DFS Furniture plc

Annual Report & Accounts 2024

Creating value

by bringing great

design and comfort

into every home

Affordable | Sustainable | Responsible

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

£60.3m

£30.6m

£10.5m

FY19

FY20

FY21

FY22

FY23

FY24

16.9p

9.4p

1.5p

FY19

FY20

FY21

FY22

FY23

FY24

86.3%

91.3%

92.8%

FY19

FY20

FY21

FY22

FY23

FY24

£1,149.8m

£1,088.9m

£987.1m

FY19

FY20

FY21

FY22

FY23

FY24

£58.5m

£29.7m

(£1.7m)

FY19

FY20

FY21

FY22

FY23

FY24

12.3p

11.1p

(1.9p)

FY19

FY20

FY21

FY22

FY23

FY24

11.7%

18.6%

28.3%

FY19

FY20

FY21

FY22

FY23

FY24

In a very challenging trading environment the Group has made good operational progress

and is well positioned to capitalise when the market recovers.

HIGHLIGHTS CONTENTS

Strategic report

1 Purpose driven approach

2 At a glance

3 Our fundamentals

4 Chair’s statement

6 Chief Executive’s report

9 Market overview

11 Our customer journey

12 Business model

13 Our strategy

14 Key performance indicators

16 Financial review

19 Alternative performance

measures

21 Risks and uncertainties

29 Section 172 statement

32 Responsibility and

sustainability report

Governance report

52 Directorsandofficers

54 Corporate governance report

61 Audit and Risk Committee

report

65 Nomination Committee

report

67 Directors’ Remuneration

report

88 Directors’ report

91 Statement of Directors’

responsibilities in respect

of the annual report and

thefinancialstatements

92 Independent auditor’s report

Financial statements

99 Consolidated income

statement

100 Consolidated statement

of comprehensive income

101 Consolidated balance sheet

102 Consolidated statement

of changes in equity

103 Consolidatedcashflow

statement

104 Notes to the consolidated

financialstatements

135 Company balance sheet

136 Company statement

of changes in equity

137 Notes to the Company

financialstatements

Shareholder information

140 Financial history

141 Shareholder information

Financial headlines

DefinitionsandreconciliationsofAlternative

Performance Measures (‘APMs’) can be found on

pages 19 and 20. Throughout this report, references

to income statement measures including revenue,

EBITDA

,profitbeforetax,andunderlyingprofitbefore

tax and brand amortisation

are in respect of continuing

operations only unless otherwise stated.

1. 53 week period.

2. Refertopages19and20forAPMdefinitions.

3. Net Promotor Scores for the DFS brand.

Operational and strategic highlights

– Execution of our Pillars and Platforms strategy consolidating our

position as the clear market leader.

– Addition of a new exclusive brand partnership with Ted Baker has

contributed to DFS continuing to broaden its appeal.

– Refresh of the Sofology customer proposition and pricing strategy

togoodeffect.

– Record NPS scores achieved, supported by various technology

solutions to enhance the customer experience.

– Costtooperateefficiencyprogrammedelivered£27.5mofin-year

cost savings across operating costs and product cost of goods.

Post purchase NPS

92.8%

Established customer NPS

28.3%

Group revenue

£987.1m

(Loss)/profit before tax

(£1.7m)

Underlying profit before tax, excluding

amortisation of brand names

£10.5m

(Loss)/earnings per share

(1.9p)

Underlying earnings per share

1.5p

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

PURPOSE DRIVEN APPROACH

Our Purpose is to bring great design and comfort into every home, in an affordable, responsible and sustainable manner.

Our customers and our people are at the heart of everything we do, and our culture is rooted in our core values.

Our vision is to lead furniture retailing in the digital age.

OUR STRATEGY DELIVERS...

Our unparalleled scale

Provides valuable customer and market insight

as well as economies of scale and national coverage

Our brands

Our platforms

Our exceptional people

Our culture and values

Our culture and values run through

everything we do. They guide our

actions and create a sustainable

and responsible business.

Read more on page 35.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

AT A GLANCE

– DFS is the leading retailer of sofas in the UK with

over 55 years’ heritage.

– Headquartered in Doncaster, it operates 115

showrooms in the UK and Republic of Ireland,

and a leading web platform.

– Thebrandispromotionally-ledwithbroad-reaching

advertising campaigns that drive brand recall and

focus on comfort and value for money.

– Its customers tend to have average national income

and a high proportion are young families.

– As one of the UK’s most visible retail brands, DFS

isoftenananchortenantdrivingsignificantfootfall

to destination retail parks.

– DFS is the most commonly searched term online

in the sector, ahead of even ‘sofa’, and its website

received an average of 1.8 million unique visitors

each month in the 12 months to June 2024.

– Themajorityofsofaordersarefulfilledona

made-to-orderbasis.

DFS

Sofology

DFS and Sofology

In addition to DFS’s own brand

products,italsooffersawiderange

of exclusive products created in

collaboration with the UK’s top

home and lifestyle brands.

FY24 number of showrooms

115

FY24 brand revenue

£786.5m

We are the leading sofa retailing group in the UK – we operate across

two retail brands, each appealing to different customer segments.

– OurGroup-widelogisticsplatformisoneofseveralkeyinfrastructure

components supporting our retail brands.

– The Sofa Delivery Company plays an important role in achieving the Group’s

environmental targets in relation to emissions, waste and recycling.

– Itoffersextendedhoursdeliverytoourcustomerssevendaysaweek,

virtually all year round.

Delivery vehicles

253

– Sofology is the third largest retailer of sofas

in the UK.

– Headquartered near Warrington, it trades

through its growing national footprint of

58 showrooms and its website.

– We see an opportunity to expand the

showroom portfolio with a medium term target

of65-70showrooms.

– Its marketing approach focuses on emphasising

product design and quality.

– Theuseofwell-knowncelebritiesinitsTV

and digital adverts has helped build its brand

awareness and distinctiveness.

– Thebrandappealstoaslightlymoreaffluent

than average customer.

– Themajorityofsofaordersarefulfilled

onamade-to-orderbasis.

FY24 number of showrooms

FY24 brand revenue

£200.6m

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

OUR FUNDAMENTALS

Delivering sustainable growth

Our Group benefits from four fundamental advantages that provide

our business model with resilience and position us well for the future.

1. Clear market

leader

With 36%

of the sofa retailing market, the DFS group

is over three times the size of our nearest competitor.

Thismarketleadershipenablessignificanteconomies

ofