Executive
Directors’ remuneration, the Committee
takes note of the overall approach to
remuneration in the Group. Although
the Committee does not formally
consult with employees when setting
the Policy, details of how it engages
with colleagues on pay are set out on
page 118.

Shareholder views
The Board is committed to ongoing
engagement with shareholders in
respect of all governance matters,
including executive remuneration.

We consulted with shareholders in
relation to the new Policy including,
in particular, our approach to variable
pay and shareholding requirements
for Executive Directors. We were
pleased with the level of engagement
from shareholders and for the support
shown for our proposals, which we have
finalised having regard to feedback
received.

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Approach to recruitment
remuneration
The Committee will apply the principles
set out below when agreeing a
remuneration package for a new
Executive Director (whether an external
candidate or an internal promotion).
The package must be sufficient to
attract and retain the high calibre talent
necessary to develop and deliver the
Group’s strategy:

• No more should be paid than is

necessary.

• Pension provision will be in line with

the Policy table.

• The Committee reserves the

discretion to make appropriate
remuneration decisions outside
the standard policy to meet the
individual needs of the recruitment
provided the Committee believes
the relevant decisions are in the best
interests of the Group.

Circumstances in which the Committee
might apply this discretion include:

• Where an interim appointment
is made on a short-term basis,
including where the Chair or another
Non-Executive Director has to
assume an executive position.

• Where employment commences
at a time in the year when it is
inappropriate to provide a bonus
or share incentive award as there
is insufficient time to assess
performance, the quantum for the
subsequent year might be increased
proportionately instead.

• An executive is recruited from a
business or location that offered
benefits that the Committee
considers it appropriate to ‘buy out’,
or which the Committee considers it
appropriate to offer.

Dunelm Group plc Annual Report and Accounts 2023

101

GOVERNANCE REPORT

Remuneration Committee report continued

Examples of remuneration decisions
that the Committee may make are set
out below:

•

It may be appropriate to offer a
lower salary initially, with a series of
increases to reach the desired salary
over a period of time, subject to
performance.

• The Committee may also alter the
performance criteria applicable to
the initial annual bonus or LTIP award
so that they are more applicable to
the circumstances of the recruitment.

• An internal candidate would be
able to retain any outstanding
variable pay awarded in respect of
their previous role that pays out in
accordance with its terms of grant.

• Appropriate costs and support

will be provided if the recruitment
requires the relocation of the
individual.

The maximum level of variable pay that
could be awarded to a new Executive
Director in the first year of employment,
excluding any buyout arrangements,
would be 375% of salary as set out
in the Policy table. The Committee
would explain the rationale for the
remuneration package in the next
Annual Report of the Company.

In addition, on hiring an external
candidate the Committee may make
arrangements to buy out remuneration
that the individual has forfeited on

leaving a previous employer. The
Committee will generally seek to
structure buyout awards and payments
on a comparable basis to remuneration
arrangements forfeited. These awards
or payments are excluded from
the maximum level of variable pay
referred to in the Policy; however, the
Committee’s intention is that the value
awarded or paid would be no higher
than the expected value of the forfeited
arrangements.

In order to implement the arrangements
described, the Committee may rely
on the exemption in Listing Rule 9.4.2,
which allows for the grant of share or
share option awards to facilitate, in
unusual circumstances, the recruitment
of a Director.

The Committee does not intend to use
any discretion in this section to make
a non-performance-related incentive
payment (for example a ‘golden hello’).

On the appointment of a new Chair the
fee will be set taking into account the
experience and calibre of the individual
and pay for similar roles in companies
of similar size and complexity in
the market. The fees for any newly
appointed Non-Executive Director
would be set in accordance with the
Policy table on page 97. No share
incentives or performance-related
incentives would be offered.

Legacy remuneration
arrangements
The Committee reserves the right to
make remuneration payments and
payments for loss of office (including
exercising any discretion available to it
in connection with any such payment)
notwithstanding that they are not in line
with the Policy set out above where the
terms of payments were agreed:

• Before the Policy came into effect
(provided that, in the case of any
payments agreed on or after
11 November 2014 they are in line
with any applicable shareholder
approved Directors’ remuneration
policy in force at the time they were
agreed or were otherwise approved
by shareholders); or

• At a time when the relevant

individual was not a Director of the
Company (or other person to whom
the Policy set out above applies) and,
in the opinion of the Committee, the
payment was not in consideration for
the individual becoming a Director of
the Company (or other such person).

For these purposes, ‘payments’
includes the satisfaction of variable
remuneration and, in relation to an
award over shares, the terms of the
payment are ‘agreed’ no later than the
time the award is granted.

102

Dunelm Group plc Annual Report and Accounts 2023

Annual Report on Remuneration

This report has been prepared on behalf of the Board by the Committee, chaired by William Reeve. It sets out how the Directors’
Remuneration Policy which was approved by shareholders on 17 November 2020 has been applied in FY23 and how the revised
policy being put forward for approval by shareholders at the AGM on 16 November 2023 will, subject to approval, be applied in
FY24. Together with the Chair’s statement on pages 88 to 91, it will be put to shareholders for an advisory vote at the FY23 AGM.

The information contained in this report is unaudited unless expressly stated otherwise.

Composition of the Committee
William Reeve has chaired the Committee since 2018. Alison Brittain became a member when she joined the Board on
7 September 2022 and has remained a member since becoming Chair (being independent on appointment). All other
independent Non-Executive Directors are members of the Committee.

Only members of the Committee have the right to attend meetings. Other Directors and individuals such as the CEO and
People & Stores Director are invited to attend all or part of meetings, as appropriate. No Director participates when his or her
own remuneration is discussed. The Group General Counsel and Company Secretary acts as secretary to the Committee and
attends all meetings.

During the year the Committee met four times. The table below sets out the membership of the Committee and attendance of
Directors at meetings during the year.

Member

Attendance

Notes

William Reeve
Alison Brittain
Ian Bull
Peter Ruis
Vijay Talwar
Arja Taaveniku
Kelly Devine
Andy Harrison

4/4
3/3 Alison joined the Board and the Committee on 7 September 2022.
4/4
4/4
4/4
4/4
4/4
2/2 Andy Harrison stepped down from the Board and the Committee on 31 December 2022.

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Remuneration Committee report continued

Single figure for total remuneration (audited)
The following table sets out total remuneration for Directors for the period ended 1 July 2023:

Table 1 – Directors’ remuneration – single figure table

Salary/fees
£’0001

Benefits
£’0002

Pension
£’0003

Total fixed
remuneration
£’0004

LTIP awards
£’0005

Bonus
£’0006

Total variable
remuneration
£’0007

Total
£’000

Director

FY23

FY22

FY23

FY22

FY23

FY22

FY23

FY22

FY23

FY22

FY23

FY22

FY23

FY22

FY23

FY22

Executive
Nick
Wilkinson

Karen
Witts

Sir Will
Adderley

582

580

450

—

Sub-total

1,032

607

106

Non-
Executive

Alison
Brittain

Ian Bull

Kelly
Devine

William
Reeve

Peter Ruis

Marion
Sears

Arja
Taaveniku

Vijay
Talwar

Andy
Harrison

179

—

108

216

—

647

648 1,003 1,210

335

653 1,338 1,863 1,985 2,511

—

502

—

252

754

—

21 1,169

698 1,003 1,210

587

675 1,590 1,885 2,759 2,583

—

179

—

108

216

—

179

—

108

216

Total

1,739 1,178

106

21 1,876 1,269 1,003 1,210

587

675 1,590 1,885 3,466 3,154

Vijay Talwar was appointed on 1 October 2021 and Kelly Devine was appointed on 1 March 2022. Karen Witts and Alison Brittain joined the Board on 9 June 2022 and
7 September 2022 respectively and Alison Brittain was appointed Chair on 1 January 2023. Basic salary/fee for Vijay Talwar, Kelly Devine and Alison Brittain and salary,
pension and benefits for Karen Witts are pro-rated over the relevant year as appropriate. Nick Wilkinson, the CEO, asked to not be considered for a salary increase for FY22.
Sir Will Adderley’s base salary is held at £1 per annum. Andy Harrison, the Chairman, asked not to be considered for a fee increase in FY22 and stepped down on 31 December
2022 and so his fee was pro-rated accordingly for the year. The fees for the other Non-Executive Directors increased by 4%.
Benefits include the cost of a car allowance and private health insurance for the individual and their family. Nick Wilkinson is also entitled to an allowance of 5% of his annual
salary towards the cost of travel from home to Leicester. Karen Witts is entitled to an allowance of £1,500 per month to cover the cost of rent on a property close to the office in
Leicester and travel costs. This is from 9 June 2022 and will continue until she purchases a home close to Leicester, or for the duration of her of employment should Karen not
choose to do so.
Pension entitlement is 3% of contractual salary to a defined contribution plan or cash allowance in lieu. For Nick Wilkinson, prior to 1 August 2022 the pension entitlement
was 8% of contractual salary, and prior to 1 August 2021 the pension entitlement was 10% of contractual salary. Sir Will Adderley waived his entitlement to a pension from
1 July 2015.

4 Total fixed remuneration includes salary/fees, benefits and pension.
5

The figure for Nick Wilkinson is the value of the FY21-23 LTIP award, the three-year performance period for which ends on the last day of the financial period being reported
on. The price used to calculate the value of the awards, which will vest on 20 November 2023, was the average of Dunelm’s closing share price over the last three months of
FY23, which was 1,133 pence per share. It also includes a ’special dividend equivalent’ of 65p per vested share in respect of the special dividend paid on 8 October 2021, 37p
per vested share in respect of the special dividend paid on 18 March 2022 and 40p per vested share in respect of the special dividend paid on 11 April 2023. The share price
used to calculate the number of shares in Nick’s ‘special dividend equivalent’ was 1,310p per share in respect of the October 2021 special dividend, 1,127p per share in respect
of the March 2022 special dividend and 1,081 per share in respect of the April 2023 special dividend, in each case being the share price the working day before the special
dividend date. No discretion was applied to adjust the performance conditions or outcome of the FY21-FY23 LTIP for share price appreciation or depreciation or for any other
reason. The prior year figures have been updated to reflect the actual closing share price of 796p on the day before the vesting date, compared to last year’s report which was
based on the average closing share price over the last three months of FY22. Sir Will Adderley asked not to be considered for an LTIP award.
Nick Wilkinson and Karen Witts were awarded an annual performance-related bonus for FY23 with a maximum opportunity of 125% of contractual salary. The performance
conditions which applied to the bonus were set in September 2022 and are described on pages 105 and 106. Karen Witts was awarded a pro-rated performance-related
annual bonus for FY22, reflective of the period from her start date to the end of the FY22 financial year and subject to the financial performance criteria applicable to
Nick Wilkinson (she declined the personal performance element given the relatively short period that she had been in role during that financial year).

7 Total variable remuneration includes bonus and LTIP awards.

104

Dunelm Group plc Annual Report and Accounts 2023

FY23 annual bonus (audited)
Each of Nick Wilkinson and Karen Witts were eligible to earn an annual bonus of up to 125% of base salary during the year,
subject to meeting the performance targets set out below. Sir Will Adderley asked not to be considered for an annual bonus.
The bonus was based on challenging targets set by the Committee at the start of the financial year, with 75% based on financial
targets and 25% based on personal and strategic targets. The ‘Sales’ element of the bonus would only be paid if we achieved
the threshold PBT and sales target. Information on the targets set and the performance against them is set out in Table 2
below. Based on performance against those targets, Nick Wilkinson earned a bonus of £334,592 and Karen Witts earned a
bonus of £251,719 (see Table 3 below). The full bonus is paid in cash, with two-thirds of the after tax amount being subject to a
requirement that it is invested in shares.

Table 2 – annual bonus 2023 payout (audited)

Performance measures

Financial measures1
- Profit before tax
- Sales
Non-financial personal and
strategic targets

% of bonus
opportunity

Threshold
performance
(0%)

On-target
performance
(40%)

Maximum
performance
(100%)

FY23 actual
performance

% outcome for
each measure

50%
25%

25%

£172.8m
£1,531.2m

£192.0m
£1,702.5m

£211.2m
£1,787.6m

£192.7m
£1,638.8m

(see below and page 106 for details)

42%
25%
CEO – 75%
CFO – 70%

1 Bonus is earned between threshold and on-target and between on-target and maximum on a straight-line basis.

Table 3 – overall 2023 bonus earned (audited)

£’000

Nick Wilkinson
Karen Witts

Base salary

Maximum bonus
% of salary

2023 bonus
outcome % of
maximum

Overall 2023
bonus earned
£’000

2023 bonus
outcome
% of salary

582
450

125%
125%

46%
45%

335
252

57%
56%

Non-financial personal and strategic objectives
25% of the bonus opportunity is linked to performance against objectives, both personal and strategic. Payment of this element
of the bonus is subject to meeting threshold on the PBT financial metric for the year (which has been achieved). The targets,
which are specific to each of the CEO and CFO, were set by the Committee to reflect personal and strategic priorities for FY23.
Assessment against them (including consideration of relevant KPIs) was considered by the Committee at the end of the financial
year, and a bonus outcome determined accordingly.

It was assessed that 75% of the personal and strategic targets had been met by the CEO and 70% of the personal and strategic
targets had been met by the CFO. Further details on their respective key achievements against each objective are set out on the
following page.

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Remuneration Committee report continued

CEO – FY23 performance against objectives – outcome 75% of maximum
Objectives

Key achievements during FY23

Strategy
c.25% weighting

• Navigated a complex and volatile trading environment, continuing to deliver clear investor communications

throughout.

• Delivered meaningful progress toward digitalisation goals.
• Further embedded sustainability initiatives across the business, including the successful launch of

‘Conscious Choice’. Scope 3 roadmap in development.
Increased store-centred community engagement, with this becoming a key differentiator for Dunelm.

•

Customer proposition
c.25% weighting

• Delivered strongly on value and choice – achieved market share gains and margin targets, added significant

number of SKUs and improved value communications.

• Progress made on improving customer experience and product availability through process and

technology change.

People
c.25% weighting

• Successful restructuring of Executive Team in FY23. Team performing well.
• Strengthened senior leadership team (below Executive Team) with the recruitment of six external

Organisation capabilities –
drive efficiencies, build on
shared values
c.12.5% weighting

•

candidates during the year.
Implemented development plans for Executive Team and senior leadership team, with potential succession
opportunities identified.

• Achieved stretching cost ratio targets for stores and logistics.
• Strong approach to cost reduction and identification of efficiency opportunities in procurement and returns

and stock loss.

• Continued progress on improving data insights and analytics, with clear step-change in capability.
• Supported ongoing work of our inclusion and diversity networks, which are flourishing.

Corporate
c.12.5% weighting

Implemented greater rigor around identifying potential corporate activity.

•
• Managed post-acquisition performance of Sunflex, exceeding targets.

CFO – FY23 performance against objectives – outcome 70% of maximum
Objectives

Key achievements during FY23

Driving business performance
c.25% weighting

•

Implemented a revised approach to operational KPIs to provide holistic framework for driving budgeted
performance.

• Achieved full-year cost to sales ratio <38% despite cost pressures.
• Delivered £15m operating cost savings.
• Maintained strong free cash flow performance and strengthened robustness of cash flow forecasting.

Investor relations
c.15% weighting

• Developed investor relations capability.
• Developed relationships with advisers and a new investor relations strategy, the output of which has

introduced new investors to our register.

• Continued to progress work on telling our ESG equity story.

Sustainability
c.15% weighting

• Refreshed ESG operating model.
• Scope 3 roadmap in development.
• Reviewed and refreshed KPIs.

Internal controls environment
c.15% weighting

• Successfully implemented new balance substantiation system and commenced process mapping of key

financial processes ahead of the next stage of SAP4Hana implementation.
Improved non-stock internal controls.

•

People
c.10% weighting

Technology
c.10% weighting

Corporate
c.10% weighting

Increased finance team engagement scores.

•
• Built capability in non-financial and sustainability reporting.
• Ensured succession plans are well developed.

Improved accuracy of forecasting.

•
• Ongoing review of technology KPIs and delivery of cost-tracking improvements in relation to levels

of investment.

•
•

Implemented M&A framework.
Increased corporate development capability and developed network.

106

Dunelm Group plc Annual Report and Accounts 2023

LTIP awards earned in respect of performance in FY21-23 (audited)
Nick Wilkinson was granted an LTIP award in November 2020 with vesting subject to performance conditions assessed
over the three-year period FY21 to FY23. This award has vested at 83% as set out in the table below. Neither Karen Witts
nor Sir Will Adderley had an LTIP award vesting in respect of performance in FY21 to FY23.

Table 4 – LTIP awards earned

Performance condition and outturn: FY23 Diluted EPS

Director

Shares under
award

Threshold
(10%
vesting)

On-target
(50%
vesting)

Maximum
(100%

vesting) FY23 outturn

Vesting
percentage

Vested
shares

Dividend
equivalent
shares1

Total vesting
shares2

Nick Wilkinson

94,846

60p

65p

80p

75.0p

83%

79,038

9,440

88,478

1 Nick Wilkinson will also receive £106,985 by way of ‘special dividend equivalents’ in relation to the special dividends of (i) 65p per share paid on 8 October 2021,

(ii) 37p per share paid on 18 March 2022, and (iii) 40p per share paid on 11 April 2023, as well as any further special dividend paid before the vesting date (if
applicable). In each case these will be paid in shares. The number of additional shares to vest for Nick Wilkinson as a result is 9,440.

2 The value of this number of shares is included in the single figure for total remuneration for FY23 as set out in Table 1 on page 104, and the basis on which it has

been calculated is set out in note 5 of Table 1. Vested shares must be retained in accordance with the shareholding guidelines set out in the Remuneration Policy.

Awards made to Directors under share incentive schemes in FY23 (audited)
LTIP awards were made on 27 October 2022 to Nick Wilkinson and Karen Witts as set out below:

Table 5 – LTIP awards made to Directors during FY23

Director

Award

Shares
under
award1

Face value at
date of award
(200%
of salary)

Nick Wilkinson

Nil-cost options
under LTIP

139,765 £1,164,250

Performance condition

FY25 Diluted EPS (80% of opportunity)

Performance
period

Vesting
date

Threshold
(10% vesting)

On-target
(50% vesting)

Maximum (100%
vesting)

83.4p

87.6p

103.4p

Non-financial measures2 (20% of opportunity)

July 2022
to June
2025

27
October
2025

Karen Witts

Nil-cost options
under LTIP

108,043

£900,000

As above for Nick Wilkinson

ESG metric 1
(5% vesting)

ESG metric 2
(5% vesting)

ESG metric 3
(5% vesting)

ESG metric 4
(5% vesting)

1 Based on the average closing share price between 24 and 26 October 2022 of 833p per share.

2 Four sustainability-based measures, each accounting for a quarter of this element of the award, on a simple pass or fail basis against target: (i) ESG metric 1 –

reduction in Scope 1 greenhouse gas emissions per £m sales against a FY19 base (FY25 target – 32%); (ii) percentage of own brand cotton products which meet
our ‘More Responsibly Sourced Cotton’ standard (FY25 target – 100%); (iii) reduction in plastic packaging of own brand products against FY20 base (FY25 target
– 30%); and (iv) percentage of own brand products for which we offer an easy to use take-back service with a credible end-of-life solution in at least 90% of our
superstore estate (FY25 target – 50%).

All of the shares vesting (after payment of tax and National Insurance) must be held for two years from the vesting date, and
thereafter at least two-thirds of these must be held for the duration of employment. The Executive Directors are eligible to
receive a ‘special dividend equivalent’ in relation to these awards, in respect of a special dividend of 40 pence per share paid
on 11 April 2023 and any other special dividend paid before the awards vest.

Payments to past Directors and for loss of office (audited)
No payments were made to any former Director in the financial year or to any Director in respect of loss of office or the
termination of his or her employment.

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107

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Remuneration Committee report continued

Statement of Directors’ share interests
Under the current Directors’ Remuneration Policy, Executive Directors are subject to a shareholding target which requires
them to build a holding of Dunelm shares with a value of 1× salary after three years and 2× salary after five years (measured by
reference to share price at the financial year end). Achievement against this requirement is set out in the table below, other than
in the case of Sir Will Adderley who only receives a salary of £1 per year and for whom the requirement is therefore not relevant.
The approach to shareholding requirements under the proposed Directors’ Remuneration Policy for which approval will be
sought at the 2023 AGM is set out on page 96.

Tables 6 and 7 show the interests of the Directors in shares of the Company at 1 July 2023.

Table 6 – Shareholdings of Directors and Persons Closely Associated with them (audited)

At 1 July 2023
1p Ordinary
Shares

At 2 July 2022
1p Ordinary
Shares

Percentage of
salary (where
applicable)1

Shareholding target
(where applicable)

Executives

Nick Wilkinson

Karen Witts

Sir Will Adderley

Non-Executives
Alison Brittain

Ian Bull

Kelly Devine

William Reeve

Peter Ruis

Marion Sears

Arja Taaveniku

Vijay Talwar

Andy Harrison2

371,330

249,759

681%

24,918

23,744

76,371,779

37,500

11,000

—

N/A

11,000

—

22,000

—

105,000

6,000

9,670

6,000

—

488,017

454,811

59%

N/A

1x salary by Feb 2021
2x salary by Feb 2023

1x salary by July 2025
2x salary by July 2027

N/A

1 Based on the closing share price of 1,121p on 1 July 2023 and base salary at 1 August 2023.

2 Position as at 31 December 2022 when Andy Harrison stepped down from the Board.

There have been no changes in the interests of each Director in the period from 2 July 2023 to the date of this report.

108

Dunelm Group plc Annual Report and Accounts 2023

Table 7 – Directors’ interests in share awards and options at the period end (audited)
All share awards and options held by the Executive Directors who served during the year, together with any movements, are
shown below:

Nick
Wilkinson

Karen
Witts

Date of
award

Name of
award

October
2019

FY20-22
LTIP3

November
2020

FY21-23
LTIP3

October
2021

October
2022

FY22-24
LTIP3

FY23-25
LTIP

November
2020

FY204
Share
Bonus

FY214
Share
Bonus

November
2021

FY22
Sharesave

November
2022

FY23
Sharesave

June
2022

October
2022

FY22-24
LTIP

FY23-25
LTIP

November
2022

FY23
Sharesave

Type of
award

Share
options

Share
award

Share
options

Share
options/
awards
granted
during
the year1

Share
options/
awards
vested and
exercised
during
the year1

Share
options/
awards
lapsed/
cancelled
during
the year

Share
options/
awards at
2 July
2022

End of
performance
period

Option
price

Share
options/
awards at
1 July
2023

—

94,846

89,078

139,765

June
2022

June
2023

June
2024

June
2025

—

N/A

— June 2021

—

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O
V
E
R
N
A
N
C
E
R
E
P
O
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T

—

(1,720)

—

N/A 1,046p

—

2,698

N/A

667p

73,979

108,043

June
2024

June
2025

—

2,698

n/a

667p

134,984

17,041 (152,025)²

94,846

89,078

—

— 139,765

—

5,797

477

(6,274)

24,013

1,979

(25,992)

1,720

—

2,698

73,979

—

— 108,043

—

2,698

—

1 LTIP awards are eligible to receive a ‘special dividend equivalent’ in respect of any special dividend paid during the performance period applicable to the award

and up to the date of vesting. The FY20 and FY21 Share Bonus awards were also eligible to receive a ‘special dividend equivalent’ in respect of any special
dividend paid from date of grant up to the date of vesting. Dividend equivalent shares have been included where quantified.

2 During the year Nick Wilkinson exercised 152,025 nil-cost share options with a market value of 796p equalling a gain of £1,210,119.

3 Performance conditions in respect of the LTIP awards granted in FY20 and FY21 are set out in the FY21 Annual Report, and the performance conditions in respect

to the award granted in FY22 are set out in the FY22 Annual Report.

4 Payment of bonuses earned for FY20 and FY21, which would normally have been paid in cash, were deferred in shares under a Share Bonus Award, with 50%

vesting in September 2021 and 50% vesting in September 2022. During the year Nick Wilkinson received 32,266 shares with a market value of 713.5p equalling
a gain of £230,218. No performance conditions were applied to the FY20 Share Bonus awards. The FY21 Share Bonus awards were subject to the performance
conditions referred to on pages 155 to 158 of the FY21 Annual Report.

Dunelm Group plc Annual Report and Accounts 2023

109

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Remuneration Committee report continued

Share options and dilution limits
The Committee considers the provisions of the Investment Association’s Guidelines on Executive Remuneration when
determining the number of shares over which share scheme incentive awards may be made.

As at 1 July 2023 over the last ten-year period options have been granted over 3.8% of the Company’s issued share capital
(adjusted for share issuance and cancellation). The Group does not hold any shares in an employee benefit trust.

Service contracts
In accordance with the Group’s policy, the service contracts of the Executive Directors have no fixed term. The notice period
for termination is 12 months from either party for Sir Will Adderley, and six months for each of Nick Wilkinson and Karen Witts
respectively. Service contracts for the Executive Directors include a non-compete arrangement. Payments on termination are
restricted to a maximum of the value of base salary and benefits for the notice period. The Committee may apply mitigation
in respect of any termination payment. Copies of the Executive Directors’ service contracts are available for inspection at the
Company’s registered office.

The Non-Executive Directors have letters of appointment for an initial period of three years with a provision for termination on
one month’s notice from either party, or three months’ notice from either party in the case of Alison Brittain, the Chair.

Table 8 – Directors’ service contracts

Start date

Expiry of current term

Notice period

Executives
Nick Wilkinson
Karen Witts
Sir Will Adderley

Non-executives
Alison Brittain
Ian Bull
Kelly Devine
Williams Reeve
Peter Ruis
Marion Sears1
Arja Taaveniku
Vijay Talwar

1 February 2018
9 June 2022
28 September 2006

7 September 2022
10 July 2019
1 March 2022
1 July 2015
10 September 2015
22 July 2004
15 February 2021
1 October 2021

N/A
N/A
N/A

7 September 2025
10 July 2025
1 March 2025
1 July 2024
10 September 2024
22 July 2024
15 February 2024
1 October 2024

6 months
6 months
12 months

3 months
1 month
1 month
1 month
1 month
1 month
1 month
1 month

1 Marion Sears has served more than nine years on the Board. Her contract is renewed for a one-year term (rather than three), with the notice period referred

to above.

110

Dunelm Group plc Annual Report and Accounts 2023

Total shareholder return performance and historic CEO remuneration
The graph below shows the Group’s performance over ten years, measured by total shareholder return, compared with the
FTSE 350 General Retail Index and the FTSE 250. The Committee has chosen these indices for comparison because they
provide a range of comparator companies which have similar market capitalisation, which are in the same sector and face
similar market and economic challenges in the long term.

Table 9 – Total shareholder return performance graph (rebased to 2 July 2013 = 100)
The shares traded in the range of 671p to 1,232p during the year and stood at 1,121.0p at 1 July 2023.

Dunelm
FTSE 250
FTSE 350 General Retail

1,000

900

800

700

600

500

400

300

200

100

)
0
0
1
o
t

d
e
s
a
b
e
R
(
e
c
n
a
m
r
o
f
r
e
p
R
S
T

384.6%

93.1%

69.3%

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Jul 13

Jul 14

Jul 15

Jul 16

Jul 17

Jul 18

Jul 19

Jul 20

Jul 21

Jul 22

Jul 23

Factset as of 20 July 2023. Last ten years data on weekly frequency. FTSE 350 General Retail Index includes Dunelm.

The table below sets out the prescribed remuneration data for each of the individuals undertaking the role of Chief Executive
Officer during each of the last ten financial years.

Table 10 – Historic Chief Executive Officer pay

FY23
FY22
FY21
FY20
FY19

FY18
FY18
FY17
FY16
FY16
FY15
FY15
FY14

Nick Wilkinson
Nick Wilkinson
Nick Wilkinson
Nick Wilkinson1
Nick Wilkinson
Nick Wilkinson2
John Browett2,3
John Browett
John Browett4
Sir Will Adderley4
Sir Will Adderley5
Nick Wharton5
Nick Wharton6

CEO single figure of
total remuneration
£’000

Annual bonus payment
against maximum
opportunity
%

Long-term incentive
vesting rates against
maximum opportunity
%

1,985
2,511
3,756
885
1,365

308
429
722
489
10
507
110
1,509

46.0%
90.0%
81.2%
20.0%
97.9%

13.3%
N/A
14.0%
57.7%
N/A
5.0%
N/A
22.5%

83.3%
100.0%
100.0%
19.8%
N/A

N/A
N/A
N/A
N/A
N/A
N/A
N/A
77.5%

1 During the period April to June 2020 inclusive, Nick Wilkinson took a voluntary 90% reduction in base salary.

2 John Browett left the Group on 29 August 2017. He was succeeded by Nick Wilkinson on 1 February 2018. The total figure for John Browett includes £322,120 in
respect of salary and benefits paid for his six-month notice period. The data for each Director for FY18 is pro-rated by time of service as Chief Executive Officer.

3 No LTIP awards vested to John Browett during his tenure.

4 Sir Will Adderley was succeeded by John Browett as Chief Executive Officer on 1 January 2016. The data for each Director for FY16 is pro-rated by time of service

as Chief Executive Officer. Sir Will Adderley’s base salary was reduced to £1 on 1 July 2015.

5 Sir Will Adderley was reappointed Chief Executive Officer on 11 September 2014, following the resignation of Nick Wharton on 10 September 2014. The data for

each Director for FY15 is pro-rated by time of service as Chief Executive Officer.

6 Nick Wharton’s first LTIP award vested and was exercised in December 2013.

Dunelm Group plc Annual Report and Accounts 2023

111

GOVERNANCE REPORT

Remuneration Committee report continued

Statement of change in pay
The table below sets out the increase in total remuneration for each Director compared with other colleagues.

Table 11 – Change in Directors’ pay compared with annual change in average employee’s pay

Percentage change in remuneration
between FY22 and FY23

Percentage change in remuneration
between FY21 and FY22

Percentage change in remuneration
between FY20 and FY21

Percentage change in remuneration
between FY19 and FY20

Salary and
fees1

Benefits

Short-term
incentive 2,3

Salary and
fees1

Benefits

Short-term
incentive2,3

Salary and
fees1

Benefits

Short-term
incentive 2,3

Salary and
fees1

Benefits

Short-term
incentive2,3

Executives
Nick
Wilkinson4

Karen
Witts

Sir Will
Adderley

Non-
Executives

Alison
Brittain5

Ian
Bull

Kelly
Devine

Andy
Harrison

Williams
Reeve6

Peter
Ruis

Marion
Sears

Arja
Taaveniku

Vijay
Talwar

All
colleagues7,8

0.3%

0.0% (48.8%)

3.4%

(4.3%)

14.6%

1.8%

3.6% 313.0%

2.0% (55.6%)

(79.2%)

0.0%

0.0% (33.7%)

N/A

0.0%

N/A

0.0%

N/A

(4.8%)

N/A

0.0%

N/A

3.9%

N/A

2.7%

N/A

2.0%

N/A

3.9%

N/A

0.0%

N/A

0.0%

N/A

2.0%

N/A

3.9%

N/A

4.5%

N/A

8.4%

N/A

2.2%

N/A

4.0%

N/A

3.2%

N/A

4.0%

N/A

3.2%

N/A

2.0%

N/A

2.0%

N/A

3.7%

N/A

3.2%

N/A

3.7%

N/A

7.2%

1.9% (36.6%)

4.9%

0.8%

(4.7%)

4.4%

0% 145.4%

3.5%

0% (42.7%)

1 Directors’ remuneration is based on contractual salary or fees as appropriate and does not take account of the voluntary salary reductions of 90% of Nick

Wilkinson between April and June 2020 inclusive, or the waiver by all other Directors of 100% of their fees for this period.

2 Short-term incentive percentage has been calculated in relation to only those colleagues eligible to receive a bonus in the period as this is considered a more

appropriate comparator group. All colleagues’ short-term incentives include a one-off £250 ‘thank you’ payment to all colleagues not usually eligible for a bonus
in respect of FY20 and the ‘thank you’ payment of between £250 and £350 made to colleagues not usually eligible for a bonus in respect of FY21.

3 The difference between the increase in short-term incentives of the Directors and the ‘all colleagues’ rate reflects the strong performance of the business, and the

fact that a higher proportion of the Directors’ pay is performance-related.

4 The decrease in benefits for Nick Wilkinson in FY22 is due to benefits received in lieu of holiday in FY21 which were not received in FY22.

5 No comparator data is provided for Alison Brittain as she joined Dunelm during FY23.

6 The increase in William Reeve’s fee in FY21 is due to the assumption of responsibilities as Senior Independent Director.

7 All colleagues’ salary increase is calculated only for colleagues employed for the whole of the financial year.

8 Comparisons have been made against colleague pay across the entire Group as the parent company employs a limited number of individuals.

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Dunelm Group plc Annual Report and Accounts 2023

CEO pay ratio
There are three permissible methods available to calculate the CEO pay ratio, which are outlined below:

Option

Method

Determining the total full term equivalent remuneration for all UK employees.

Rank from low to high.

Identify the colleagues at 25th percentile, 50th percentile and 75th percentile.

Identify the colleagues at 25th, 50th and 75th percentile, using the Gender Pay Gap Reporting.

Use a different data set, but calculate in the same way as the Gender Pay Gap Reporting.

Option A is considered the most statistically accurate method and therefore we have opted for this method. The data used to
identify the colleagues at 25th percentile, 50th percentile and 75th percentile was taken on 5 April 2023.

The table below shows the ratio of actual pay of Nick Wilkinson, CEO, to other colleagues. Full-year pay data has been used to
calculate these ratios and the elements included are based on the CEO single figure remuneration in Table 1. We have used
a 40-hour week in order to consistently calculate the annual salary for everyone, converting hourly rate of pay into a full-time
equivalent salary, to ensure a direct comparison.

Table 12 – CEO pay ratio

Financial year

FY23
FY23 Base salary
FY23 Total pay and benefits
FY22
FY21
FY20 (Based on actual remuneration – including Nick’s 90% pay
reduction during the period April to June 2020)
FY20 (Based on contractual remuneration)

Method

Option A

Option A
Option A

25th percentile
pay

50th percentile
pay

75th percentile
pay

93:1
£20,864
£21,445
124:1
204:1

54:1
62:1

87:1
£22,334
£22,880
121:1
204:1

47:1
53:1

67:1
£28,811
£29,682
112:1
186:1

38:1
43:1

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Commentary:
The Committee considered whether the median pay ratio for the year is consistent with the pay, reward and progression policies
for the Company’s UK employees taken as a whole, and concluded that it is, for the following reasons:

• The pay gap has significantly reduced, compared to the previous year. The main difference is the CEO bonus outcome for

FY23 at 46% of maximum opportunity being lower than last year.

• The CEO’s LTIP is vesting at 83% this year, which is a lower percentage than last year.

• The colleagues at the 25th, 50th and 75th percentile are hourly paid colleagues. This reflects that c.80% of our colleague

base are employed in hourly-paid roles.

• The median pay ratio is considered appropriate and consistent with the pay and reward policies for the Company’s UK

employees. Our remuneration strategy is based on paying median to market for salary, to reward strong performance and
focus on long-term value creation. The CEO remuneration is reflective of this, as his pay has a larger quantum in variable pay.

•

In comparison we pay our hourly-paid colleagues upper median or above versus the market and have invested to improve
our pay position for these colleagues in FY23.

Dunelm Group plc Annual Report and Accounts 2023

113

GOVERNANCE REPORT

Remuneration Committee report continued

Relative spend on pay
The table below shows the all employee pay cost, returns to shareholders by way of dividends (including special dividends) and
share buyback for FY23 and FY22.

Table 13 – Relative spend on pay

Total spend on pay
Ordinary dividend to shareholders
Distributions to shareholders via treasury share purchases
Special distributions to shareholders

Total distributions to shareholders

This information is based on the following:

FY23
£’m

214.3
82.6
7.0
80.7

170.3

FY22
£’m

194.9
75.1
28.3
207.0

310.4

% change

10.0%
10.0%
(75.3%)
(61.0%)

(45.1%)

• Total spend on pay – total employee costs excluding car and travel allowances and bonuses from note 4 on page 144.

• Dividends taken from note 7 on page 146.

Executive Director external board appointments
Nick Wilkinson is a trustee of Rewilding Britain. Karen Witts is a Non-Executive Director of Ipsen Pharma SA. Sir Will Adderley is
a Director of WA Capital Limited.

Statement of implementation of policy in the FY24 financial year
Base salary and benefits for each of the Executive Directors for FY24 are set out in the table below.

Table 14 – Executive Directors fixed remuneration

Nick Wilkinson

Karen Witts

Sir Will Adderley

Base salary

611,100

472,500

Increase to base
salary YoY

5.0%

Nil

Benefits

50,555

38,000

20,000

Increase to
benefits YoY

6.3%

Nil

Change to
pension
contribution YoY

Nil

N/A

Pension

18,333

14,175

Nil

Base salary
The Committee determined that the Executive Directors performed strongly throughout the year, and this has been reflected
in the financial performance of the Group. Further to this, the Committee approved a 5% increase in base salary for each of the
CEO and CFO in line with the increases given to senior management. In making its decision, the Committee took into account
the median pay award made to the wider colleague population of 9.6% and stakeholder considerations, including the feedback
on Executive pay received from the National Colleague Voice. In implementing the increase, Nick’s base pay remains positioned
around the lower quartile versus our peers and Karen’s base pay remains positioned at median for the top 50 companies in the
FTSE 250.

Sir Will Adderley has asked that he not be considered for a pay increase.

Pension
The pension entitlement for both Nick Wilkinson and Karen Witts is 3% of base salary, which is in line with the current
workforce average.

114

Dunelm Group plc Annual Report and Accounts 2023

FY24 annual bonus
Nick Wilkinson has been awarded a bonus opportunity of up to 150% of salary (subject to approval of, and in line with, our
new Policy) and Karen Witts has been awarded a bonus opportunity of up to 125% of base salary. The performance conditions
attached to their respective bonuses are:

• 50% linked to achievement of budget PBT.

• 25% linked to achievement of budget sales.

• 25% linked to achievement of strategic and personal targets, aligned to the Group strategy, and including environmental,

social and governance measures.

The budget sales and PBT are set taking into account market consensus and broker expectations. The actual financial and
strategic targets have not been disclosed at this time as they are commercially sensitive. The targets and an assessment of the
extent to which they have been achieved will be disclosed in next year’s Remuneration Committee report.

Whilst the Policy enables bonus vesting levels at up to 10% of maximum at threshold and 50% for on-target performance,
for FY24 this will apply only in respect of sales, with PBT remaining at 5% of maximum at threshold and 40% for on-target
performance (and PBT moving to up to 10% of maximum at threshold and 50% for on-target performance in FY25).

Nick Wilkinson and Karen Witts have contractually committed that two-thirds of the bonus earned (after payment of income
tax and National Insurance) will be invested in Dunelm shares, to be held for the duration of employment. This is also in line
with our Policy. Shares held on termination of employment will be retained for up to a minimum of two years as required by the
shareholding requirements set out in the Policy.

Sir Will Adderley has asked that he not be considered for a bonus award.

LTIP FY24-26
Subject to the approval of, and in line with, our proposed new Policy, and subject to shareholder approval of the proposed
amendments to the LTIP rules at this year’s AGM, an award is expected to be made in November 2023 under the LTIP over
shares to the value of 225% of salary to Nick Wilkinson and 200% of salary to Karen Witts. The award will vest, subject to
continued employment, on the third anniversary of the grant date, to the extent that performance conditions have been met.
All of the vested shares (after sales to cover tax and National Insurance liability on exercise) must be retained for two years after
vesting, after which one-third of these may be sold and the remainder must be retained for the duration of employment. Shares
held on termination of employment will be retained for a minimum of two years as required by the shareholding requirements
set out in the Policy. Our current intention is that the FY24-26 LTIP awards will be granted in line with our standard approach
(with the number of shares to be awarded based on the average share price for the three business days preceding grant) and we
will review the final outturn to ensure that there have not been any windfall gains. This is in addition to the performance underpin
and review of the final outturn to ensure it is warranted based on shareholder experience over the performance period.

The performance criteria that apply to the award were set by the Committee in line with the new Policy subject to shareholder
approval, and are as follows:

Financial measures: 80% of the award

Percentage of this element of the FY24-26 award vesting1

FY26 Diluted EPS

Nil

Less than
78p

Threshold
10%

On-target
50%

Maximum

100%

78p

83p

100.0p
or more

1 Performance between each of these percentage thresholds will be calculated on a straight-line basis.

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Dunelm Group plc Annual Report and Accounts 2023

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Remuneration Committee report continued

Non-financial measures: 20% of the award

Measure

Reduction in Scope 1 greenhouse gas emissions per £m sales
Percentage of own brand cotton products which meet our ‘More Responsibly Sourced Cotton’
standard
Percentage of role-model leadership roles filled by ethnically diverse colleagues

FY26
target

-59.3%

100%
8%

% of LTIP
award

6.67%

6.67%
6.67%

These targets were chosen because they are aligned to our strategy and long-term targets, and they cover areas where we are
able to make the most impact on the environment and provide the most benefit to our customers and our communities.

Reduction of our Scope 1 greenhouse gas emissions will enable us to reduce our impact on climate change in line with our
Pathway to Zero commitment. Cotton products account for approximately half of Dunelm’s carbon footprint. Cotton which
meets our ‘More Responsibly Sourced’ standard will have a lower carbon footprint, as well as using less water and meeting our
ethical/social standards.

This year, the Committee decided to remove our reduction in plastic packaging and take-back service targets on the basis that
our work in these areas is progressing well and, in the case of the former, is subject in any event to regulatory requirements. Its
view was that the focus should continue to be on those areas where a step-change is required to meet our ambitions. This in no
way diminishes the importance of other targets, but takes into account the outcome of stakeholder engagement as well as our
desire to ensure that we continue to live our shared values. As a result, these measures have been replaced with an ethnicity
target whereby 8% of our role-model leadership roles shall be held by ethnically diverse colleagues by the end of FY26. The
Committee has set stretching meet/fail targets rather than setting a target range in order to incentivise management to make
significant progress in delivering these important objectives.

Sir Will Adderley has asked that he not be considered for an LTIP award.

Sharesave
An invitation will be issued in October 2023 to all eligible employees to apply for options to be granted under the Sharesave
scheme at a 20% discount to the average closing market price of Dunelm shares on the three dealing days preceding the issue
of the invitation. The maximum monthly savings will be £500 per month. Executive Directors employed at the eligibility date
may apply for Sharesave options, subject to the plan rules.

Non-Executive Director fees for FY24
Fees to be paid to Non-Executive Directors in FY24 are as set out in the table below:

Table 15 – Non-Executive Director fees

Alison Brittain
Ian Bull
Kelly Devine
William Reeve

Peter Ruis
Marion Sears
Arja Taaveniku
Vijay Talwar

Position

Chair
Audit and Risk Committee Chair
Non-Executive Director
Remuneration Committee Chair
Senior Independent Director (SID)
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director

Base fee

£337,177
£58,490
£58,490
£58,490
—
£58,490
£58,490
£58,490
£58,490

Committee
Chair/SID fee

Increase in base
fee year-on-year

Increase in
Committee/SID
fee year-on-year

N/A
£11,316
N/A
£11,316
£7,190
N/A
N/A
N/A
N/A

5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%

N/A
5.0%
N/A
5.0%
5.0%
N/A
N/A
N/A
N/A

Fees above are for the full year and reflect Board responsibilities at the date of this report.

116

Dunelm Group plc Annual Report and Accounts 2023

Statement of shareholder voting
At the Annual General Meeting on 30 November 2022, the total number of shares in issue with voting rights (excluding treasury
shares) was 201,361,214. Details of voting on remuneration-related resolution is set out below:

Resolution

Votes for

% of votes cast

Votes against

% of votes cast

Votes withheld

% withheld

Approve Annual Remuneration Report 177,668,641

99.77

408,268

0.23

3,114,149

1.55

At the Annual General Meeting on 17 November 2020, the total number of shares in issue with voting rights (excluding treasury
shares) was 202,354,357. Details of voting on the remuneration policy resolution is set out below:

Resolution

Votes for

% of votes cast

Votes against

% of votes cast

Votes withheld

% withheld

Approve Directors’ Remuneration Policy 185,828,351

99.9

21,010

0.01

248,318

0.13

Advisers
The UK Executive Compensation practice of Deloitte provides general advice on executive remuneration to the Committee
and access to external information and research on market data and trends. They were appointed by the Committee following a
review against other providers in the market. Deloitte are signatories to the Remuneration Consultants’ Code of Conduct, which
requires their advice to be impartial, and they have confirmed their compliance with the Code to the Committee.

Total fees paid to Deloitte for remuneration-related work in the year were £30,150 (FY22: £14,850) which was a mixture of fixed
fees and time spent basis, depending on the work conducted.

Risk Advisory and Consulting teams within Deloitte (outside of its UK Executive Compensation practice) provided non-
remuneration-related consultancy services in the year. In each case, the appointment of Deloitte was made based on
Deloitte’s expertise in the particular area, on an arm’s length basis and without reference to the fact that Deloitte also provides
remuneration advice. Having considered the fees paid to Deloitte for non- remuneration-related work, the Committee is
satisfied that the remuneration advice that they have received from Deloitte in the year has been objective and independent.

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Gender pay disclosures
Dunelm’s purpose is ‘To help create the joy of truly feeling at home, now and for generations to come.’ We want everyone to
feel that Dunelm is a place for them, and this applies equally for our colleagues and customers. Diversity, inclusion, and more
generally the wellbeing of our colleagues, are high on our agenda. We want all colleagues to feel they can grow with Dunelm
and that they are welcome. Improving our gender balance remains one of our commitments.

The Committee supports gender pay reporting and the actions taken in the business to drive gender balance, supporting
a culture of inclusion. Dunelm published its sixth Gender Pay Gap Report in April 2023, and an overview is provided in our
Sustainability Report 2023. Both documents are available to download at corporate.dunelm.com.

Dunelm Group plc Annual Report and Accounts 2023

117

GOVERNANCE REPORT

Remuneration Committee report continued

Engaging with our colleagues on pay
In May 2023, the National Colleague Voice (‘NCV’) allocated a full meeting to a discussion on pay and reward. The meeting
was well attended by representatives from across the business with a 43%:57% male/female gender split and ethnic diversity
representation of 21%. The meeting was led by members of our People Team who were joined by Marion Sears, our designated
Non-Executive Director for colleague matters, and William Reeve, Chair of the Remuneration Committee. It was also attended
by the Group General Counsel and Company Secretary. The meeting covered two key topics as follows:

Topic 1: Engaging on colleague reward and pay

Representatives from each part of the business were invited to share feedback on reward and pay gathered from colleagues
ahead of the meeting. Overall, colleagues were pleased with our general reward packages and those who have access to a
computer make good use of online access to our total reward system and access to benefits. However, the meeting discussed
that store colleagues and drivers do not always have the same ease of access and have requested further consideration as to
how this can be achieved. Other areas of discussion were the possibility of reviewing the Company’s approach to sick leave pay
and eligibility for the bonus scheme at a support analyst level.

There was also a discussion on cost of living, and notably that the effects of a higher cost of living are more acutely felt by
store colleagues who are impacted by the availability of overtime. As a result of this discussion, management determined to
define more specifically the most-affected colleague population to review whether a different approach might be adopted and
consider further improvements we can make to our communication more generally around business performance and more
personally to colleagues about the other assistance that is available for anyone experiencing hardship.

Topic 2: Engaging on Board remuneration

William Reeve provided an overview of the remit of the Committee, core elements of Dunelm’s proposed new Remuneration
Policy and the context in which the Committee takes decisions. It was explained that the Committee is held to account
through shareholder voting and that for the Executive Team, and most of our senior leadership, reward is related to business
performance. The fixed and variable reward elements for different role levels were highlighted, as was the requirement for a
significant proportion of reward to be held in shares, to ensure shareholder alignment and in keeping with our shared values.
Feedback on our executive pay was positive, with NCV colleagues recognising the desire to pay appropriately for good
leadership, the level of care and scrutiny exercised by the Committee and its long-term thinking. It was noted that colleagues’
acceptance of executive pay is linked to business performance, colleague job security and workforce pay, and if Dunelm’s
circumstances changed, colleagues would feel it inappropriate for our leaders to receive a high level of pay/bonus. It was also
noted that our colleagues consider strong leadership to include having compassion and being proactive.

For more information on the NCV and its other activities during the year see page 32.

Committee effectiveness
The effectiveness of the Committee was considered as part of this year’s Board evaluation process, more details of which can
be found on page 78. The review concluded that the Committee continues to operate effectively and having considered the
findings, it was agreed that particular areas of focus during the forthcoming year should be:

1. Reflecting on measures used to determine performance, alignment of management incentives and approach to retention

following implementation of the new Policy (subject to shareholder approval) and refresh of the ‘Plan on a Page’;

2. A deep dive into gender pay gap data and reporting; and

3. Preparing for an effective handover to a new Chair at the appropriate time.

Approved by the Board on 20 September 2023.

William Reeve
Chair of the Remuneration Committee

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Dunelm Group plc Annual Report and Accounts 2023

Directors’ report

The Directors present their report together with the audited
financial statements for the period ended 1 July 2023.

Disclosures that are relevant to
the Directors’ report have been
incorporated by reference and can
be found elsewhere within the Annual
Report and Accounts as noted below.

Strategic report
The Group’s Strategic report is set
out on pages 1 to 55. It contains an
indication of likely future developments
in the business of the Company and
the Group.

Corporate governance
Our Governance report on pages 58 to
118 explains how we have applied the
Principles set out in the UK Corporate
Governance Code published in
July 2018 (the ‘Code’). Our Code
compliance statement can be found
on page 59.

Sustainability reporting
For information on the Group’s
approach to environmental, social and
governance matters, see Sustainability
on pages 26 and 27, our TCFD report
on pages 40 to 47 which includes
the Streamlined Energy and Carbon
Reporting disclosures, and our
Sustainability Report 2023, available
at corporate.dunelm.com.

Results and dividends
The consolidated profit of the Group
for the year after taxation was £151.9m
(2022: £171.2m). The results are
discussed in greater detail in the
CFO’s review on pages 22 to 25.

A final ordinary dividend of 27p per
share (2022: 26p per share) is proposed
in respect of the period ended 1 July
2023, to add to a special dividend of
40p per share paid on 11 April 2023
(2022: £1.02 pence in total) and an
interim ordinary dividend of 15p per
share paid on 11 April 2023 (2022:
14p per share). The final dividend
will be paid on 20 November 2023
to shareholders on the register at
27 October 2023.

Information to be disclosed under LR 9.8.4R
The majority of the disclosures required under LR 9.8.4 are not applicable to Dunelm.
The table below sets out the location of those requirements that are applicable:

Applicable sub-paragraph within LR 9.8.4

Disclosure provided

(4) Long-term incentive schemes

pages 107, 115 and 116

(14) A statement made by the Board
that the Company has entered into an
agreement under LR 9.2.2A, that the
Company has, and as far as it is aware,
the other parties to the agreement have,
complied with the agreement.

Treasury and risk management
The Group’s approach to treasury and
financial risk management, including
its use of hedging instruments, is
explained in the principal risks and
uncertainties section on page 54 and
note 17 of the financial statements.

Stakeholder engagement
Details of how the Directors have
engaged with employees and other
stakeholders, and had regard to the
interests of colleagues and the need
to foster the Company’s business
relationships with suppliers, customers
and others and the effect of that
regard, including on the principal
decisions taken by the Company during
the financial year, are set out in the
Strategic report on pages 30 to 34,
with complementary information in
the Governance report on pages 68 to
71. Our s172(1) Companies Act 2006
statement can be found on page 35.

Employee information
Information relating to employees of
the Group is set out in the Nominations
Committee report, with more
information in our Sustainability
Report 2023.

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‘Shareholder and voting rights’ below.

The Company is clear in its policy that
people with health conditions, both
visible and non-visible, will have a full
and fair consideration for all vacancies.
Dunelm continues to demonstrate its
commitment to interviewing applicants
with disabilities who fulfil the minimum
criteria for the role and endeavours
to retain colleagues in roles in the
business if they become disabled
during their employment. Dunelm
will actively look to put into place
reasonable adjustments that may be
required by the colleague to allow them
to thrive and belong at Dunelm.

Share incentive schemes in which
employees participate are described
in the Remuneration Committee report
on page 101.

Shareholder and voting rights
All members who hold Ordinary Shares
are entitled to attend and vote at the
Annual General Meeting. On a show
of hands at a general meeting every
member present in person shall have
one vote and, on a poll, every member
present in person or by proxy shall
have one vote for every Ordinary Share
held. There are no special voting rights
attached to any of the Company’s shares.

In order to be passed, an ordinary
resolution of the Company must be
supported by at least 50% of the votes
cast at a shareholders’ meeting, and
a special resolution by at least 75% of
votes cast.

Dunelm Group plc Annual Report and Accounts 2023

119

GOVERNANCE REPORT

Directors’ report continued

On 2 October 2006, Jean Adderley,
Bill Adderley and Sir Will Adderley (all
shareholders at that time) entered into
a Relationship Agreement with the
Company, pursuant to which each of
Jean Adderley, Bill Adderley and Sir Will
Adderley undertook to the Company
that, for so long as, individually or
together, they are entitled to exercise,
or to control the exercise of, 30% or
more of the rights to vote at general
meetings of the Company or they are
able to control the appointment of
Directors who are able to exercise a
majority of votes at Board meetings
of the Company, they will:

• Conduct all transactions and

relationships with any member of the
Group on arm’s length terms and on
a normal commercial basis.

• Not take any action which precludes

or inhibits any member of the
Group from carrying on its business
independently of Jean and Bill
Adderley, Sir Will Adderley and
their associates (as defined in the
Listing Rules).

• Not exercise any of their voting

rights or other powers to procure
any amendment to the Articles of
Association of the Company which
would be inconsistent with or
undermine any of the provisions
of the Relationship Agreement.

• Abstain from voting on any

resolution to which LR11.1.7.R(4) of
the Listing Rules applies involving
Jean Adderley, Bill Adderley or
Sir Will Adderley or any of their
associates as the related party.

• Not carry on (other than through
their holding of securities of the
Company) or have any financial
interest (other than a financial
interest in securities which are held
for investment purposes only) in any
person who carries on a business as
a homewares retailer, to the extent
that it would be inconsistent with
or undermine any provisions of the
Relationship Agreement.

• Only enter into, amend or terminate

any transaction, agreement or
relationship between themselves
or any of their associates and
any member of the Group with
the approval of a majority of the
independent Non-Executive
Directors.

WA Capital Limited and Lady Nadine
Adderley, to whom Sir Will Adderley
transferred shares by way of a gift,
have subsequently become parties
to this agreement.

In July 2014, the Relationship
Agreement was amended so as to
comply with Listing Rule LR 9.2.2A(2)(a),
which came into effect on 16 May 2014
(as at 1 January 2018 this reference is LR
9.2.2AD R(1)). The following additional
undertakings were given by the parties:

• No action will be taken that would
have the effect of preventing the
Company from complying with its
obligations under the Listing Rules.

• No resolution will be proposed, or
procured to be proposed, which
is intended to, or appears to be
intended to circumvent the proper
application of the Listing Rules.

In addition, the Articles of Association
of the Company provide that the
election and re-election of Independent
Directors must be conducted in
accordance with the election provisions
set out in LR 9.2.2ER and LR 9.2.2FR.

The Company confirms that it has
complied with its obligations under
the Relationship Agreement during the
financial period under review, and that
so far as it is aware, all other parties to
that agreement have complied with it.

The Company confirms that there
are no contracts of significance
between any member of the Group
and any of the parties to the
Relationship Agreement, with the
exception of Sir Will Adderley’s
service agreement as a Director of
the Company, the terms of which
are outlined in the Remuneration
Committee report.

There are no restrictions on the
transfer of Ordinary Shares in the
Company other than certain restrictions
imposed by laws and regulations
(such as insider trading and marketing
requirements relating to closed
periods) and requirements of the
Listing Rules whereby Directors and
certain employees of the Company
require Board approval to deal in the
Company’s securities.

Change of control
The Company is not party to any
significant agreements which take
effect, alter or terminate solely on a
change of control of the Company
following a takeover bid.

There are no agreements between
the Company and its Directors or
employees providing for additional
compensation for loss of office
or employment (whether through
resignation, redundancy or otherwise)
that occurs because of a takeover bid.

Details of the rights of employees to
exercise options on a change of control
of the Company are set out in the
Remuneration Policy section of
this report.

Share capital and
treasury shares
The Company has only one class of
shares, Ordinary Shares of 1p each.
As at 1 July 2023, its capital comprised
203,426,835 (2022: 203,426,835) fully
paid Ordinary shares of 1p each.

At the 2022 Annual General Meeting,
shareholders renewed the Directors’
authority to allot shares in the Company.
No shares were allotted during the
year. A resolution to renew the standard
authority will be proposed at the 2023
Annual General Meeting.

At 1 July 2023, the Company held
1,712,790 Ordinary Shares in treasury
(2022: 1,686,200).

During the year ended 1 July 2023 the
Company purchased 908,064 Ordinary
Shares for a total consideration of
£6,969,509 and these shares are held
in treasury with no voting or dividend
rights. 881,474 shares were transferred
to employees who exercised options
under a share incentive scheme or
under the LTIP scheme. Details of
option exercises by Directors are
set out in the Remuneration
Committee report.

Since the financial year end, 16,914
Ordinary Shares have been moved out
of treasury to employees who exercised
options under a share incentive scheme.

Further details on the Company’s share
capital are set out in note 20 to the
financial statements.

120

Dunelm Group plc Annual Report and Accounts 2023

Substantial shareholders
At 1 July 2023 the Company had been notified under the Disclosure and
Transparency Rules (DTR 5) of the following notifiable interests in the Company’s
issued share capital. The information provided below was correct at the date of
notification. These holdings are likely to have changed since the Company was
notified; however, notification of any change is not required until the next notifiable
threshold is crossed. No further notifications have been received since year end.

Sir Will Adderley
Jean Adderley
abrdn plc
JP Morgan Asset Management
Holdings Inc
Jupiter Fund Management PLC
Royal London Asset
Management Limited

Ordinary
Shares

Percentage of
share capital

Date of notification

76,371,779
9,968,500
9,565,468

10,936,894
10,044,063

37.8 15 February 2021
7 July 2021
4.92
22 March 2018
4.74
11 December
2022
6 January 2022

5.43
4.95

9,907,809

4.91

13 July 2018

Sir Will Adderley is also deemed to hold a legal interest in 967,250 Ordinary Shares
held by the Stoneygate Trust and 172,750 Ordinary Shares held by the Paddocks
Discretionary Trust, by virtue of the fact that he is a trustee of those trusts.

Appointment and removal
of Directors
The Articles of Association of the
Company provide that a Director may
be appointed by ordinary resolution
of the Company’s shareholders in a
general meeting, or by the Board so
long as the Director stands down and
offers him or herself for election at the
next Annual General Meeting of the
Company.

The Board’s policy is that all Directors
are subject to annual re-election and
therefore should stand down and offer
themselves for re-election at each
Annual General Meeting. The Articles
also provide that each Director must
stand down and offer him or herself
for re-election by shareholders at the
Annual General Meeting at least every
three years.

The Nominations Committee makes
recommendations to the Board on the
appointment and removal of Directors.

Directors and officers
Details of the Directors of the Company
who served on the Board during the
year can be found on page 60. The
biographies of the Directors on the
Board at the date of this report are
set out on pages 61 to 63. Details of
changes to the Board during the period
are set out on page 62. Details of the
interests of the Directors in shares of the
Company can be found in the Annual
Report on Remuneration on page 108.

On 1 December 2022, Dawn Durrant
stepped down as Company Secretary
and Luisa Wright was appointed.

Powers of Directors
The business of the Company is
managed by the Board, which may
exercise all of the powers of the
Company, subject to the requirements
of the Companies Act, the Articles of
Association of the Company and any
special resolution of the Company.
As stated in the Governance report
on page 66, the Board has adopted
internal delegations of authority in
accordance with the Code and these set
out matters which are reserved to the
Board or Committees and the powers
and duties of the Chair, the Deputy
Chair and the Chief Executive Officer
respectively.

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Directors may be removed by a special
resolution of shareholders, or by an
ordinary resolution of which special
notice has been given in accordance
with the Companies Act 2006. The
Articles also provide that the office of
a Director shall be vacated if they are
prohibited by law from being a Director,
or are declared bankrupt; and that the
Board may resolve that his or her office
be vacated if he or she is of unsound
mind or is absent from Board meetings
without consent for six months or
more. A Director may also resign from
the Board.

Indemnities and insurance
The Company has granted indemnities
to each of its Directors and the
Company Secretary to the extent
permitted by law in respect of costs
of defending claims against them
and third-party liabilities. Deeds of
indemnity in favour of Alison Brittain
and Luisa Wright were entered
into during the year following their
appointments as Non-Executive
Director and Company Secretary
respectively.

All indemnities, the provisions of which
are deemed to be qualifying third-
party indemnity provisions pursuant
to section 234 of the Act, were in
force throughout FY23 (or, in the case
of Alison Brittain and Luisa Wright,
from the date of their respective
appointments and thereafter for the
remainder of FY23) and remain in force
as at the date of this report.

A copy of each indemnity is available for
inspection at the Company’s registered
office during normal business hours
and will be available for inspection
at the Company’s Annual General
Meeting.

The Group maintained Directors’ and
Officers’ liability insurance cover for
its Directors and officers as permitted
under the Articles of the Company and
the Companies Act 2006 throughout
the financial year.

Dunelm Group plc Annual Report and Accounts 2023

121

GOVERNANCE REPORT

Directors’ report continued

Managing conflicts of interest
and related-party matters
The Companies Act 2006 allows the
Board of a public company to authorise
conflicts and potential conflicts of
interest of individual Directors where
the Articles of Association contain a
provision to that effect. The Company’s
Articles of Association give the Board
this authority subject to the following
safeguards:

• Directors who have an interest in

matters under discussion at a Board
meeting must declare that interest
and abstain from voting.

• Only Directors who have no interest
in the matter being considered
are able to approve a conflict of
interest and, in taking that decision,
the Directors must act in a way they
consider, in good faith, would be
most likely to promote the success
of the Company.

• The Directors are able to impose
limits or conditions when giving
authorisation if they feel this is
appropriate.

Directors are required to disclose any
actual or potential conflicts of interests
to the Board immediately when they
arise. In addition, a formal process
is undertaken each year when all
Directors confirm to the Board details
of any other directorships and confirm
relevant information in connection with
related parties.

Further to the above, the Board believes
it has effective procedures in place
to monitor and manage conflicts of
interest and ensure that any related
party transactions involving Directors or
their connected persons are conducted
on an arm’s length basis.

Donations
The Group does not make any political
donations.

Public policy
We are members of the British Retail
Consortium and support relevant
campaigning activity by that body.
During the year we have not taken
part in any direct lobbying or public
policy activity.

Articles of association
The Company’s Articles of Association
may only be amended, or new articles
adopted, by a special resolution of
shareholders.

Independent auditors
In accordance with section
489 of the Companies Act 2006 and
the recommendation of the Audit
and Risk Committee, a resolution
will be proposed at the 2023 AGM to
reappoint PricewaterhouseCoopers LLP
as external auditor of the Group.

Important events since
1 July 2023
There have been no important
events affecting the Company or
any subsidiary since 1 July 2023.

Disclaimer
This Directors’ report, Strategic report
and the financial statements contain
certain forward-looking statements
with respect to the financial condition,
results, operations and business of
Dunelm Group plc.

These statements and forecasts
involve risk and uncertainty because
they relate to events and depend
upon circumstances that will occur
in the future. There are a number of
factors that could cause actual results
or developments to differ materially
from those expressed or implied by
these forward-looking statements and
forecasts. Nothing in this Directors’
report, the Strategic report or in
these financial statements should be
construed as a profit forecast.

This document also contains non-
financial information and data. While
reasonable steps have been taken to
ensure that this is correct, it has not
been externally audited or verified
unless specifically stated in this
document.

Annual General Meeting
The Annual General Meeting will
be held at 11:30am on Thursday
16 November 2023 at the Stoke 2
Distribution Centre, White Rock Road,
Prologis Park, Stoke-on-Trent, ST4 4FA.

A formal notice of meeting, explanatory
circular and a form of proxy will
accompany this Annual Report and
financial statements.

This report was reviewed and
signed by order of the Board on
20 September 2023.

Luisa Wright
Company Secretary
20 September 2023

122

Dunelm Group plc Annual Report and Accounts 2023

Statement of Directors’ responsibilities
in respect of the financial statements

Disclosure of information
to the auditors
Each Director in office at the date on
which the Directors’ report is approved
confirms that:

• so far as the Directors are aware,

there is no relevant audit information
of which the auditor is unaware; and

• the Directors have taken all the steps
that they ought to have taken as
Directors to make themselves aware
of any relevant audit information and
to establish that the auditor is aware
of that information.

Nick Wilkinson
Chief Executive Officer
20 September 2023

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The Directors are responsible for
preparing the Annual Report and
Accounts 2023 in accordance with
applicable law and regulation.

Company law requires the Directors
to prepare financial statements for
each financial year. Under that law the
Directors have prepared the Group
financial statements in accordance with
UK-adopted international accounting
standards and the parent company
financial statements in accordance with
United Kingdom Generally Accepted
Accounting Practice (United Kingdom
Accounting Standards, comprising FRS
101 “Reduced Disclosure Framework”,
and applicable law).

Under company law, Directors must
not approve the financial statements
unless they are satisfied that they give a
true and fair view of the state of affairs
of the Group and parent company and
of the profit or loss of the Group for
that period. In preparing the financial
statements, the Directors are
required to:

• select suitable accounting policies
and then apply them consistently;

• state whether applicable UK-

adopted international accounting
standards have been followed for
the Group financial statements
and United Kingdom Accounting
Standards, comprising FRS 101,
have been followed for the parent
company financial statements,
subject to any material departures
disclosed and explained in the
financial statements;

• make judgements and accounting
estimates that are reasonable and
prudent; and

• prepare the financial statements

on the going concern basis unless
it is inappropriate to presume that
the Group and parent company will
continue in business.

The Directors are responsible for
safeguarding the assets of the Group
and parent company and hence
for taking reasonable steps for the
prevention and detection of fraud
and other irregularities.

The Directors are also responsible
for keeping adequate accounting
records that are sufficient to show
and explain the Group’s and parent
company’s transactions and disclose
with reasonable accuracy at any time
the financial position of the Group and
parent company and enable them to
ensure that the financial statements and
the Directors’ Remuneration Report
comply with the Companies Act 2006.

The Directors are responsible for
the maintenance and integrity of the
parent company’s website. Legislation
in the United Kingdom governing
the preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.

Directors’ confirmations
Each of the Directors, whose names and
functions are listed in the Governance
report confirm that, to the best of their
knowledge:

• the Group financial statements,
which have been prepared in
accordance with UK-adopted
international accounting standards,
give a true and fair view of the assets,
liabilities, financial position and profit
of the Group;

• the parent company financial
statements, which have been
prepared in accordance with United
Kingdom Accounting Standards,
comprising FRS 101, give a true
and fair view of the assets, liabilities
and financial position of the parent
company; and

• the Strategic report includes a fair
review of the development and
performance of the business and
the position of the Group and
parent company, together with a
description of the principal risks
and uncertainties that it faces.

Dunelm Group plc Annual Report and Accounts 2023

123

FINANCIAL STATEMENTS

Seizing the opportunity

to
spread
happiness

In this section
Independent auditors’ report 126
Consolidated Financial

Statements

Parent Company Financial

Statements
Other information
Alternative performance
measures (APMs)
Advisers and contacts

132

164

172

124

Dunelm Group plc Annual Report and Accounts 2023

happiness

Dunelm Group plc Annual Report and Accounts 2023

125

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FINANCIAL STATEMENTS

Independent auditors’ report
to the members of Dunelm Group plc

Report on the audit
of the financial
statements
Opinion
In our opinion:

• Dunelm Group plc’s group

financial statements and parent
company financial statements
(the “financial statements”) give
a true and fair view of the state
of the group’s and of the parent
company’s affairs as at 1 July 2023
and of the group’s profit and the
group’s cash flows for the 52 week
period then ended;

• the group financial statements
have been properly prepared
in accordance with UK-adopted
international accounting
standards as applied in
accordance with the provisions of
the Companies Act 2006;

• the parent company financial

statements have been properly
prepared in accordance with
United Kingdom Generally
Accepted Accounting Practice
(United Kingdom Accounting
Standards, including FRS 101
“Reduced Disclosure Framework”,
and applicable law); and

• the financial statements have
been prepared in accordance
with the requirements of the
Companies Act 2006.

We have audited the financial
statements, included within the
Annual Report and Accounts
(the “Annual Report”), which
comprise: the consolidated
statement of financial position
and parent company statement
of financial position as at 1 July
2023; the consolidated income
statement, consolidated statement
of comprehensive income,
consolidated statement of cash
flows, consolidated statement
of changes in equity and parent
company statement of changes in
equity for the period then ended; the
accounting policies; and the notes to
the financial statements.

Our opinion is consistent with our
reporting to the Audit and Risk
Committee.

Basis for opinion
We conducted our audit in accordance
with International Standards on
Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities
under ISAs (UK) are further described
in the Auditors’ responsibilities for the
audit of the financial statements section
of our report. We believe that the audit
evidence we have obtained is sufficient
and appropriate to provide a basis for
our opinion.

Independence
We remained independent of the
group in accordance with the ethical
requirements that are relevant to our
audit of the financial statements in the
UK, which includes the FRC’s Ethical
Standard, as applicable to listed public
interest entities, and we have fulfilled
our other ethical responsibilities in
accordance with these requirements.

To the best of our knowledge and
belief, we declare that non-audit
services prohibited by the FRC’s Ethical
Standard were not provided.

Other than those disclosed in note 3,
we have provided no non-audit services
to the parent company or its controlled
undertakings in the period under audit.

Our audit approach
Overview
Audit scope
• The group is structured with

one segment which comprises a
consolidation of the parent company
and eight additional components.

• For the purposes of the group

financial statements, we conducted
an audit of the complete financial
information of one financially
significant component, together with
additional procedures performed
centrally including the group
consolidation.

• We separately audited the parent
company financial statements.

126

Dunelm Group plc Annual Report and Accounts 2023

Key audit matters
•

Inventory provisions (group)

• Recoverability of investments in
subsidiary undertakings (parent)

Materiality
• Overall group materiality:

£9,635,000 (2022: £10,640,000)
based on 5% of profit before tax.

• Overall parent company materiality:

£2,300,000 (2022: £1,600,000) based
on 1% of total assets.

• Performance materiality: £7,225,000

(2022: £8,000,000) (group) and
£1,725,000 (2022: £1,200,000)
(parent company).

The scope of our audit
As part of designing our audit, we
determined materiality and assessed
the risks of material misstatement in the
financial statements.

Key audit matters
Key audit matters are those matters
that, in the auditors’ professional
judgement, were of most significance
in the audit of the financial statements
of the current period and include
the most significant assessed risks
of material misstatement (whether
or not due to fraud) identified by the
auditors, including those which had
the greatest effect on: the overall audit
strategy; the allocation of resources in
the audit; and directing the efforts of
the engagement team. These matters,
and any comments we make on the
results of our procedures thereon, were
addressed in the context of our audit of
the financial statements as a whole, and
in forming our opinion thereon, and we
do not provide a separate opinion on
these matters.

This is not a complete list of all risks
identified by our audit.

The key audit matters below are consistent with last year.

Key audit matter

How our audit addressed the key audit matter

Inventory provisions (group)
Refer to the Audit and Risk Committee Report, the
Accounting Policies, Note 3 (Operating Profit) and Note
13 (Inventories) to the Consolidated Financial Statements.
Inventory represents a significant asset on the Group’s
balance sheet and is carried at the lower of cost and net
realisable value (“NRV”). The Group’s accounting policy is
to determine a provision based upon: the historic negative
margin of the type of inventory, by ageing category, which is
calculated by analysing the historic sales price compared to
the cost of inventory, and applying a percentage provision
to each line of inventory; and a further provision for ‘at risk’
lines where the calculated provision was not considered to
be sufficient.

Recoverability of investments in subsidiary
undertakings (parent)
Refer to note 4 (Investments) to the Parent Company
Financial Statements. In accordance with IAS 36 (Impairment
of assets), the Parent Company’s investments balance of
£68.8m (FY22: £64.8m) should be carried at no more than
its recoverable amount, being the higher of fair value less
costs to sell and its value in use. IAS 36 requires an entity to
determine whether there are indications that an impairment
loss may have occurred and if so, make a formal estimate of
the recoverable amount.

We tested sales made post period-end to assess whether
inventory items were held at the lower of cost and NRV. We
examined inventory write-offs in the financial period to assess
whether they are consistent with the key assumptions used in
the inventory provision model at the year end. We tested the
inputs to the provision calculation, including the classification
of inventory and sales data for each of the ageing categories
from the Buying department, which is segregated from the
Finance department. We tested the average cost of inventory
by agreeing a sample of inputs to source documentation and
testing freight and duty costs. We consider management’s
conclusion that there are no indicators of impairment to be
appropriate. We tested the integrity of the provision model
to ensure that it was using the underlying data correctly and
calculating provision amounts accurately. We challenged
management’s assumptions on what they deemed the ‘at
risk’ inventory lines were, and corroborated whether these
lines were at risk with the Merchandising team. We also
independently challenged the completeness of the ‘at risk’
lines based on our understanding of the nature of the group’s
inventory lines. We found that the NRV provision against
inventory was consistent with the evidence obtained

We evaluated whether any indications that an impairment
loss may have occurred in relation to the Parent Company’s
investments balance with specific consideration given to
the following: the market capitalisation of the Group is
significantly in excess of the investments balance, noting that
substantially all of the market capitalisation is considered
to be in relation to one indirect subsidiary (Dunelm (Soft
Furnishings) Ltd) of the Parent Company; the trading
results of Dunelm (Soft Furnishings) Ltd are not worse than
expected and are not expected to be worse in future periods;
and there have not been and are not expected to be any
significant changes with an adverse impact in relation to
the technological, market, economic or legal environment
in which this indirect subsidiary operates. We consider
management’s conclusion that there are no indicators of
impairment to be appropriate.

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Independent auditors’ report continued

How we tailored the audit scope
We tailored the scope of our audit to
ensure that we performed enough
work to be able to give an opinion on
the financial statements as a whole,
taking into account the structure of
the group and the parent company,
the accounting processes and
controls, and the industry in which
they operate.

The group is structured with one
reporting segment which comprises
a consolidation of the parent
company and eight additional
components.

In establishing the overall approach
to the group audit, we identified
one component: Dunelm (Soft
Furnishings) Limited, which, as the
sole trading legal entity in the Group,
required an audit of its complete
financial information due to its
financial significance to the group.

Further specific audit procedures
over central functions including the
Group consolidation, equity and
taxes were performed.

All audit procedures were performed
by the Group Engagement Team.
The scoping above gave us the
evidence we needed for our opinion
on the group financial statements as
a whole.

The Parent Company is comprised of
one component which was subject
to a full scope audit for the purposes
of the Parent Company financial
statements.

The impact of climate risk
on our audit
As part of our audit we made
enquiries of management to
understand the process adopted
to assess the extent of the potential
impact of climate risk on the financial
statements and to support the
disclosures made within the
Annual report.

Our risk assessment was based on enquiry, as well as the review of Dunelm’s
corporate responsibility reporting and climate related commitments. As detailed in
the group accounting policies, management considers that there is no material risk
to the financial statements in respect of climate change.

We challenged, based on our knowledge of the business, the impact of climate risk
on right-of-use assets and property, plant and equipment, which were considered
to be the assets at most risk of the effects of climate change.

We also considered the consistency of the disclosures in relation to climate change
(including the disclosures in the Task Force on Climate-related Financial Disclosures
(TCFD) section) within the Annual Report with the financial statements and our
knowledge obtained from our audit.

Our procedures did not identify any material impact in the context of our audit of
the financial statements as a whole, or our key audit matters for the 52 week period
ended 1 July 2023.

Materiality
The scope of our audit was influenced by our application of materiality. We set
certain quantitative thresholds for materiality. These, together with qualitative
considerations, helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual financial statement
line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial
statements as a whole as follows:

Overall materiality

Financial statements – group

£9,635,000 (2022:
£10,640,000).

Financial statements –
parent company

£2,300,000 (2022:
£1,600,000).

How we determined it

5% of profit before tax

1% of total assets

Rationale for benchmark
applied

Profit before tax is the
primary measure used
by the shareholders in
assessing the performance
of the group and is a
generally accepted
auditing benchmark.

The parent company does
not trade and therefore
total assets is considered
to be the most appropriate
benchmark.

For each component in the scope of our group audit, we allocated a materiality that
is less than our overall group materiality.

We use performance materiality to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements
exceeds overall materiality. Specifically, we use performance materiality in
determining the scope of our audit and the nature and extent of our testing
of account balances, classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was 75% (2022: 75%) of
overall materiality, amounting to £7,225,000 (2022: £8,000,000) for the group
financial statements and £1,725,000 (2022: £1,200,000) for the parent company
financial statements.

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In determining the performance
materiality, we considered a number of
factors – the history of misstatements,
risk assessment and aggregation risk
and the effectiveness of controls –
and concluded that an amount at the
upper end of our normal range was
appropriate.

We agreed with the Audit and Risk
Committee that we would report to
them misstatements identified during
our audit above £480,000 (group audit)
(2022: £530,000) and £115,000 (parent
company audit) (2022: £80,000) as well
as misstatements below those amounts
that, in our view, warranted reporting
for qualitative reasons.

Conclusions relating to
going concern
Our evaluation of the directors’
assessment of the group’s and the
parent company’s ability to continue
to adopt the going concern basis of
accounting included:

• We obtained management’s going
concern assessment and ensured
that this was consistent with board
approved budgets;

• We have evaluated management’s
forecasting accuracy based on
historical budgets versus actual
performance;

• We obtained confirmation from

lenders of the level of drawn and
undrawn revolving credit facilities
and tested the actual and forecast
covenant compliance associated
with these facilities;

• We considered the mitigating
actions available to Dunelm to
increase liquidity, if required, with
the key actions being reductions in
stock purchases and capex, as well
as cessation of dividends; and

• We assessed the adequacy of the
going concern disclosures in the
accounting policies.

Based on the work we have performed,
we have not identified any material
uncertainties relating to events
or conditions that, individually or
collectively, may cast significant
doubt on the group’s and the parent

company’s ability to continue as a
going concern for a period of at least
twelve months from when the financial
statements are authorised for issue.

In auditing the financial statements,
we have concluded that the directors’
use of the going concern basis of
accounting in the preparation of the
financial statements is appropriate.

However, because not all future events
or conditions can be predicted, this
conclusion is not a guarantee as to
the group’s and the parent company’s
ability to continue as a going concern.

In relation to the directors’ reporting
on how they have applied the UK
Corporate Governance Code, we
have nothing material to add or draw
attention to in relation to the directors’
statement in the financial statements
about whether the directors considered
it appropriate to adopt the going
concern basis of accounting.

Our responsibilities and the
responsibilities of the directors with
respect to going concern are described
in the relevant sections of this report.

Reporting on other
information
The other information comprises all of
the information in the Annual Report
other than the financial statements
and our auditors’ report thereon. The
directors are responsible for the other
information, which includes reporting
based on the Task Force on Climate-
related Financial Disclosures (TCFD)
recommendations. Our opinion on the
financial statements does not cover
the other information and, accordingly,
we do not express an audit opinion or,
except to the extent otherwise explicitly
stated in this report, any form of
assurance thereon.

In connection with our audit of the
financial statements, our responsibility
is to read the other information and, in
doing so, consider whether the other
information is materially inconsistent
with the financial statements or our
knowledge obtained in the audit, or
otherwise appears to be materially

misstated. If we identify an
apparent material inconsistency
or material misstatement, we are
required to perform procedures
to conclude whether there is a
material misstatement of the
financial statements or a material
misstatement of the other
information. If, based on the work
we have performed, we conclude
that there is a material misstatement
of this other information, we are
required to report that fact. We have
nothing to report based on these
responsibilities.

With respect to the Strategic report
and Directors’ Report, we also
considered whether the disclosures
required by the UK Companies Act
2006 have been included.

Based on our work undertaken in the
course of the audit, the Companies
Act 2006 requires us also to report
certain opinions and matters as
described below.

Strategic report and
Directors’ Report
In our opinion, based on the work
undertaken in the course of the
audit, the information given in the
Strategic report and Directors’
Report for the period ended 1 July
2023 is consistent with the financial
statements and has been prepared
in accordance with applicable legal
requirements.

In light of the knowledge and
understanding of the group
and parent company and their
environment obtained in the course
of the audit, we did not identify
any material misstatements in the
Strategic report and Directors’
Report.

Directors’ Remuneration
In our opinion, the part of the
Remuneration Committee report
to be audited has been properly
prepared in accordance with the
Companies Act 2006.

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Independent auditors’ report continued

Corporate governance
statement
The Listing Rules require us to
review the directors’ statements in
relation to going concern, longer-
term viability and that part of the
corporate governance statement
relating to the parent company’s
compliance with the provisions
of the UK Corporate Governance
Code specified for our review. Our
additional responsibilities with
respect to the corporate governance
statement as other information are
described in the Reporting on other
information section of this report.

Based on the work undertaken as
part of our audit, we have concluded
that each of the following elements
of the corporate governance
statement, included within the
Strategic report and Governance
report is materially consistent with
the financial statements and our
knowledge obtained during the
audit, and we have nothing material
to add or draw attention to in
relation to:

• The directors’ confirmation that
they have carried out a robust
assessment of the emerging and
principal risks;

• The disclosures in the Annual
Report that describe those
principal risks, what procedures
are in place to identify emerging
risks and an explanation of how
these are being managed or
mitigated;

• The directors’ statement in

the financial statements about
whether they considered it
appropriate to adopt the going
concern basis of accounting
in preparing them, and their
identification of any material
uncertainties to the group’s
and parent company’s ability to
continue to do so over a period
of at least twelve months from the
date of approval of the financial
statements;

• The directors’ explanation as to
their assessment of the group’s
and parent company’s prospects,
the period this assessment
covers and why the period is
appropriate; and

• The directors’ statement as to

whether they have a reasonable
expectation that the parent company
will be able to continue in operation
and meet its liabilities as they fall due
over the period of its assessment,
including any related disclosures
drawing attention to any necessary
qualifications or assumptions.

Our review of the directors’ statement
regarding the longer-term viability of
the group and parent company was
substantially less in scope than an audit
and only consisted of making inquiries
and considering the directors’ process
supporting their statement; checking
that the statement is in alignment
with the relevant provisions of the UK
Corporate Governance Code; and
considering whether the statement is
consistent with the financial statements
and our knowledge and understanding
of the group and parent company
and their environment obtained in the
course of the audit.

In addition, based on the work
undertaken as part of our audit, we have
concluded that each of the following
elements of the corporate governance
statement is materially consistent
with the financial statements and our
knowledge obtained during the audit:

• The directors’ statement that they
consider the Annual Report, taken
as a whole, is fair, balanced and
understandable, and provides
the information necessary for the
members to assess the group’s
and parent company’s position,
performance, business model
and strategy;

• The section of the Annual Report that
describes the review of effectiveness
of risk management and internal
control systems; and

• The section of the Annual Report
describing the work of the Audit
and Risk Committee.

We have nothing to report in respect
of our responsibility to report when
the directors’ statement relating to the
parent company’s compliance with
the Code does not properly disclose a
departure from a relevant provision of
the Code specified under the Listing
Rules for review by the auditors.

Responsibilities for the
financial statements and
the audit
Responsibilities of the directors for
the financial statements
As explained more fully in the
Statement of directors’ responsibilities
in respect of the financial statements,
the directors are responsible for the
preparation of the financial statements
in accordance with the applicable
framework and for being satisfied
that they give a true and fair view. The
directors are also responsible for such
internal control as they determine is
necessary to enable the preparation of
financial statements that are free from
material misstatement, whether due to
fraud or error.

In preparing the financial statements,
the directors are responsible for
assessing the group’s and the parent
company’s ability to continue as a going
concern, disclosing, as applicable,
matters related to going concern
and using the going concern basis of
accounting unless the directors either
intend to liquidate the group or the
parent company or to cease operations,
or have no realistic alternative but to
do so.

Auditors’ responsibilities for the
audit of the financial statements
Our objectives are to obtain reasonable
assurance about whether the financial
statements as a whole are free from
material misstatement, whether due to
fraud or error, and to issue an auditors’
report that includes our opinion.
Reasonable assurance is a high level
of assurance, but is not a guarantee
that an audit conducted in accordance
with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud
or error and are considered material
if, individually or in the aggregate,
they could reasonably be expected
to influence the economic decisions
of users taken on the basis of these
financial statements.

Irregularities, including fraud, are
instances of non-compliance with laws
and regulations. We design procedures
in line with our responsibilities, outlined
above, to detect material misstatements

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in respect of irregularities, including
fraud. The extent to which our
procedures are capable of detecting
irregularities, including fraud, is
detailed below.

Based on our understanding of the
group and industry, we identified that
the principal risks of non-compliance
with laws and regulations related to
employment regulations, and we
considered the extent to which non-
compliance might have a material
effect on the financial statements.
We also considered those laws and
regulations that have a direct impact
on the financial statements such
as the Companies Act 2006 and
taxation. We evaluated management’s
incentives and opportunities for
fraudulent manipulation of the financial
statements (including the risk of
override of controls), and determined
that the principal risks were related
to the posting of journals with
unexpected account combinations,
which manipulate revenue or profits,
and management bias in accounting
estimates and judgements. Audit
procedures performed by the
engagement team included:

• Discussions with management,
internal audit and the Company
Secretary, including consideration
of known or suspected instances
of non-compliance with laws and
regulation and fraud;

• Assessment of matters reported on
the Group’s whistleblowing log;

• Searches for news articles

which would highlight potential
non-compliance with laws and
regulations;

•

Identifying and testing journal
entries, in particular journal entries
posted with unusual account
combinations which manipulate
revenue or profits; and

• Challenging assumptions and

judgements made by management in
their significant accounting estimates
and judgements, in particular in
relation to inventory provisions
(see related key audit matter).

There are inherent limitations in the
audit procedures described above.
We are less likely to become aware of
instances of non-compliance with laws

and regulations that are not closely
related to events and transactions
reflected in the financial statements.
Also, the risk of not detecting a
material misstatement due to fraud is
higher than the risk of not detecting
one resulting from error, as fraud may
involve deliberate concealment by,
for example, forgery or intentional
misrepresentations, or through
collusion.

Our audit testing might include testing
complete populations of certain
transactions and balances, possibly
using data auditing techniques.
However, it typically involves selecting
a limited number of items for
testing, rather than testing complete
populations. We will often seek to
target particular items for testing based
on their size or risk characteristics. In
other cases, we will use audit sampling
to enable us to draw a conclusion about
the population from which the sample
is selected.

A further description of our
responsibilities for the audit of the
financial statements is located on the
FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description
forms part of our auditors’ report.

Use of this report
This report, including the opinions,
has been prepared for and only for the
parent company’s members as a body
in accordance with Chapter 3 of Part
16 of the Companies Act 2006 and for
no other purpose. We do not, in giving
these opinions, accept or assume
responsibility for any other purpose or
to any other person to whom this report
is shown or into whose hands it may
come save where expressly agreed by
our prior consent in writing.

Other required
reporting
Companies Act 2006
exception reporting
Under the Companies Act 2006 we
are required to report to you if, in
our opinion:

• we have not obtained all the

information and explanations we
require for our audit; or

• adequate accounting records

have not been kept by the parent
company, or returns adequate for
our audit have not been received
from branches not visited by us; or

• certain disclosures of directors’

remuneration specified by law are
not made; or

• the parent company financial
statements and the part of
the Remuneration Committee
report to be audited are not in
agreement with the accounting
records and returns.

We have no exceptions to report
arising from this responsibility.

Appointment
Following the recommendation of
the Audit and Risk Committee, we
were appointed by the members
on 14 January 2014 to audit the
financial statements for the year
ended 28 June 2014 and subsequent
financial periods. The period of total
uninterrupted engagement is ten
years, covering the years ended
28 June 2014 to 1 July 2023.

Other matter
In due course, as required by
the Financial Conduct Authority
Disclosure Guidance and
Transparency Rule 4.1.14R, these
financial statements will form part of
the ESEF-prepared annual financial
report filed on the National Storage
Mechanism of the Financial Conduct
Authority in accordance with the
ESEF Regulatory Technical Standard
(‘ESEF RTS’). This auditors’ report
provides no assurance over whether
the annual financial report will be
prepared using the single electronic
format specified in the ESEF RTS.

Mark Skedgel
(Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and
Statutory Auditors
Birmingham

20 September 2023

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Consolidated Income Statement
For the 52 weeks ended 1 July 2023

Revenue
Cost of sales

Gross profit
Operating costs

Operating profit
Financial income
Financial expenses

Profit before taxation
Taxation

Profit for the period

Earnings per Ordinary Share – basic

Earnings per Ordinary Share – diluted

2023
52 weeks
£’m

1,638.8
(817.9)

820.9
(622.1)

198.8
1.7
(7.8)

192.7
(40.8)

151.9

75.2p

75.0p

2022
53 weeks
£’m

1,581.4
(772.0)

809.4
(591.7)

217.7
1.2
(6.1)

212.8
(41.6)

171.2

84.5p

83.6p

Note

3
5
5

Consolidated Statement of Comprehensive Income
For the 52 weeks ended 1 July 2023

Profit for the period
Other comprehensive (expense)/income:
Items that may be subsequently reclassified to profit or loss:
Movement in fair value of cash flow hedges
Deferred tax on hedging movements

Other comprehensive (expense)/income for the period, net of tax

Total comprehensive income for the period

Note

17
12

2023
52 weeks
£’m

151.9

2022
53 weeks
£’m

171.2

(14.0)
6.6

(7.4)

144.5

32.4
(5.3)

27.1

198.3

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Consolidated Statement of Financial Position
As at 1 July 2023

Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Derivative financial instruments

Total non-current assets

Current assets
Inventories
Trade and other receivables
Current tax asset
Derivative financial instruments
Cash and cash equivalents

Total current assets

Total assets

Current liabilities
Trade and other payables
Lease liabilities
Current tax liability
Derivative financial instruments

Total current liabilities

Non-current liabilities
Bank loans
Lease liabilities
Provisions
Derivative financial instruments

Total non-current liabilities

Total liabilities

Net assets

Equity
Issued share capital
Share premium account
Capital redemption reserve
Hedging reserve
Retained earnings

Total equity attributable to equity holders of the Parent

Note

1 July 2023
£’m

2 July 2022
£’m

9
10
11
12

13
14

16
11

18
11
19

5.3
169.9
231.3
6.9
—

413.4

211.0
24.3
—
1.8
46.3

283.4

696.8

(208.1)
(53.4)
(0.2)
(7.9)

(269.6)

(75.9)
(204.8)
(5.9)
(3.1)

(289.7)

(559.3)

137.5

2.0
1.7
43.2
(6.9)
97.5

137.5

9.9
173.7
248.5
4.1
4.6

440.8

223.0
22.9
1.1
19.9
30.2

297.1

737.9

(223.2)
(52.8)
—
—

(276.0)

(52.8)
(225.3)
(5.5)
—

(283.6)

(559.6)

178.3

2.0
1.7
43.2
20.2
111.2

178.3

The financial statements on pages 132 to 163 were approved by the Board of Directors on 20 September 2023 and were
signed on its behalf by:

Karen Witts
Chief Financial Officer
20 September 2023

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Consolidated Statement of Cash Flows
For the 52 weeks ended 1 July 2023

Cash flows from operating activities
Profit before taxation
Net financial expense

Operating profit
Depreciation and amortisation of property, plant and equipment and
intangible assets
Depreciation of right-of-use assets
Loss on disposal and impairment of property, plant and equipment and
intangible assets
Gain on disposal and impairment of right-of-use assets
Share-based payments expense

Operating cash flows before movements in working capital
Decrease/(increase) in inventories
Increase in trade and other receivables
(Decrease)/increase in trade and other payables

Net movement in working capital
Tax paid

Net cash generated from operating activities

Cash flows from investing activities
Acquisition of intangible assets
Acquisition of property, plant and equipment
Acquisition of business combination
Interest received

Net cash used in investing activities

Cash flows from financing activities
Proceeds from issue of treasury shares and Ordinary Shares
Purchase of treasury shares
Drawdowns on Revolving Credit Facility
Repayments of Revolving Credit Facility
Interest paid and loan transaction costs
Interest paid on lease liabilities
Repayment of principal element of lease liabilities
Ordinary dividends paid

Net cash used in financing activities

Net increase/(decrease) in cash and cash equivalents
Foreign exchange revaluations
Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

2023
52 weeks
£’m

2022
53 weeks
£’m

Note

3
3

21
21

5
15

192.7
6.1

198.8

29.8
49.3

0.3
—
4.8

283.0
12.0
(1.6)
(14.6)

(4.2)
(38.2)

240.6

(0.4)
(21.4)
—
1.1

(20.7)

2.4
(7.0)
139.0
(116.0)
(2.2)
(5.3)
(52.0)
(163.3)

(204.4)

15.5
0.6
30.2

46.3

212.8
4.9

217.7

30.5
48.6

0.3
(0.1)
4.8

301.8
(40.3)
(7.7)
33.2

(14.8)
(35.2)

251.8

(0.7)
(23.3)
(17.7)
0.1

(41.6)

3.9
(28.3)
85.0
(31.0)
(2.2)
(4.8)
(50.2)
(282.1)

(309.7)

(99.5)
1.1
128.6

30.2

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Consolidated Statement of Changes in Equity
For the 52 weeks ended 1 July 2023

Issued share
capital
£’m

Note

Share
premium
account
£’m

Capital
redemption
reserve
£’m

Hedging
reserve
£’m

Retained
earnings
£’m

As at 27 June 2021
Profit for the period
Movement in fair value of cash flow hedges
Deferred tax on hedging movements

Total comprehensive income for the period

Proceeds from issue of shares
Proceeds from issue of treasury shares
Purchase of treasury shares
Share-based payments
Deferred tax on share-based payments
Current tax on share options exercised
Movement on cash flow hedges
transferred to inventory
Ordinary dividends paid

Total transactions with owners, recorded
directly in equity

As at 2 July 2022
Profit for the period
Movement in fair value of cash flow hedges
Deferred tax on hedging movements

Total comprehensive income for the period

Proceeds from issue of treasury shares
Purchase of treasury shares
Share-based payments
Deferred tax on share-based payments
Current tax on share options exercised
Movement on cash flow hedges
transferred to inventory
Ordinary dividends paid

Total transactions with owners, recorded
directly in equity

17
12

20
21
21
22
12

17
7

17
12

21
21
22
12

17
7

2.0
—
—
—

—

—
—
—
—
—
—

—
—

—

2.0
—
—
—

—

—
—
—
—
—

—
—

—

1.6
—
—
—

—

0.1
—
—
—
—
—

—
—

0.1

1.7
—
—
—

—

—
—
—
—
—

—
—

—

43.2
—
—
—

—

—
—
—
—
—
—

—
—

—

43.2
—
—
—

—

—
—
—
—
—

—
—

—

As at 1 July 2023

2.0

1.7

43.2

Total equity
attributable
to equity
holders of
the Parent
£’m

281.2
171.2
32.4
(5.3)

198.3

0.1
3.9
(28.3)
4.8
0.8
2.2

(4.3)
—
32.4
(5.3)

27.1

—
—
—
—
—
—

238.7
171.2
—
—

171.2

—
3.9
(28.3)
4.8
0.8
2.2

(2.6)
—

—
(282.1)

(2.6)
(282.1)

(2.6)

20.2
—
(14.0)
6.6

(7.4)

—
—
—
—
—

(19.7)
—

(19.7)

(6.9)

(298.7)

(301.2)

111.2
151.9
—
—

151.9

2.4
(7.0)
4.8
(3.1)
0.6

—
(163.3)

(165.6)

97.5

178.3
151.9
(14.0)
6.6

144.5

2.4
(7.0)
4.8
(3.1)
0.6

(19.7)
(163.3)

(185.3)

137.5

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135

FINANCIAL STATEMENTS

Consolidated Accounting Policies
For the 52 weeks ended 1 July 2023

General information
The Group financial statements
consolidate those of Dunelm Group
plc (‘the Company’) and its subsidiaries
(together referred to as ‘the Group’).
The Company financial statements on
pages 164 to 171 present information
about the Company as a separate
entity and not about its Group.

Dunelm Group plc and its subsidiaries
are incorporated and domiciled in
the UK. Dunelm Group plc is a listed
public company, limited by shares and
the Company registration number
is 04708277. The registered office
is Dunelm Store Support Centre,
Watermead Business Park, Syston,
Leicester, Leicestershire, England,
LE7 1AD.

The primary business activity of the
Group is the sale of homewares in the
UK in stores and online.

Basis of preparation
The financial statements presented
cover a 52-week trading period for
the financial period ended 1 July 2023
(2022: 53-week period ended
2 July 2022).

The financial statements of Dunelm
Group plc have been prepared
in accordance with UK-adopted
International Accounting Standards
and with the requirements of the
Companies Act 2006 as applicable
to companies reporting under those
standards. These financial statements
are presented on pages 132 to 163.

The accounting policies set out below
have, unless otherwise stated, been
applied consistently to all periods
presented in these Group financial
statements.

The annual financial statements are
prepared under the historical cost
convention except for financial assets
and financial liabilities (including
derivative financial instruments and
share-based payments), which have
been stated at fair value. The financial
statements are prepared in pounds
sterling, rounded to the nearest
0.1 million.

Going concern
At the time of approving the financial
statements, the Board of Directors is
required to formally assess that the
business has adequate resources to
continue in operational existence and
as such can continue to adopt the
‘going concern’ basis of accounting.
To support this assessment, the Board
is required to consider the Group’s
current financial position, its
strategy, the market outlook,
and its principal risks.

The key judgement that the Directors
have considered in forming their
conclusion is the potential impact on
future revenue, profits and cash flows
of a downturn in consumer spending
away from homewares, due to the
current economic environment. This
scenario might result in no growth
in Year 1 and lower sales and margin
across all channels throughout the
five-year review period. They have
also considered a deeper downturn
in consumer spending away from
homewares, resulting in negative
growth in Year 1 and lower sales and
margin across all channels throughout
the review period.

In both downside scenarios Dunelm
has sufficient liquidity to continue
trading, including maintaining the
payment of dividends in line with its
dividend policy, and to comfortably
meet its financial covenants. The
Directors continue to assess the
risks that climate change poses to
the business and climate change is
not expected to have a significant
impact on the Group’s going concern
assessment or on the viability of the
Group over the next five years.

Reverse stress modelling has
demonstrated that a prolonged sales
reduction of 23% in FY24 and 28% in
FY25 is required to breach covenants
by the end of FY25 and a reduction of
47% in both FY24 and FY25 is required
to breach the RCF limit by the end of
FY25, assuming reasonable mitigating
actions have been implemented.
Even in such an event, management
would follow a similar course of
action to that initially undertaken
during the recent Covid-19 pandemic.

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Such actions could include further
reductions in discretionary spend
(e.g. marketing and travel) and capital
investment in new stores and refits,
and reducing headcount.

As a result, the Board believes that
the Group is well placed to manage
its financing and other significant risks
satisfactorily and that the Group will be
able to operate within the level of its
facilities and meet its liabilities as they
fall due, for at least the next five years.
For this reason, the Board considers it
appropriate for the Group to adopt the
going concern basis in preparing its
financial statements.

Further detail in respect of the
Directors’ going concern assessment
is included in the going concern
statement on page 55.

Further information regarding the
Group’s business activities, together
with the factors likely to affect its
future development, performance
and position is set out in the Strategic
Report on pages 1 to 55. In addition,
note 17 includes the Group’s
objectives, policies, and processes
for managing its capital, its financial
risk management objectives and
its exposures to credit risk and
liquidity risk.

Use of estimates and
judgements
Based on the IAS 1 definitions, there
are no significant estimates or critical
judgements used in the Financial
Statements. The inventory provision is
not considered a significant estimate
as there is not a significant risk of a
material adjustment to the level of
the provision in the next 12 months.
Management does, however, consider
the inventory provision to be a key
estimate as it is based on assumptions
relating to a highly material balance
(gross inventory) and is subject to
uncertainty. It is therefore disclosed as
an other estimate in line with IAS 1.

Inventory provisions
The Group provides against the
carrying value of the inventories
held where it is anticipated that net
realisable value (NRV) will be below
cost. NRV is based on estimated selling
price with future price reductions
assumed to be in line with historic
margin analysis on a line-by-line
basis and applied to the inventory
population as deemed appropriate
given the expected sell through period
and discontinuation status. A 100 basis
points change in the provision rate of
each stock discontinuation category
would lead to a change in the provision
of £1.9m (2022: £2.0m). Consideration
is also given to whether any stock
categories require additional provision
due to specific circumstances in place
at the period end date.

Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by
the Company. The financial statements
of subsidiaries are included in the
Consolidated Financial Statements
from the date that control commences
until the date that control ceases.

Transactions eliminated on
consolidation
Intra-group balances, and any
unrealised gains and losses or income
and expenses arising from intra-
group transactions, are eliminated in
preparing the Consolidated Financial
Statements. Consistent accounting
policies have been adopted across
the Group.

Revenue
Revenue is generated from the sale
of homewares and related goods
and services through the Group’s
stores and website, excluding sales
between Group companies, and is
after deducting returns, relevant
discounts and VAT. Revenue is
recognised when the Group has
satisfied its performance obligations
to its customers and the customer has
obtained control of the goods and
services being transferred.

In general, these conditions for store
sales are met at the point of sale. The
exceptions to this are custom-made
products and Click & Collect sales,
where revenue is recognised at the
point that the goods are collected,
and gift cards, where revenue is
deferred and subsequently recognised
when redeemed or expired. Gift card
obligations are recognised as deferred
income as shown in note 16. An
estimate of breakage is made on the
sale of gift cards based on historical
data and recognised at the point of
sale of the card. Revenue on home
delivery sales is recognised at the
point of delivery. Revenue is settled
in cash at the point of sale for all
revenue channels.

The Group has two types of products;
stocked products and products
which are sent directly from suppliers
to customers. Management has
established that the Group acts as a
principal for both types of products
and thus should recognise revenue as
the gross amount of consideration to
which it expects to be entitled.

The Group holds a sales return
provision in the Consolidated
Statement of Financial Position to
provide for expected levels of returns
on sales made before the period end
but returned after the period end. The
Group recognises the expected value
of revenue relating to returns within
sales provisions and the expected value
of cost of sales relating to the returned
items is included within inventories.

Expenses
Financial income and expenses
Financial income and expenses
comprise interest payable on
borrowings calculated using the
effective interest method, interest
receivable on funds invested and
related foreign exchange gains
and losses.

Retirement benefits
The Group operates a defined
contribution pension plan using a
third-party provider. Obligations
for the contributions to this plan are
recognised as an expense in the
Consolidated Income Statement
as incurred.

Share-based payments
The Group operates a number
of equity-settled, share-based
compensation plans, under which
the entity receives services from
employees as consideration for
equity instruments (options) of the
Group. The fair value of the employee
services received in exchange for the
grant of the options is recognised as
an expense. The total amount to be
expensed is determined by reference
to the fair value of the options granted:

•

Including any market performance
condition (for example, an entity’s
share price);

• Excluding the impact of any service

and non-market performance
vesting conditions (for example,
profitability, sales growth targets
and remaining an employee of the
entity over a specified time period);
and

•

Including the impact of any non-
vesting conditions (for example, the
requirement for employees to save).

Non-market performance and service
conditions are included in assumptions
about the number of options that are
expected to vest. The total expense is
recognised over the vesting period,
which is the period over which all of
the specified vesting conditions are
to be satisfied.

In addition, in some circumstances
employees may provide services
in advance of the grant date and
therefore the grant date fair value
is estimated for the purposes of
recognising the expense during
the period between service
commencement period and
grant date.

At the end of each reporting period,
the Group revises its estimates of the
number of options that are expected to
vest based on the non-market vesting
conditions. It recognises the impact of
the revision to original estimates, if any,
in the Consolidated Income Statement,
with a corresponding adjustment
to equity.

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Consolidated Accounting Policies continued

When options are exercised, the
Company either issues new shares,
or uses treasury shares purchased for
this purpose. For newly issued shares,
the proceeds received net of any
directly attributable transaction costs
are credited to share capital (nominal
value) and the share premium account.

Social security contributions payable
in connection with the grant of the
share options are considered an
integral part of the grant itself, and the
charge will be treated as a cash-settled
transaction.

Foreign currencies
Transactions in foreign currencies
are recorded at the prevailing rate at
the date of the transaction. Monetary
assets and liabilities denominated
in foreign currency are translated at
the rates ruling at the Consolidated
Statement of Financial Position date.
Resulting exchange gains or losses
are recognised in the Consolidated
Income Statement for the period in
financial income and expenses, except
when deferred as qualifying cash
flow hedges.

Taxation
Tax on the profit or loss for the period
comprises current and deferred tax.
Tax is recognised in the Consolidated
Income Statement except to the extent
that it relates to items recognised
directly in equity, in which case it is
recognised in equity.

Current tax represents the expected
tax payable on the taxable income for
the period, using tax rates enacted
or substantively enacted at the
Consolidated Statement of Financial
Position date, together with any
adjustment to tax payable in respect
of previous periods.

Deferred tax is provided using the
Statement of Financial Position liability
method, providing for temporary
differences between the carrying
amounts of assets and liabilities for
financial reporting purposes and the
amounts used for taxation purposes.
Deferred tax is determined using
tax rates (and laws) that have been
enacted or substantively enacted

at the Consolidated Statement
of Financial Position date and are
expected to apply when the related
deferred tax asset is realised, or the
deferred tax liability is settled.

A deferred tax asset is recognised
only to the extent that it is probable
that future taxable profits will be
available against which the asset can
be recognised.

Deferred income tax assets and
liabilities are offset when there is a
legally enforceable right to offset
current tax assets against current
tax liabilities and when they relate
to income taxes levied by the same
taxation authority on either the taxable
entity or different taxable entities
where there is an intention to settle the
balances on a net basis.

Dividends
Dividends are recognised as a
liability in the period in which they
are approved such that the Group is
obligated to pay the dividend.

Intangible assets
Intangible assets comprise software
development, licences, rights to
brands and customer lists and are
stated at cost less accumulated
amortisation and impairment. Costs
incurred in developing the Group’s
own brands are expensed as incurred.

Separately acquired brands
and customer lists are shown at
historical cost. Software, brands and
customer lists acquired in a business
combination are recognised at fair
value at the acquisition date. These
assets are deemed to have a finite
useful life and are carried at cost
less accumulated amortisation.
Amortisation is calculated using the
straight-line method to allocate the
cost over the estimated useful life.

Acquired computer software licences
are capitalised on the basis of the costs
incurred to acquire and bring to use
the specific software. These costs are
amortised over their estimated
useful lives.

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Costs associated with maintaining
computer software programmes are
recognised as an expense as incurred.
Development costs that are directly
attributable to the design and testing
of identifiable and unique software
products controlled by the Group are
recognised as intangible assets when
the following criteria are met:

•

It is technically feasible to complete
the software product so that it will
be available for use;

• Management intends to complete
the software product and use or
sell it;

• There is an ability to use or sell the

software product;

•

It can be demonstrated how the
software product will generate
probable future economic benefits;

• Adequate technical, financial and
other resources to complete the
development and to use or sell the
software product are available; and

• The expenditure attributable

to the software product during
its development can be reliably
measured.

Other development expenditures
that do not meet these criteria are
recognised as an expense as incurred.

Computer software development costs
recognised as assets are amortised
over their estimated useful lives.

Amortisation
Amortisation is charged to the
Consolidated Income Statement on a
straight-line basis over the estimated
useful life of the asset. These are as
follows:

Software development
and licences

Rights to brands and
customer lists

3 to 5 years

5 to 15 years

Property, plant
and equipment
Owned assets
Items of property, plant and equipment
are stated at historical cost less
accumulated depreciation and
impairment losses. Cost includes the
original purchase price of the asset
and the costs attributable to bringing
the asset to its working condition for
intended use.

Where parts of an item of property,
plant and equipment have different
useful lives, they are accounted for as
separate items of property, plant and
equipment.

Depreciation
Depreciation is charged to the
Consolidated Income Statement on a
straight-line basis over the estimated
useful lives of each part of an item of
property, plant and equipment, to
write down the cost to its estimated
residual value. Land is not depreciated.

The estimated useful lives are as
follows:

Freehold buildings
Leasehold
improvements

50 years
over the
remaining period
of the lease,
or useful life
if shorter

Fixtures, fittings,
and equipment

3 to 5 years

The assets’ residual values and useful
lives are reviewed and adjusted
if appropriate at the end of each
reporting period. An asset’s carrying
amount is written down immediately
to its recoverable amount if the asset’s
carrying amount is greater than its
estimated recoverable amount.

Leases
Lease recognition
At the inception of a contract, the
Group assesses whether a contract
is, or contains, a lease. A contract is,
or contains, a lease if it conveys the
right to control the use of an identified
asset for a period of time in exchange
for consideration. To assess whether
a contract conveys the right to control
the use of an identified asset, the
Group uses the definition of a lease
in IFRS 16.

Right-of-use assets
The Group recognises right-of-use
assets at the commencement date
of the lease. Right-of-use assets are
measured at cost, less accumulated
depreciation and impairment losses
and adjusted for any remeasurement
of lease liabilities. The cost of right-
of-use assets includes the amount of
lease liabilities recognised, adjusted
for any lease payments made at or
before the commencement date, less
any lease incentives received. Right-
of-use assets are depreciated over
the shorter of the asset’s useful life or
the lease term on a straight-line basis.
Right-of-use assets are subject to, and
reviewed regularly for, impairment.
Depreciation of right-of-use assets
is included in operating costs in the
Consolidated Income Statement.

Lease liabilities
At the commencement date of the
lease, the Group recognises lease
liabilities measured at the present
value of the lease payments to be
made over the lease term. Lease
payments include fixed payments less
any lease incentives receivable.

In calculating the present value of
lease payments, the Group uses its
incremental borrowing rate at the
lease commencement date if the
interest rate implicit in the lease
is not readily determinable. The
carrying amount of lease liabilities is
remeasured if there is a modification,
a change in the lease term or a change
in the fixed lease payments. Interest
charges are included in finance costs in
the Consolidated Income Statement.

Short-term leases and leases
of low-value assets
The Group has elected not to
recognise right-of-use assets and
lease liabilities for short-term leases of
machinery and equipment that have a
lease term of less than 12 months and
leases of low-value assets (defined
as assets with a value, when new,
of £5,000 or less). Lease payments
relating to short-term leases and leases
of low-value assets are recognised
as an expense on a straight-line basis
over the lease term.

Subsequent measurement
The lease liability and right-of-use
asset is subsequently remeasured to
reflect changes in:

• The lease term (using a revised

discount rate);

• The assessment of a purchase

option (using a revised discount
rate); and

• Future lease payments resulting

from a change in an index, or a rate
used to determine those payments
(using an unchanged discount rate).

Lease modifications may also prompt
remeasurement of the lease liability
unless they are determined to be
separate leases.

The payments related to leases are
presented under cash flow from
financing activities in the Consolidated
Cash Flow Statement.

Financial instruments
Recognition and measurement
At initial recognition, the Group
measures a financial asset at its fair
value plus, in the case of a financial
asset not at fair value through profit or
loss (FVPL), transaction costs that are
directly attributable to the acquisition
of the financial asset. Transaction costs
of financial assets carried at FVPL are
expensed in the Consolidated Income
Statement.

Financial assets with embedded
derivatives are considered in their
entirety when determining whether
their cash flows are solely payment
of principal and interest.

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Consolidated Accounting Policies continued

Subsequent measurement of debt
instruments depends on the Group’s
business model for managing the asset
and the cash flow characteristics of
the asset. There are two measurement
categories into which the Group
classifies its debt instruments:

• Amortised cost: Assets that are

Certain derivative financial instruments
are designated as hedges in line
with the Group’s treasury policy.
These are instruments that hedge
exposure to variability in cash flows
that is attributable to a particular risk
associated with a highly probable
forecasted transaction.

held for collection of contractual
cash flows where those cash flows
represent solely payments of
principal and interest are measured
at amortised cost. Interest income
from these financial assets is
included in finance income
using the effective interest rate
method. Any gain or loss arising
on derecognition is recognised
directly in the Consolidated Income
Statement and presented in other
gains/(losses) together with foreign
exchange gains and losses.

• FVPL: All other financial assets
that do not meet the criteria for
amortised cost are measured at
FVPL, unless the Group has made
an irrevocable election at the time
of initial recognition to account for
the equity investment at fair value
through other comprehensive
income (FVOCI). A gain or loss
on a debt investment that is
subsequently measured at FVPL
is recognised in the Consolidated
Income Statement in the period in
which it arises.

Impairment of financial assets
The Group uses a forward-looking
approach to assess the expected
credit losses associated with its debt
instruments carried at amortised cost.
The impairment methodology applied
depends on whether there has been a
significant increase in credit risk.

Derivatives
Derivative financial instruments
used are forward foreign exchange
contracts. These are measured at fair
value. The fair values are determined
by reference to the market prices
available from the market on which the
instruments are traded.

Any gains or losses arising from
changes in fair value derivative
financial instruments not designated
as hedges are recognised in the
Consolidated Income Statement.

The effective portion of changes in
the fair value of derivatives that are
designated and qualify as cash flow
hedges is recognised in the cash flow
hedge reserve within equity. The
gain or loss relating to the ineffective
portion is recognised immediately in
the Consolidated Income Statement,
within operating costs.

When option contracts are used to
hedge forecast transactions, the
Group designates only the intrinsic
value of the options as the hedging
instrument.

Gains or losses relating to the effective
portion of the change in intrinsic
value of the options and time value of
options are recognised in the cash flow
hedge reserve within equity.

When forward contracts are used
to hedge forecast transactions, the
Group designates the full change
in fair value of the forward contract
(including forward points) as the
hedging instrument. The gains or
losses relating to the effective portion
of the change in fair value of the entire
forward contract are recognised in the
cash flow hedge reserve within equity.

Amounts accumulated in equity are
reclassified in the periods when the
hedged item affects profit or loss.
Where the hedged item subsequently
results in the recognition of a non-
financial asset (such as inventory), both
the deferred hedging gains and losses
and the deferred time value of the
option contracts or deferred forward
points, if any, are included within the
initial cost of the asset. The deferred

amounts are ultimately recognised in
the Consolidated Income Statement as
the hedged item affects profit or loss
(for example, through cost of sales).

When a hedging instrument expires, or
is sold or terminated, or when a hedge
no longer meets the criteria for hedge
accounting, any cumulative deferred
gain/loss and deferred costs of
hedging in equity at that time remain
in equity until the forecast transaction
occurs, resulting in the recognition of
a non-financial asset such as inventory.
When the forecast transaction is
no longer expected to occur, the
cumulative gain/loss and deferred
costs of hedging that were reported in
equity are immediately reclassified to
the Consolidated Income Statement.

Offsetting financial instruments
Financial assets and liabilities are
offset, and the net amount reported
in the Consolidated Statement of
Financial Position when there is a
legally enforceable right to offset
the recognised amounts and there
is an intention to settle on a net
basis or realise the asset and settle
the liability simultaneously. The
legally enforceable right must not be
contingent on future events and must
be enforceable in the normal course
of business and in the event of default,
insolvency or bankruptcy of the Group
or the counterparty.

Trade and other receivables
Trade and other receivables are
initially recognised at fair value and
then carried at amortised cost using
the effective interest method, net of
impairment provisions.

Inventories
Inventories are stated at the lower of
cost and net realisable value. Cost is
derived using the average cost method
and includes costs incurred in bringing
the inventories to their present location
and condition. Net realisable value is
the estimated selling price less cost to
sell in the ordinary course of business.
Provisions are made for obsolete, slow-
moving or discontinued stock and for
stock losses.

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Cash and cash equivalents
Cash and cash equivalents comprise
cash balances including credit card
receipts and deposits. All cash
equivalents have an original maturity
of three months or less.

Trade and other payables
Trade and other payables are
recognised initially at their fair value
and subsequently measured at
amortised cost using the effective
interest rate method.

Bank borrowings and
borrowing costs
Interest-bearing bank loans are
initially recorded at their fair value
and subsequently held at amortised
cost. Transaction costs incurred are
amortised over the term of the loan.

Borrowings are classed as current
liabilities unless the Group has an
unconditional right to defer settlement
of the liability for at least 12 months
from the Consolidated Statement of
Financial Position date.

Impairment of
non-financial assets
The carrying amounts of the Group’s
assets are reviewed annually at each
Consolidated Statement of Financial
Position date to determine whether
there is any indication of impairment.
If any such indication exists, the asset’s
recoverable amount is estimated.

The recoverable amount is the greater
of fair value less costs of disposal
and value in use. In assessing value in
use, the estimated future cash flows
are discounted to their present value
using a pre-tax discount rate that
reflects current market assessments
of the time-value of money and the
risks specific to the asset. For an
asset that does not generate largely
independent cash inflows, the
recoverable amount is determined for
assets grouped at the lowest levels for
which there are largely independent
cash flows, i.e. the cash-generating
unit to which the asset belongs.

An impairment loss is recognised
whenever the carrying amount of
an asset or its cash-generating unit
exceeds the recoverable amount. A
cash-generating unit has been defined
as an individual store or the online
business. If an impairment loss is
identified for a cash-generating unit,
the loss shall be allocated to reduce
the carrying amount of the assets
of the unit pro-rated on the basis of
the carrying amount of each asset in
the unit for both property, plant and
equipment and right-of-use assets.
Impairment losses are recognised in
the Consolidated Income Statement.

Share capital
Where the Group purchases its own
equity share capital (treasury shares),
the consideration paid, including
any directly attributable incremental
costs, is deducted from equity
attributable to the Group’s equity
holders until the shares are cancelled
or reissued. Where such shares are
subsequently sold or reissued, any
consideration received net of any
directly attributable incremental
transaction costs and the related
income tax effects, is included in
equity attributable to the Group’s
equity holders.

Provisions
A provision is recognised in the
Consolidated Statement of Financial
Position when the Group has a current
legal or constructive obligation
as a result of a past event and it is
probable that an outflow of economic
benefits will be required to settle the
obligation, and the amount has been
reliably measured.

A provision for onerous contracts is
recognised when the expected benefit
to be derived by the Group from a
contract is lower than the unavoidable
costs of meeting its obligations under
the contract.

A dilapidations provision is recognised
when there is an expectation of future
obligations relating to the maintenance
of leasehold properties arising from
events such as lease renewals or
terminations.

Climate change
Climate change risks including the
impact of achieving the Group’s
carbon emissions reduction targets
and the risks identified in the TCFD
disclosures on pages 40 to 47 have
been considered and assessed in
the preparation of the Consolidated
Financial Statements for the period to
1 July 2023.

There has been no material impact
identified on the financial reporting
judgements and estimates applied
in the preparation of the Group’s
Consolidated Financial Statements as a
result of climate change risks.

Given that the identified risks of
climate change are expected to be
present in the medium to long term
our focus has been on the non-current
assets within the Consolidated
Statement of Financial Position.
Specifically, for the material non-
current assets, we note the following:

• The plant, property and equipment,
and the right-of-use assets have
relatively short useful lives (the
average remaining lease term of our
leasehold land and buildings is 5.0
years (2022: 5.2 years)). The longer
life assets relate to freehold stores
and our head office, none of which
are located in areas identified as
being at significant risk to climate
change.

• The intangible assets, which consist
of a brand, internally generated and
other software, have a useful life of
3 to 5 years and therefore we would
not expect the identified risks to
impact these assets.

The other non-current assets were also
reviewed, and no risk was identified.
Current assets, by their nature, are
expected to be fully utilised within
the business in the short term and no
climate risk has been identified in this
time horizon.

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Consolidated Accounting Policies continued

New standards and
interpretations
The Group has applied the following
new standards and interpretations for
the first time for the annual reporting
period commencing 3 July 2022:

• Amendments to IAS 37: Onerous
Contracts – Cost of Fulfilling a
Contract.

• Amendments to IFRS 3: Reference
to the Conceptual Framework.

• Amendments to IAS 16: Property,
Plant and Equipment – Proceeds
before Intended Use.

• Annual Improvements to IFRS
Standards 2018-2020 Cycle:
Amendments to IFRS 1 First-time
Adoption of International Financial
Reporting Standards, IFRS 9
Financial Instruments, IFRS 16
Leases and IAS 41 Agriculture.

The adoption of the standards and
interpretations listed above has not
led to any changes to the Group’s
accounting policies or had any other
material impact on the financial
position or performance of the Group.

New accounting standards in
issue but not yet effective
New standards and interpretations that
are in issue, but not yet effective, are
listed below:

•

IFRS 17 Insurance Contracts.

• Amendments to IAS 1: Classification

of Liabilities as Current or Non-
Current.

• Amendments to IAS 1 and IFRS

Practice Statement 2: Disclosure of
Accounting Policies.

• Amendments to IAS 8: Definition of

Accounting Estimates.

• Amendments to IAS 12: Deferred

Tax Related to Assets and Liabilities
arising from a Single Transaction.

• Amendments to IFRS 10 and IAS

28: Sale or Contribution of Assets
between an Investor and its
Associate or Joint Venture.

The adoption of the above standards
and interpretations is not expected
to lead to any changes to the Group’s
accounting policies nor have any
other material impact on the financial
position or performance of the Group.

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Dunelm Group plc Annual Report and Accounts 2023

Notes to the Consolidated Financial Statements
For the 52 weeks ended 1 July 2023

1. Revenue
The Group has one reportable segment, in accordance with IFRS 8 Operating Segments, which is the retail of homewares in
the UK.

Customers access the Group’s offer across multiple channels and their journey often involves more than one channel.
Therefore, internal reporting focuses on the Group as a whole and does not identify individual segments.

The Chief Operating Decision-maker is the Executive Board of Directors of Dunelm Group plc. The Executive Board reviews
internal management reports on a monthly basis and performance is assessed based on a number of financial and non-
financial KPIs as well as on profit before taxation. The list of our financial and non-financial KPIs can be found on pages
20 to 21.

Management believes that these measures are the most relevant in evaluating the performance of the Group and for making
resource allocation decisions.

All material operations of the Group are carried out in the UK. The Group’s revenue is driven by the consolidation of
individual small value transactions and as a result, Group revenue is not reliant on a major customer or group of customers.

At the year end the Group had £13.8m (2022: £12.2m) of sales orders placed that will be recognised in the Consolidated
Income Statement when the goods are despatched in the following financial year.

2. Operating costs

Selling and distribution costs
Administrative expenses

3. Operating profit
Operating profit is stated after charging/(crediting) the following items:

Cost of inventories included in cost of sales
Amortisation of intangible assets
Depreciation of owned property, plant and equipment
Depreciation of right-of-use assets
Loss on disposal and impairment of property, plant and equipment and intangible assets
Gain on disposal and impairment of right-of-use assets
Expense related to short-term leases

2023
52 weeks
£’m

489.7
132.4

622.1

2022
53 weeks
£’m

469.4
122.3

591.7

2023
52 weeks
£’m

2022
53 weeks
£’m

803.4
4.6
25.2
49.3
0.3
—
1.6

765.3
6.2
24.3
48.6
0.3
(0.1)
0.6

The cost of inventories included in cost of sales includes the impact of a net decrease in the provision for obsolete
inventory of £0.8m (2022: £4.2m increase) of which £0.7m decrease relates to Sunflex which was acquired in May 2022
(2022: £2.6m increase).

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Notes to the Consolidated Financial Statements continued

3. Operating profit continued

The analysis of the auditor’s remuneration is as follows:

Fees payable to the Group’s auditor for the audit of the Parent and consolidated annual
financial statements
Fees payable to the Group’s auditor and its associates for other services to the Group
– Audit of the Company’s subsidiaries pursuant to legislation
– Other assurance services (See Audit and Risk Committee report on page 83 for

further information)

4. Employee numbers and costs
The average monthly number of people employed by the Group (including Directors) was:

Selling
Distribution
Administration

2023
52 weeks
Number
of heads

9,446
1,057
1,099

11,602

2023
52 weeks
Full-time
equivalents

5,252
1,026
1,082

7,360

The aggregate remuneration of all employees (including Directors) comprises:

Wages and salaries (including termination benefits)
Social security costs
Share-based payment expense
Pension costs – defined contribution plans

2023
52 weeks
£’000

2022
53 weeks
£’000

293

256

2022
53 weeks
Number
of heads

9,544
963
925

11,432

2023
52 weeks
£’m

224.8
16.1
4.8
6.2

251.9

2022
53 weeks
Full-time
equivalents

5,437
930
906

7,273

2022
53 weeks
£’m

211.1
14.4
4.8
5.2

235.5

Details of Directors’ remuneration, share options, long-term incentive schemes and pension entitlements are disclosed in the
Remuneration Committee report on pages 88 to 118 and in the Related Parties note on page 163.

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Dunelm Group plc Annual Report and Accounts 2023

5. Financial income and expenses

Financial income
Interest on bank deposits
Net foreign exchange gains

Financial expenses
Interest on bank borrowings
Amortisation of issue costs of bank loans
Interest on lease liabilities

Net financial expense

6. Taxation

Current taxation
UK corporation tax charge for the period
Adjustments in respect of prior periods

Deferred taxation
Origination of temporary differences
Adjustments in respect of prior periods
Impact of change in tax rate

Total tax expense

The tax expense is reconciled with the standard rate of UK corporation tax as follows:

Profit before taxation
UK corporation tax at standard rate of 20.5% (2022: 19.0%)
Factors affecting the charge in the period:

Non-deductible expenses
Adjustments in respect of prior periods
Impact of change in tax rate

Tax expense

2023
52 weeks
£’m

2022
53 weeks
£’m

1.1
0.6

1.7

(2.2)
(0.3)
(5.3)

(7.8)

(6.1)

0.1
1.1

1.2

(0.9)
(0.4)
(4.8)

(6.1)

(4.9)

2023
52 weeks
£’m

2022
53 weeks
£’m

40.0
0.1

40.1

0.7
0.1
(0.1)

0.7

40.8

39.0
(0.2)

38.8

3.0
(0.2)
—

2.8

41.6

2023
52 weeks
£’m

192.7
39.5

1.2
0.2
(0.1)

40.8

2022
53 weeks
£’m

212.8
40.4

1.6
(0.4)
—

41.6

The taxation expense for the period as a percentage of profit before tax is 21.2% (2022: 19.5%).

The UK Government substantively enacted an increase in the corporation tax rate to 25.0% effective from 1 April 2023.
The deferred tax asset as at 1 July 2023 has been calculated based on the rate of 25.0%.

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Notes to the Consolidated Financial Statements continued

7. Dividends
The dividends set out in the table below relate to the 1 pence Ordinary Shares:

Special dividend for the period ended 26 June 2021
Final dividend for the period ended 26 June 2021
Interim dividend for the period ended 2 July 2022
Special dividend for the period ended 2 July 2022
Final dividend for the period ended 2 July 2022
Interim dividend for the period ended 1 July 2023
Special dividend for the period ended 1 July 2023

– paid 65.0 pence
– paid 23.0 pence
– paid 14.0 pence
– paid 37.0 pence
– paid 26.0 pence
– paid 15.0 pence
– paid 40.0 pence

2023
52 weeks
£’m

2022
53 weeks
£’m

—
—
—
—
52.4
30.2
80.7

163.3

131.9
46.8
28.3
75.1
—
—
—

282.1

The Board is proposing a final dividend of 27 pence per Ordinary Share for the period ended 1 July 2023 which equates to
£54.5m. Subject to shareholder approval at the AGM this will be paid on 20 November 2023 to shareholders on the register
at the close of business on 27 October 2023.

8. Earnings per Ordinary Share
Basic earnings per share is calculated by dividing the profit for the period attributable to equity holders of the Company by
the weighted average number of Ordinary Shares in issue during the period, excluding Ordinary Shares purchased by the
Company and held as treasury shares (note 21).

For diluted earnings per share, the weighted average number of Ordinary Shares in issue is adjusted to assume conversion
of all dilutive potential Ordinary Shares. These represent share options granted to employees where the exercise price is less
than the average market price of the Group’s Ordinary Shares during the period.

Weighted average numbers of shares:

Weighted average number of shares in issue during the period
Impact of share options

Number of shares for diluted earnings per share

Profit for the period

Earnings per Ordinary Share – basic
Earnings per Ordinary Share – diluted

2023
52 weeks
‘000

201,917
746

202,663

2023
52 weeks
£’m

151.9

75.2p
75.0p

2022
53 weeks
‘000

202,722
2,135

204,857

2022
53 weeks
£’m

171.2

84.5p
83.6p

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Dunelm Group plc Annual Report and Accounts 2023

9. Intangible assets

Cost
At 27 June 2021
Additions
Acquisition through business combination
Disposals

At 2 July 2022
Additions
Disposals

At 1 July 2023

Accumulated amortisation
At 27 June 2021
Charge for the financial period
Disposals

At 2 July 2022
Charge for the financial period
Disposals

At 1 July 2023

Net book value
At 27 June 2021
At 2 July 2022

At 1 July 2023

Software
development
and licences
£’m

Rights to brands
and customer
lists
£’m

52.0
0.9
—
(0.3)

52.6
0.1
(0.7)

52.0

37.2
6.2
(0.2)

43.2
4.5
(0.6)

47.1

14.8
9.4

4.9

11.0
—
0.5
—

11.5
—
—

11.5

11.0
—
—

11.0
0.1
—

11.1

—
0.5

0.4

Total
£’m

63.0
0.9
0.5
(0.3)

64.1
0.1
(0.7)

63.5

48.2
6.2
(0.2)

54.2
4.6
(0.6)

58.2

14.8
9.9

5.3

All amortisation is included within operating costs in the Consolidated Income Statement.

There was no trigger for impairment in the period.

Within software development and licences there were no additions (2022: nil) related to internally generated assets.

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Notes to the Consolidated Financial Statements continued

10. Property, plant and equipment

Cost
At 27 June 2021
Transfer
Additions
Acquisition through business combination
Disposals

At 2 July 2022
Transfer
Additions
Disposals

At 1 July 2023

Accumulated depreciation
At 27 June 2021
Transfer
Charge for the financial period
Disposals

At 2 July 2022
Transfer
Charge for the financial period
Disposals

At 1 July 2023

Net book value
At 27 June 2021
At 2 July 2022

At 1 July 2023

Freehold land
and buildings
£’m

Leasehold
improvements
£’m

Fixtures, fittings
and equipment
£’m

97.7
—
0.1
9.2
—

107.0
—
—
—

107.0

18.1
—
1.8
—

19.9
0.1
1.8
—

21.8

79.6
87.1

85.2

157.7
1.2
13.3
0.1
(8.3)

164.0
0.2
10.2
(7.2)

167.2

91.9
(0.5)
14.4
(8.1)

97.7
0.1
14.3
(7.0)

105.1

65.8
66.3

62.1

124.2
(1.2)
12.6
0.3
(3.7)

132.2
(0.2)
11.4
(3.1)

140.3

107.0
0.5
8.1
(3.7)

111.9
(0.2)
9.1
(3.1)

117.7

17.2
20.3

22.6

Total
£’m

379.6
—
26.0
9.6
(12.0)

403.2
—
21.6
(10.3)

414.5

217.0
—
24.3
(11.8)

229.5
—
25.2
(10.1)

244.6

162.6
173.7

169.9

All depreciation charges have been included within operating costs in the Consolidated Income Statement.

There was no trigger for impairment in the period.

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Dunelm Group plc Annual Report and Accounts 2023

11. Leases
Right-of-use assets included in the Consolidated Statement of Financial Position at 1 July 2023 were as follows:

At the beginning of the period
Additions
Disposals
Depreciation

At the end of the period

2023
Land and
buildings
£’m

240.4
20.3
(0.1)
(45.1)

215.5

2023
Motor vehicles,
plant and
equipment
£’m

8.1
12.0
(0.1)
(4.2)

15.8

2023
Total
£’m

248.5
32.3
(0.2)
(49.3)

231.3

Right-of-use additions did not include any lease modifications in the period (2022: £3.1m).

Lease liabilities included in the Consolidated Statement of Financial Position at 1 July 2023 were as follows:

At the beginning of the period
Additions
Disposals
Interest
Repayment of lease liabilities

At the end of the period

2023
Land and
buildings
£’m

(270.1)
(21.2)
0.1
(4.9)
53.6

(242.5)

2023
Motor vehicles,
plant and
equipment
£’m

(8.0)
(12.0)
0.1
(0.4)
4.6

(15.7)

2023
Total
£’m

(278.1)
(33.2)
0.2
(5.3)
58.2

(258.2)

2022
Total
£’m

262.0
35.3
(0.2)
(48.6)

248.5

2022
Total
£’m

(293.3)
(35.9)
0.1
(4.8)
55.8

(278.1)

The discount rate applied across all lease liabilities ranged between 0.9% and 5.85% (2022: 0.9% and 2.8%). The discount rate
reflects our incremental borrowing rate which we assess by considering the marginal rate on the Group’s Revolving Credit
Facility (‘RCF’), the Bank of England base rate, the yield on Government bonds and the term of the lease.

The maturity analysis of the lease liabilities is as follows:

Current
Non-current

2023
£’m

(53.4)
(204.8)

(258.2)

The remaining contractual maturities of the lease liabilities, which are gross and undiscounted, are as follows:

Less than one year
One to two years
Two to five years
Five to ten years
More than ten years

Total undiscounted lease liability

The average remaining lease term of our leasehold land and buildings is 5.0 years (2022: 5.2 years).

2023
£’m

(65.8)
(61.4)
(123.0)
(78.9)
(3.7)

(332.8)

2022
£’m

(52.8)
(225.3)

(278.1)

2022
£’m

(57.1)
(53.2)
(111.9)
(68.3)
(5.0)

(295.5)

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Notes to the Consolidated Financial Statements continued

11. Leases continued

The following amounts have been recognised in the Consolidated Income Statement:

Depreciation of right-of-use assets
Gain on disposal of right-of-use assets
Interest expenses (included in financial expenses)
Expense relating to short-term leases

There was no trigger for impairment in the current year.

2023
52 weeks
Land and
buildings
£’m

45.1
—
4.9
0.4

2023
52 weeks
Motor vehicles,
plant and
equipment
£’m

4.2
—
0.4
1.2

2023
52 weeks
Total
£’m

49.3
—
5.3
1.6

2022
53 weeks
Total
£’m

48.6
(0.1)
4.8
0.6

The total cash outflow for leases during the financial period was £57.3m (2022: £55.0m).

12. Deferred tax assets/liabilities
Deferred tax is provided in full on temporary differences under the liability method using a taxation rate of 25.0%.

Deferred taxation assets and liabilities are attributable to the following:

Assets

Liabilities

Net assets/(liabilities)

Property, plant and equipment
Share-based payments
Hedging
Other temporary differences

Deferred tax recoverable/(payable)
after more than 12 months
Deferred tax recoverable/(payable)
within 12 months

2023
£’m

—
5.1
2.3
0.5

7.9

Assets

2023
£’m

2.1

5.8

7.9

2022
£’m

0.7
7.5
—
0.4

8.6

2022
£’m

1.4

7.2

8.6

The movement in the net deferred tax balance is as follows:

Property, plant and equipment
Share-based payments
Hedging
Other temporary differences

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2023
£’m

(0.8)
—
—
(0.2)

(1.0)

2022
£’m

—
—
(4.3)
(0.2)

(4.5)

2023
£’m

(0.8)
5.1
2.3
0.3

6.9

Liabilities

Net assets/(liabilities)

2022
£’m

(0.2)

(4.3)

(4.5)

2023
£’m

1.1

5.8

6.9

2022
£’m

0.7
7.5
(4.3)
0.2

4.1

2022
£’m

1.2

2.9

4.1

Recognised in
income
£’m

Recognised in
equity
£’m

(2.9)
0.2
—
(0.1)

(2.8)

—
0.8
(5.3)
—

(4.5)

Balance at
2 July
2022
£’m

0.7
7.5
(4.3)
0.2

4.1

2023
£’m

(1.0)

—

(1.0)

Balance at
27 June
2021
£’m

3.6
6.5
1.0
0.3

11.4

Property, plant and equipment
Share-based payments
Hedging
Other temporary differences

13. Inventories

Raw materials
Work in progress
Goods for resale

Balance at
3 July
2022
£’m

0.7
7.5
(4.3)
0.2

4.1

Recognised in
income
£’m

Recognised in
equity
£’m

(1.5)
0.7
—
0.1

(0.7)

—
(3.1)
6.6
—

3.5

2023
£’m

1.6
—
209.4

211.0

Balance at
1 July
2023
£’m

(0.8)
5.1
2.3
0.3

6.9

2022
£’m

1.7
1.6
219.7

223.0

Goods for resale includes a net realisable value provision of £20.7m (2022: £21.4m). Write-downs of inventories to net
realisable value amounted to £30.2m (2022: £20.1m). These were recognised as an expense during the period and were
included in cost of sales in the Consolidated Income Statement.

14. Trade and other receivables

Trade receivables
Other receivables
Prepayments and accrued income

2023
£’m

3.1
0.1
21.1

24.3

2022
£’m

2.9
9.5
10.5

22.9

All trade receivables are due within one year from the end of the reporting period.

No impairment was incurred on trade and other receivables during the period and the expected credit loss provision held at
period end is nil (2022: nil). No material amounts are overdue (2022: nil).

15. Cash and cash equivalents

Cash at bank and in hand

2023
£’m

46.3

2022
£’m

30.2

The Group deposits funds only with institutions that have a credit rating of ‘A’ and above and the term is less than
three months.

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Notes to the Consolidated Financial Statements continued

16. Trade and other payables

Trade payables
Accruals
Deferred income – gift cards
Deferred income – other
Taxation and social security
Other payables

2023
£’m

94.6
63.5
1.1
11.4
37.3
0.2

2022
£’m

98.3
74.2
1.3
11.3
34.0
4.1

208.1

223.2

Deferred income arises in respect of gift cards as payment has been received for a performance obligation which will be
performed at a later point in time. Movement in the gift card deferred income balance is as follows:

Opening balance
Issued in the year
Released to income statement

2023
£’m

1.3
5.3
(5.5)

1.1

2022
£’m

1.5
5.4
(5.6)

1.3

17. Financial risk management
The Board of Directors has overall responsibility for the oversight of the Group’s risk management framework. A formal
process for reviewing and managing risk in the business is in place.

Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations and arises principally from the Group’s deposits with banks and financial institutions as well as foreign
exchange hedging agreements with its banking counterparties. The Group only deals with creditworthy counterparties and
uses publicly available financial information to rate its counterparties, therefore credit risk is considered to be low.

Group policy is that surplus funds are placed on deposit with counterparties approved by the Board, with a minimum of an ‘A’
credit rating. The credit limit for the syndicate banks is up to £60.0m. All other parties are limited to £25.0m.

The Group’s maximum exposure to credit risk is represented by the carrying amount of financial assets. No collateral is held
(2022: nil). At the period end the maximum exposure is detailed in the table below:

Current
Cash and cash equivalents
Trade and other receivables
Accrued income
Derivative financial instruments

Total current financial assets

Non-current
Derivative financial instruments

Total financial assets

152

Dunelm Group plc Annual Report and Accounts 2023

2023
£’m

46.3
3.2
10.1
1.8

61.4

—

61.4

2022
£’m

30.2
12.4
0.6
19.9

63.1

4.6

67.7

Trade and other receivables include rebates due from suppliers recognised as a reduction to cost of sales in the period
to which they relate. The rebates are recovered through deductions from future payments to suppliers and therefore
management is confident of the recoverability of these balances.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses (‘ECL’) which uses a lifetime expected
loss allowance for all trade and other receivables and accrued income. To measure the expected credit losses, trade and
other receivables and accrued income have been grouped based on shared credit risk characteristics and the days past due.
There is limited exposure to ECL due to the way the Group operates.

The Group will write off, either partially or in full, the gross carrying amount of a financial asset when there is no realistic
prospect of recovery. This is usually the case when it is determined that the debtor does not have the assets or sources of
income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, the Group may still
choose to pursue enforcement in order to recover the amounts due.

On that basis, the loss allowance as at 2 July 2022 and 1 July 2023 was determined to not be significant for trade and other
receivables, accrued income and cash and cash equivalents.

Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach
to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when
due. The Group manages this risk by regularly monitoring cash flow forecasts. Further details of the Group’s available
facilities can be found in the capital management section of this note.

All cash flows on financial liabilities for 2023 and 2022 are contractually due within one year with the exception of provisions,
bank loans, certain derivative financial liabilities and lease liabilities. The details of lease liabilities are shown in note 11.

Total borrowings of £77.0m (2022: £54.0m) reflect the level of facility drawdown at the period end on the Group’s
committed RCF.

Interest rate risk
The Group’s bank borrowings incur variable interest rate charges. The Group’s policy aims to manage the interest cost of the
Group within the constraints of its financial covenants. The Group will continue to monitor movements in the interest rate
swap market.

During the period, if SONIA interest rates had been 100 basis points higher with all other variables held constant, post-tax
profit would have been £0.3m lower (2022: £0.1m lower).

Foreign currency risk
All of the Group’s revenues are in sterling. The majority of purchases are also in pounds sterling, but some goods purchased
direct from overseas suppliers are paid for in US dollars, accounting for just over 30.0% (2022: 30.0%) of stock purchases in
the period ended 1 July 2023.

The Group uses various means to cover its exposure to US dollars including holding US dollar cash balances and taking
out forward foreign exchange contracts for the purchase of US dollars. All the Group’s foreign exchange transactions are
designed to satisfy US dollar denominated liabilities. The maximum level of hedging coverage which will be undertaken is
100.0% of anticipated expenditure on a three-month horizon, stepping down to 75.0% on a four- to 12-month horizon and
50.0% on a 13- to 18-month horizon. There is a low level of coverage beyond the 18-month horizon.

Cash flow hedges are in place to manage foreign exchange rate risk arising from forecast purchases denominated in US
dollars. At the Consolidated Statement of Financial Position date, the fair value of US dollar foreign exchange forward
contracts held in cash flow hedges was a £9.2m liability (2022: £24.5m asset) which relates to a commitment to purchase
$350.5m (2022: $369.0m) for a fixed sterling amount. A fair value loss of £14.0m (2022: £32.4m gain) was recognised in other
comprehensive income and no loss (2022: nil) was recognised on cash flow hedges during the period. In the period, a gain of
£19.7m (2022: £2.6m gain) was recycled from the cash flow hedge reserve to inventory to offset foreign exchange movements
on purchases. The remaining hedge reserve balance will be recycled to the Consolidated Income Statement to offset future
purchases occurring after the Consolidated Statement of Financial Position date, the majority of which expire in the next
12 months.

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Notes to the Consolidated Financial Statements continued

17. Financial risk management continued

The outstanding US dollar liabilities at the period end were $0.1m (2022: $0.1m).

At the period end if GBP had strengthened by 10.0% against the US dollar with all other variables held constant, post-tax
profit would have been £0.9m higher (2022: £0.7m higher) as a result of foreign exchange gains on translation of US dollar
denominated trade payables and cash and cash equivalents. Other components of equity would have been £0.9m higher
(2022: £2.5m higher) as a result of a decrease in fair value of derivatives designated as cash flow hedges.

Conversely, if GBP had weakened by 10.0% against the US dollar with all other variables held constant, post-tax profit for the
period would have been £1.1m lower (2022: £0.8m lower) and other components of equity would have been £0.9m lower
(2022: £2.5m lower).

The US dollar period end exchange rate applied in the above analysis is £1 = $1.2694 (2022: £1 = $1.2087).

Capital management
The Group considers equity plus debt as capital. There are no externally imposed capital requirements on the Group.

The Board’s objective with respect to capital management is to ensure the Group continues as a going concern in order to
optimise returns to shareholders. The Board regularly monitors the level of capital in the Group to ensure that this can be
achieved.

On 7 September 2023 the Group amended its existing syndicated RCF to £250.0m, which is committed until 6 September
2027, and which may be extended for a further two years at Dunelm’s request, subject to lender consent. There is also
an optional accordion facility of £100.0m. The terms of the RCF are consistent with normal practice and include the same
covenants as the previous RCF in respect of leverage (Group net debt to be no greater than 2.5x Group EBITDA before
exceptional items) and fixed charge cover (Group EBITDAR before exceptional items to be no less than 1.75x Group fixed
charges), both of which were met comfortably as at 1 July 2023 as shown below. In addition, the Group maintains £10.0m of
uncommitted overdraft facilities with one syndicate partner bank.

The gearing ratio and banking covenants were as follows:

Total borrowings (note 18)
Less: cash and cash equivalents (note 15)

Net debt
Less: unamortised debt issue costs (note 18)

Net debt including unamortised debt issue costs
Total equity

Total capital

Gearing ratio

2023
£’m

77.0
(46.3)

30.7
(1.1)

29.6
137.5

167.1

17.7%

2022
£’m

54.0
(30.2)

23.8
(1.2)

22.6
178.3

200.9

11.2%

154

Dunelm Group plc Annual Report and Accounts 2023

Operating profit
Add: Depreciation and amortisation of property, plant and equipment and intangible assets
(note 3)
Add: Loss on disposal and impairment of property, plant and equipment and intangible assets
(note 3)

Adjusted EBITDA

Leverage ratio

Adjusted EBITDA
Add: RoUA depreciation

EBITDA
Add: Rent

EBITDAR

Net interest (note 5)
Rent plus RoUA depreciation

Fixed charges

Fixed charge cover

2023
52 weeks
£’m

198.8

2022
53 weeks
£’m

217.7

29.8

30.5

0.3

228.9

0.13

228.9
49.3

278.2
4.5

282.7

6.1
53.8

59.9

4.7

0.3

248.5

0.09

248.5
48.6

297.1
1.8

298.9

4.9
50.4

55.3

5.4

Derivatives: Hedge ineffectiveness
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective
effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.

For hedges of foreign currency purchases, the Group enters into hedge relationships where the critical terms of the hedging
instrument match exactly with the terms of the hedged item. The Group therefore performs a qualitative assessment of
effectiveness. If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match
exactly with the critical terms of the hedging instrument, the Group uses the hypothetical derivative method to assess
effectiveness.

In hedges of foreign currency purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what
was originally estimated, or if there are changes in the credit risk of the Group or the derivative counterparty.

Market risk
The Group has the option to use a combination of foreign currency options and foreign currency forwards to hedge its
exposure to foreign currency risk.

The Group only designates the spot component of foreign currency forwards in hedge relationships. The spot component is
determined with reference to relevant spot market exchange rates. The differential between the contracted forward rate and
the spot market exchange rate is defined as the forward points. It is discounted where material.

Dunelm Group plc Annual Report and Accounts 2023

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Notes to the Consolidated Financial Statements continued

17. Financial risk management continued

The changes in the forward element of the foreign currency forwards and the time value of the options that relate to hedged
items are deferred in the hedging reserve.

Effects of hedge accounting on the financial position and performance

Foreign currency forwards
Carrying amount of (liability)/asset
Notional amount

Maturity date
Hedge ratio
Change in value of hedged item used to determine hedge effectiveness
Change in the value of hedging instruments
Weighted average hedged rate for the year (including forward points)

2023
£’m

(9.2)
286.4

2022
£’m

24.5
280.4

July 2023-
June 2025
1:1
£(14.0)m
£14.0m
£1:US$1.2998

July 2022-
June 2024
1:1
£32.4m
£(32.4)m
£1:US$1.3426

Fair values
The fair value of the Group’s financial assets and liabilities are equal to their carrying value. The fair value of foreign currency
contracts are amounts required by the counterparties to cancel the contracts at the end of the period.

Fair value hierarchy
Financial instruments carried at fair value are required to be measured by reference to the following levels:

• Level 1: quoted prices in active markets for identical assets or liabilities;

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly

(i.e. as prices) or indirectly (i.e. derived from prices); and

• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

All derivative financial instruments carried at fair value have been measured by a Level 2 valuation method, based on
observable market data.

Financial assets/(liabilities)
The carrying value of all financial assets and financial liabilities was materially equal to their fair value.

At 2 July 2022

Cash and cash equivalents
Trade and other receivables
Accrued income
Derivative financial instruments

Total financial assets

Trade and other payables
Accruals
Lease liabilities
Bank loans

Total financial liabilities

Net financial assets/(liabilities)

Financial assets
at amortised
cost
£’m

Financial
liabilities at
amortised cost
£’m

Derivatives used
for hedging
£’m

30.2
12.4
0.6
—

43.2

—
—
—
—

—

43.2

—
—
—
—

—

(102.4)
(74.2)
(278.1)
(52.8)

(507.5)

—
—
—
24.5

24.5

—
—
—
—

—

24.5

Total
£’m

30.2
12.4
0.6
24.5

67.7

(102.4)
(74.2)
(278.1)
(52.8)

(507.5)

(439.8)

156

Dunelm Group plc Annual Report and Accounts 2023

At 1 July 2023

Cash and cash equivalents
Trade and other receivables
Accrued income
Derivative financial instruments

Total financial assets

Trade and other payables
Accruals
Lease liabilities
Bank loans
Derivative financial instruments

Total financial liabilities

Net financial assets/(liabilities)

The currency profile of the Group’s cash and cash equivalents is as follows:

Sterling
US dollar
Euro

18. Bank loans

Total borrowings
Less: unamortised debt issue costs

Net borrowings

Financial assets
at amortised
cost
£’m

Financial
liabilities at
amortised cost
£’m

Derivatives used
for hedging
£’m

46.3
3.2
10.1
—

59.6

—
—
—
—
—

—

59.6

—
—
—
—

—

(94.8)
(63.5)
(258.2)
(75.9)
—

(492.4)

—
—
—
1.8

1.8

—
—
—
—
(11.0)

(11.0)

(9.2)

2023
£’m

33.8
12.4
0.1

46.3

2023
£’m

77.0
(1.1)

75.9

Total
£’m

46.3
3.2
10.1
1.8

61.4

(94.8)
(63.5)
(258.2)
(75.9)
(11.0)

(503.4)

(442.0)

2022
£’m

19.7
10.4
0.1

30.2

2022
£’m

54.0
(1.2)

52.8

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Borrowings relate to the Group’s syndicated Revolving Credit Facility, as described in note 17.

Dunelm Group plc Annual Report and Accounts 2023

157

FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements continued

18. Bank loans continued

The analysis below shows the reconciliation of net debt:

Net (debt)/cash at 3 July 2022 and 27 June 2021
Net increase/(decrease) in cash and cash equivalents (excluding foreign exchange revaluations)
Effect of foreign exchange (note 5)
Repayments of Revolving Credit Facility
Drawdowns of Revolving Credit Facility

Movement in net debt
Net debt represented by
Cash and cash equivalents (note 15)
Non-current borrowings (note 18)

Net debt at 1 July 2023 and 2 July 2022

Lease liabilities (note 11)

Net debt at 1 July 2023 and 2 July 2022 (including lease liabilities)

2023
52 weeks
£’m

(23.8)
15.5
0.6
116.0
(139.0)

(6.9)

46.3
(77.0)

(30.7)

(258.2)

(288.9)

2022
53 weeks
£’m

128.6
(99.5)
1.1
31.0
(85.0)

(152.4)

30.2
(54.0)

(23.8)

(278.1)

(301.9)

19. Provisions

Property related

Balance at
3 July 2022
£’m

Utilised in the
period
£’m

Created in the
period
£’m

Released in the
period
£’m

Balance at
1 July 2023
£’m

5.5

(0.1)

1.4

(0.9)

5.9

Property-related provisions consist of costs associated with vacant property and dilapidations. Dilapidations are based on
the Directors’ best estimate of the Group’s future liabilities.

20. Issued share capital

In issue at the start of the period
Issued during the period in respect of share option schemes

In issue at the end of the period

2023
Number of
Ordinary Shares
of 1p each

2022
Number of
Ordinary Shares
of 1p each

203,426,835 202,833,931
592,904

—

203,426,835 203,426,835

Ordinary Shares of 1p each:
Authorised
Allotted, called up and fully paid

2023
Number of
shares

2023
£’m

2022
Number of
shares

500,000,000
203,426,835

5.0 500,000,000
2.0 203,426,835

2022
£’m

5.0
2.0

Proceeds received in relation to shares issued during the period were nil (2022: £0.1m).

158

Dunelm Group plc Annual Report and Accounts 2023

21. Treasury shares

Outstanding at the beginning of the period
Purchased during the period
Reissued during the period in respect of share option schemes

Outstanding at the end of the period

2023
Number of
shares

1,686,200
908,064
(881,474)

1,712,790

2023
£’m

17.5
7.0
(8.5)

16.0

2022
Number of
shares

160,319
2,500,000
(974,119)

1,686,200

2022
£’m

1.4
28.3
(12.2)

17.5

The Group acquired 908,064 (2022: 2,500,000) shares through purchases on the London Stock Exchange during the period
for a total value of £7.0m (2022: £28.3m).

The Group reissued 881,474 (2022: 974,119) treasury shares during the period for a total value of £8.5m (2022: £12.2m).

Proceeds from the issue of treasury shares included in the Consolidated Statement of Cash Flows and Consolidated
Statement of Changes in Equity of £2.4m (2022: £3.9m) is the amount employees contributed.

The Group has the right to reissue the remaining treasury shares at a later date.

22. Share-based payments
The Group operates a number of share-based payment schemes as follows:

Dunelm Group Savings Related Share Option Plan (Sharesave)
The Dunelm Group plc Savings Related Share Option Plan (Sharesave) scheme is open to all colleagues with eligible length
of service. Invitations to participate in the scheme are issued annually and the scheme is ‘approved’ under HMRC rules. The
current maximum monthly savings for the schemes detailed below is £500. Options are granted at the prevailing market rate
less a discount of 20.0%. Options may be exercised under the scheme within six months of the completion of each three-year
savings contract (from the grant date). There is provision for early exercise in certain circumstances such as death, disability,
redundancy, and retirement. Sharesave options are accounted for as equity-settled awards under IFRS 2.

The following table summarises the movement in Dunelm Group plc Sharesave options during the year:

Sharesave plans

Outstanding at beginning of year
Granted
Exercised
Forfeited

Outstanding at end of year

Exercisable at end of year

2023

2022

Weighted
average
exercise price
(p)

923.00
667.00
634.54
973.79

No. of options

1,182,512
2,063,669
(371,564)
(660,351)

No. of options

1,571,890
632,092
(807,250)
(214,220)

2,214,266

717.67

1,182,512

30,550

654.00

31,605

Weighted
average
exercise price
(p)

651.20
1,046.00
483.06
949.37

923.00

479.00

Exercisable at end of year refers to all share options not exercised which have passed their vesting date, but not yet
reached their expiry date. The figure of 30,550 options (2022: 31,605 options) excludes the provisions for early exercise
explained above.

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Notes to the Consolidated Financial Statements continued

22. Share-based payments continued

Options outstanding at 1 July 2023 are exercisable at prices ranging between 654.00p and 1,167.00p (2022: 479.00p
and 1,167.00p) and have a weighted average remaining contractual life of 2.8 years (2022: 2.1 years), as analysed in the
table below:

Sharesave plans

Exercise price (pence):
479.00
654.00
667.00
1,046.00
1,167.00

2023

2022

Weighted
average
remaining
contractual life
(years)

—
—
3.0
2.0
1.0

2.8

No. of options

—
19,110
1,928,943
170,758
95,455

2,214,266

No. of options

45,502
370,906
—
553,288
212,816

1,182,512

Weighted
average
remaining
contractual life
(years)

—
1.0
—
3.0
2.0

2.1

Long-Term Incentive Plan (LTIP)
As explained in the Remuneration Report, the Group operates an equity-settled LTIP scheme for Executive Directors and
other senior colleagues. Performance conditions for the LTIP awards are detailed in the Remuneration Report. LTIP options
are also accounted for as equity-settled awards under IFRS 2.

The following table summarises the movements in nil-cost LTIP awards during the year:

LTIP awards

Outstanding at beginning of year
Granted
Dividend equivalent awarded in the year
Exercised
Forfeited

Outstanding at end of year

Exercisable at end of year

2023
No. of options

2022
No. of options

1,465,667
754,112
122,382
(345,487)
(98,732)

1,733,531
515,226
17,866
(497,830)
(303,126)

1,897,942

1,465,667

21,505

17,082

Exercisable at end of year refers to all share options not exercised which have passed their vesting date, but not yet reached
their expiry date.

The weighted average remaining contractual life of these options is 8.1 years (2022: 8.0 years).

Restricted Stock Award (RSA)
These awards are granted to particular individuals and are dependent on continuing employment. The only performance
condition is that the threshold diluted earnings per share as per the LTIP conditions is met as detailed in the Remuneration
Report. RSA options are also accounted for as equity-settled awards under IFRS 2.

The following table summarises the movements in nil-cost RSA options during the year:

Restricted Stock Awards

Outstanding at beginning of year
Granted
Dividend equivalent awarded in the year
Exercised
Forfeited

Outstanding at end of year

Exercisable at end of year

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Dunelm Group plc Annual Report and Accounts 2023

2023
No. of options

2022
No. of options

123,544
207,203
14,697
(12,756)
(16,242)

68,103
75,940
2,765
(10,308)
(12,956)

316,446

123,544

2,836

2,785

Exercisable at end of year refers to all share options not exercised which have passed their vesting date, but not yet reached
their expiry date.

The weighted average remaining contractual life of these options is 7.5 years (2022: 8.8 years).

Bonus Deferred Shares Award
The Bonus Deferred Shares Award provides options over shares in Dunelm Group plc for colleagues of the Group as a
discretionary bonus. This is an equity-settled share option scheme and there are no performance conditions attached
to these awards, they are only dependent on continued employment. Under this arrangement, colleagues are awarded
a number of options which is based on the cash value of the earned bonus award, determined by their achievement of a
mixture of Group and individual performance metrics, divided by a share price value of 1,189.00p which was approved at
the November 2020 AGM. The deferred shares awarded vest in September 2021 and/or September 2022, depending on
colleague level.

The Bonus Deferred Shares Award is structured as nil-cost options and the following table summarises their movement
during the year:

Bonus Deferred Shares Award

Outstanding at beginning of year
Dividend equivalent awarded in the year
Exercised
Forfeited

Outstanding at end of year

Exercisable at end of year

2023
No. of options

2022
No. of options

158,398
—

(151,667)
(3,948)

2,783

494,420
9,608
(252,488)
(93,142)

158,398

—

The weighted average remaining contractual life of these options is nil years (2022: 0.2 years).

Fair value calculations
The fair values of all share options granted are calculated at the date of grant using a Black-Scholes option pricing model.
Expected volatility is determined by calculating the historical volatility of the Group’s share price over a period equivalent to
the expected life of an option which is aligned to its vesting period.

The following tables list the inputs to the model used for options granted in the periods ended 1 July 2023 and 2 July 2022
based on information at the date of grant:

Sharesave plans

Share price at date of grant
Exercise price
Volatility
Expected life
Risk-free rate
Dividend yield

Fair value per option

2023

2022

974.00p
667.00p
42.28%
3 years
3.66%
3.27%

393.50p

1,444.23p
1,046.00p
43.54%
3 years
0.63%
2.90%

424.30p

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Notes to the Consolidated Financial Statements continued

22. Share-based payments continued

LTIP awards

Share price at date of grant
Exercise price
Volatility
Expected life
Risk-free rate
Dividend yield

Fair value per option

Restricted Stock Awards

Share price at date of grant
Exercise price
Volatility
Expected life
Risk-free rate
Dividend yield

Fair value per option

2023

865.00p
0.00p
43.06%
3 years
3.62%
3.27%

623.30p

2022

1,307.00p
0.00p
43.65%
3 years
0.84%
2.90%

977.40p

2023

2022

678.00p-867.00p
0.00p
35.58%-35.90%
1-2 years
2.82%-3.62%
3.27%

623.30p-839.10p

1,307.00p
0.00p
46.25%-43.65%
2-3 years
0.84%
2.90%

977.40p

The charge to the Income Statement for all share option schemes is disclosed in note 4.

23. Commitments
As at 1 July 2023, the Group had entered into capital contracts for new stores and refits amounting to £8.1m (2022: £4.7m).

24. Contingent liabilities
The Group had no contingent liabilities at the period end date (2022: none).

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Dunelm Group plc Annual Report and Accounts 2023

25. Related parties
Identity of related parties
The Group has related party relationships with its subsidiaries and with its Directors. Transactions between the Group and
its subsidiaries, which are related parties, have been eliminated on consolidation for the Group. A list of subsidiaries can be
found in note C4 to the Parent Company Financial Statements.

Key management personnel
The key management personnel of the Group comprise members of the Board of Directors and the Executive Board.

Directors of the Company and their close relatives control 42.7% (2022: 42.9%) of the voting shares of the Company.

Disclosures relating to remuneration of Directors are set out in the Remuneration Report on pages 88 to 118. The remuneration
of the key management personnel is set out below:

Wages and salaries
Termination benefits
Short-term employee benefits
Post-employment benefits
Share-based payments (including NI)

52 weeks
2023
£’m

53 weeks
2022
£’m

3.8
0.1
3.1
0.1
1.9

9.0

3.5
—
4.2
0.1
2.9

10.7

The amount of gains made by Directors on the exercise of share options are disclosed in the Remuneration Report on
page 109.

From time to time Directors of the Group, or their related entities, may purchase goods from the Group. These purchases
are on the same terms and conditions as those entered into by other Group employees and values involved are trivial.

26. Ultimate controlling party
The Directors consider that there is no ultimate controlling party of Dunelm Group plc.

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Parent Company Statement of Financial Position
As at 1 July 2023

Non–current assets
Investments in subsidiary undertakings
Deferred tax assets

Total non-current assets

Current assets
Trade and other receivables

Total current assets

Total assets

Current liabilities
Trade and other payables

Total current liabilities

Total liabilities

Net assets

Equity
Issued share capital
Share premium account
Non-distributable reserves
Capital redemption reserve
Retained earnings

Total equity attributable to equity holders of the Parent

The Company made a profit after tax of £230.9m (2022: £150.5m).

Note

C4
C5

C11

1 July 2023
£’m

2 July 2022
£’m

68.8
0.6

69.4

162.3

231.7

(0.3)

231.4

2.0
1.7
23.6
43.2
160.9

231.4

64.8
1.0

65.8

98.3

164.1

(0.3)

163.8

2.0
1.7
19.6
43.2
97.3

163.8

The financial statements on pages 164 to 171 were approved by the Board of Directors on 20 September 2023 and were
signed on its behalf by:

Karen Witts
Director
Company number 04708277

20 September 2023

164

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Parent Company Statement of Changes in Equity
For the 52 weeks ended 1 July 2023

Issued share
capital
£’m

Note

Share
premium
account
£’m

Non-
distributable
reserves
£’m

Capital
redemption
reserve
£’m

As at 26 June 2021
Profit for the period

Total comprehensive income for
the period

Proceeds from issue of shares
Purchase of treasury shares
Proceeds from issue of treasury
shares
Share-based payments
Deferred tax on share-based
payments
Current corporation tax on share
options exercised
Dividends

Total transactions with owners,
recorded directly in equity

As at 2 July 2022
Profit for the period

Total comprehensive income for
the period

Purchase of treasury shares
Proceeds from issue of treasury
shares
Share-based payments
Deferred tax on share-based
payments
Current corporation tax on share
options exercised
Dividends

Total transactions with owners,
recorded directly in equity

As at 1 July 2023

C12

C12
C13

C8
C3

C12

C12
C13

C8
C3

2.0
—

—

—
—

—

—
—

—

2.0
—

—

—
—

—

—
—

—

1.6
—

—

0.1
—

—
—

—

—
—

0.1

1.7
—

—

—
—

—

—
—

—

2.0

1.7

15.5
—

43.2
—

—

—
—

—
4.1

—

—
—

4.1

19.6
—

—

—
4.0

—

—
—

4.0

23.6

—

—
—

—

—
—

—

43.2
—

—

—
—

—

—
—

—

43.2

Total equity
attributable to
equity holders
of the Parent
£’m

314.8
150.5

Retained
earnings
£’m

252.5
150.5

150.5

—
(28.3)

3.9
0.7

0.1
(28.3)

3.9
4.8

(0.5)

0.6
(282.1)

(305.7)

97.3
230.9

0.6
(282.1)

(301.5)

163.8
230.9

230.9

(7.0)

2.4
0.8

2.4
4.8

(0.3)

0.1
(163.3)

(167.3)

160.9

0.1
(163.3)

(163.3)

231.4

The non-distributable reserves’ purpose is to reflect movements in share-based payments in respect of awards given by the
Parent Company to employees of its subsidiaries.

At the time of declaring dividends, the Directors assessed the level of available distributable reserves with reference to
relevant accounts and considered there to be sufficient levels to support the dividend.

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Parent Company Accounting Policies
For the 52 weeks ended 1 July 2023

General information
Dunelm Group plc (the ‘Company’)
is incorporated and domiciled in
the UK. Dunelm Group plc is a listed
public company, limited by shares and
the Company registration number
is 04708277. The registered office
is Dunelm Store Support Centre,
Watermead Business Park, Syston,
Leicester, Leicestershire, England,
LE7 1AD.

Basis of preparation
The financial statements in the prior
year were prepared in accordance with
UK-adopted International Financial
Reporting Standards (‘IFRS’) and with
the requirements of the Companies
Act 2006 as applicable to companies
reporting under those standards.

These financial statements have been
prepared in accordance with FRS
101 Reduced Disclosure Framework
(‘FRS101’). The impact on the net assets
of the Company as a result of the
change in accounting convention has
been £nil.

As permitted by FRS 101, the Company
has taken advantage of the disclosure
exemptions available under that
standard in relation to standards not
yet effective and presentation of a
cash flow statement. The accounting
policies adopted for the Parent
Company, Dunelm Group plc, are
otherwise consistent with those used
for the Group which are set out on
pages 136 to 142.

The annual financial statements have
been prepared under the historical
cost convention, and in accordance
with the Companies Act 2006 and
other applicable law. The financial
statements are prepared in pounds
sterling, rounded to the nearest
0.1 million.

Going concern
After making enquiries, the Directors
have a reasonable expectation that the
Company has adequate resources to
continue in operational existence for
the foreseeable future. Accordingly,
they continue to adopt the going
concern basis in preparing the financial
statements.

Additional considerations relating
to the potential downturn in the
homewares market on the going
concern assumptions are set out in the
Consolidated Financial Statements on
page 136.

Share-based payments
Employees of the Company have
been granted options for two equity-
settled, share-based compensation
plans, under which the entity
receives services from employees as
consideration for equity instruments
(options) of the Company. The fair
value of the employee services
received in exchange for the grant
of the options is recognised as an
expense. The total amount to be
expensed is determined by reference
to the fair value of the options granted:

•

Including any market performance
conditions (for example, an entity’s
share price);

• Excluding the impact of any service

and non-market performance
vesting conditions (for example,
profitability, sales growth targets
and remaining an employee of the
entity over a specified time period);
and

•

Including the impact of any non-
vesting conditions (for example, the
requirement for employees to save).

At the end of each reporting period,
the Company revises its estimates
of the number of options that are
expected to vest based on the
non-market vesting conditions. It
recognises the impact of the revision to
original estimates, if any, in the Income
Statement, with a corresponding
adjustment to equity.

When the options are exercised, the
Company either issues new shares,
or uses treasury shares purchased for
this purpose. For newly issued shares,
the proceeds received net of any
directly attributable transaction costs
are credited to share capital (nominal
value) and share premium.

The social security contributions
payable in connection with the grant
of the share options are considered an
integral part of the grant itself, and the
charge will be treated as a cash-settled
transaction.

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Dunelm Group plc Annual Report and Accounts 2023

Investments
Investments in subsidiary undertakings
are stated at the adjusted cost of
the investment. IFRS 2 requires the
Parent Company to recognise an
increase in the cost of its investment
in a subsidiary which has issued share
options in the Parent Company’s
shares to its employees.

New standards and
interpretations
A detailed list of new standards,
amendments or interpretations can be
found in the consolidated accounting
policies on page 142.

Use of estimates and judgements
Based on the IAS 1 definitions, there
are no significant estimates or critical
judgements used in the Company
Financial Statements.

Taxation
Tax on the profit or loss for the period
comprises current and deferred
tax. Tax is recognised in the Income
Statement except to the extent that it
relates to items recognised directly in
equity, in which case it is recognised
in equity.

Current tax represents the expected
tax payable on the taxable income for
the period, using tax rates enacted or
substantively enacted at the Statement
of Financial Position date, together
with any adjustment to tax payable in
respect of previous periods.

Deferred tax provides for temporary
differences between the carrying
amounts of assets and liabilities for
financial reporting purposes and the
amounts used for taxation purposes.
Deferred tax is determined using
tax rates (and laws) that have been
enacted or substantively enacted at
the Statement of Financial Position
date and are expected to apply when
the related deferred tax asset is
realised or the deferred tax liability
is settled.

A deferred tax asset is recognised
only to the extent that it is probable
that future taxable profits will be
available against which the asset can
be recognised.

Dividends
Dividends are recognised as a
liability in the period in which they are
approved such that the Company is
obligated to pay the dividend.

Trade and other receivables
Trade and other receivables are
initially recognised at fair value and
then carried at amortised cost, net of
impairment provisions.

Share capital
Where the Company purchases its own
equity share capital (treasury shares)
the consideration paid, including
any directly attributable incremental
costs, is deducted from equity
attributable to the Company’s equity
holders until the shares are cancelled
or reissued. Where such shares are
subsequently sold or reissued, any
consideration received net of any
directly attributable incremental
transaction costs and the related
income tax effects, is included in
equity attributable to the Company’s
equity holders.

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Notes to the Parent Company Financial Statements
For the 52 weeks ended 1 July 2023

C1. Income Statement
The Company made a profit after tax of £230.9m (2022: £150.5m). The Directors have taken advantage of the exemption
available under section 408 of the Companies Act 2006 and have not presented an Income Statement for the Company.

Disclosures relating to the fees paid to the Company’s auditor is set out in note 3 in the Group’s financial statements on
page 144.

C2. Employee costs
The Company’s employees are the three Executive Directors and the Non-Executive Directors. Full details of the Directors’
remuneration and interests are set out in the Remuneration Report on pages 88 to 118. Share-based payments details are
given in note C13 on page 171.

C3. Dividends and special distributions to shareholders
Disclosures relating to dividends and special distributions to shareholders are set out in note 7 in the Group’s financial
statements on page 146.

C4. Investments in subsidiary undertakings
Shares in subsidiary undertakings:

As at 27 June 2021
Share-based payments

As at 2 July 2022
Share-based payments

As at 1 July 2023

£’m

60.7
4.1

64.8
4.0

68.8

The share-based payment adjustment to investments reflects share option awards given by the Parent Company to
employees of its subsidiaries.

The following were subsidiaries as at 1 July 2023:

Subsidiary

Proportion of ordinary shares held Nature of business

Dunelm Limited
Dunelm (Soft Furnishings) Ltd*
Dunelm Estates Limited*
Zoncolan Limited*
Fogarty Holdings Limited*
Globe Online Limited*
Dunelm (Soft Furnishings) Londonderry Ltd*

*Share capital held by subsidiary undertaking.

100%
100%
100%
100%
100%
100%
100%

Holding company
Retailer of soft furnishings
Dormant company
Dormant company
Non-trading company
Dormant company
Non-trading company

Dunelm Group plc, the Parent Company, and its subsidiaries (excluding Dunelm (Soft Furnishings) Londonderry Ltd) are
incorporated and domiciled in the UK. The registered office is Dunelm Store Support Centre, Watermead Business Park,
Syston, Leicester, Leicestershire, England, LE7 1AD.

The registered address for Dunelm (Soft Furnishings) Londonderry Ltd is Faustina Retail Park, 35 Buncrana Road, Londonderry,
Northern Ireland, BT48 8QN.

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C5. Deferred tax assets

Employee benefits

The movement in deferred tax assets is as follows:

Employee benefits

2023
£’m

0.6

2022
£’m

1.0

Balance at
27 June 2021
£’m

Recognised in
income
£’m

Recognised in
equity
£’m

Balance at
2 July 2022
£’m

1.8

(0.3)

(0.5)

1.0

Balance at
3 July 2022
£’m

Recognised in
income
£’m

Recognised in
equity
£’m

Balance at
1 July 2023
£’m

1.0

(0.1)

(0.3)

0.6

C6. Trade and other receivables

Amounts owed by subsidiary undertakings

2023
£’m

162.3

2022
£’m

98.3

Amounts owed by subsidiary undertakings are repayable on demand. Interest is charged monthly on all intercompany
balances at an annual rate of 2.0%. There is no security on these balances.

These amounts pose no liquidity or credit risk as they are owed by other Group undertakings and are expected to be settled
by Group transactions.

C7. Trade and other payables

Accruals and deferred income
Other taxation and social security

2023
£’m

0.3
—

0.3

2022
£’m

—
0.3

0.3

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Notes to the Parent Company Financial Statements continued

C8. Taxation

Current taxation
UK corporation tax charge for the period

Deferred taxation
Origination of temporary differences

Tax expense

The tax charge is reconciled with the standard rate of UK corporation tax as follows:

Profit before taxation
UK corporation tax at standard rate of 20.5% (2022: 19.0%)
Factors affecting the charge in the period:

Income not subject to tax
Impact of change in tax rate
Group relief

Tax expense

2023
52 weeks
£’m

2022
53 weeks
£’m

0.1

0.2

2023
52 weeks
£’m

231.1
47.4

(47.8)
(0.1)
0.7

0.2

0.5

0.3

0.8

2022
53 weeks
£’m

151.3
28.7

(28.5)
-
0.6

0.8

C9. Interest-bearing loans and borrowings
The Company’s only interest-bearing borrowings relate to intercompany loans which have interest charges of 2.0% and are
not affected by changes in SONIA.

C10. Financial risk management
Capital management
The Board’s objective with respect to capital management is to ensure the Company continues as a going concern in order
to optimise returns to shareholders. The Board’s policy is to retain a strong capital base so as to maintain investor, creditor
and market confidence and to sustain future development. The Board regularly monitors the level of capital in the Group to
ensure that this can be achieved.

C11. Issued share capital
Disclosures relating to issued share capital are set out in note 20 in the Group’s financial statements on page 158.

C12. Treasury shares
Disclosures relating to treasury shares are set out in note 21 in the Group’s financial statements on page 159.

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Dunelm Group plc Annual Report and Accounts 2023

C13. Share-based payments
The Company operates the following share-based payment schemes for the CEO and CFO:

a. Dunelm Group Savings Related Share Option Plan (Sharesave)
The Dunelm Group plc Savings Related Share Option Plan (Sharesave) scheme is open to all colleagues with eligible length
of service. Invitations to participate in the scheme are issued annually and the scheme is ‘approved’ under HMRC rules. The
current maximum monthly savings for the schemes is £500. Options are granted at the prevailing market rate less a discount
of 20%. Options may be exercised under the scheme within six months of the completion of each three-year savings contract
(from the grant date). There is provision for early exercise in certain circumstances such as death, disability, redundancy, and
retirement. Sharesave options are accounted for as equity-settled awards under IFRS 2.

b. Long-Term Incentive Plan (LTIP)
As explained in the Remuneration Report, the Company operates an equity-settled LTIP scheme. Performance conditions for the
LTIP awards are detailed in the Remuneration Report. LTIP options are also accounted for as equity-settled awards under IFRS 2.

c. Bonus Deferred Shares Award
The Bonus Deferred Shares Award provides options over shares in Dunelm Group plc for participants as a discretionary
bonus. This is an equity-settled share option scheme and there are no performance conditions attached to these awards,
they are only dependent on continued employment. Under this arrangement, participants are awarded a number of options
which is based on the cash value of the earned bonus award – determined by their achievement of a mixture of Group and
individual performance metrics – divided by a share price value of 1,189.00p which was approved at the November 2020
AGM. The deferred shares awarded vest in September 2021 and September 2022.

C14. Contingent liabilities
The Company had no contingent liabilities at the period end date (2022: none).

C15. Related parties
Transactions between the Company and its subsidiaries were as follows:

Dividends received
Dividends receivable
Net interest receivable

Amounts owed by subsidiary undertakings

2023
52 weeks
£’m

163.3
70.0
2.3

235.6

162.3

2022
53 weeks
£’m

150.2
—
3.1

153.3

98.3

Key management personnel
All employees of the Company are key management personnel. Directors of the Company and their close relatives control
42.7% (2022: 42.9%) of the voting shares of the Company.

Wages and salaries
Short-term employee benefits
Share-based payments (including NI)

2023
52 weeks
£’m

2022
53 weeks
£’m

1.7
1.4
0.9

4.0

1.6
1.8
0.9

4.3

There were no termination benefits for employees of the Company.

The amount of gains made by Directors on the exercise of share options are disclosed in the Remuneration Report on page 109.

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Alternative performance measures (APMs)

APM

Definition, purpose and reconciliation to statutory measure

Unique active
customers
growth

Total sales

Digital sales

Digital %
total sales

Growth in unique active customers who have shopped in a 12-month period compared to the prior 12-month
period, based on Barclays transactional data. Note that Barclays data represents approximately 10% of total
Dunelm transactions. To measure whether we are continuing to grow our active customer base – from both new
customers and retention of existing customers.

Equivalent to revenue (from all channels). This is net of customer returns.

Digital sales include home delivery, Click & Collect (or Reserve & Collect before October 2019) and tablet-based
sales in store.

Digital sales (as defined above) expressed as a percentage of revenue. This is not a measure that we seek to
maximise in itself, but we measure it to track our adaptability to changing customer behaviours.

Gross margin % Gross profit expressed as a percentage of revenue. Measures the profitability of product sales prior to operating

costs.

Operating costs
to sales ratio

EBITDA1

Adjusted
EBITDA

EBITDAR1

Operating costs expressed as a percentage of revenue. To measure the growth of costs relative to sales growth.

Earnings before interest, tax, depreciation, amortisation and impairment. Operating profit plus depreciation and
amortisation of property, plant and equipment, right-of-use assets and intangible assets plus loss on disposal
and impairment of property, plant and equipment and intangible assets. Used in our capital and dividend policy.

EBITDA less depreciation on right-of-use assets. To measure compliance with bank covenants

EBITDAR is calculated as EBITDA plus rent. To measure compliance with bank covenants

Effective tax rate Taxation expressed as a percentage of profit before taxation. To measure how close we are to the UK corporation

tax rate and understand the reasons for any differences.

Capex (net of
disposals)

Free cash flow2

Acquisition of intangible assets and acquisition of property, plant and equipment less proceeds on disposal of
property, plant and equipment and intangibles.

Free cash flow is defined as net cash generated from operating activities less capex (net of disposals) and
business combinations, net interest paid (including leases) and loan transaction costs, and repayment of
principal element of lease liabilities. Measures the cash generated that is available for disbursement to
shareholders.

Net cash/(debt)

Cash and cash equivalents less total borrowings (as shown in note 18). Excludes IFRS 16 lease liabilities.

Cash conversion Free cash flow expressed as a percentage of operating profit.

Ordinary
dividend cover

Ordinary dividend cover is calculated as earnings per share divided by the total ordinary dividend relating to the
financial year. This measure is used in our capital and dividend policy.

1 Please see Note 17 to the Financial Statements on page 152.

2 Please see cash generation and net cash table on page 24.

172

Dunelm Group plc Annual Report and Accounts 2023

Advisers and contacts

Corporate
brokers

Financial
advisers

Barclays Bank plc

5 The North Colonnade

London E14 4BB

Tel: 020 7623 2323

UBS Investment Bank

5 Broadgate

London EC2M 2QS

Tel: 020 7567 8000

Independent
auditor

PricewaterhouseCoopers LLP

One Chamberlain Square

Registered
office

Birmingham B3 3AX

Tel: 0121 265 5000

Peel Hunt LLP

100 Liverpool Street

London EC2M 2AT

Tel: 020 7418 8900

Financial public
relations

MHP Communications

60 Great Portland Street

London W1W 7RT

Tel: 020 3128 8100

Dunelm Store Support Centre

Watermead Business Park

Syston, Leicester

Leicestershire, England LE7 1AD

Company registration no: 4708277

Principal bankers Barclays Bank plc

Midlands Corporate Banking

Investor
relations

corporate.dunelm.com

Tel: 0116 264 4400

Registrars

PO Box 333

15 Colmore Row

Birmingham B3 2BH

Tel: 0345 734 5345

Equiniti

Aspect House

Spencer Road, Lancing

West Sussex BN99 6DA

Tel: 0371 384 20301

Email: investorrelations@dunelm.com

1 If dialling internationally, call +44 121 415 7047. The helpline is open Monday to Friday 8.30 am to 5.30 pm, excluding bank holidays.

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Tel: 0116 264 4400
Email: investorrelations@dunelm.com
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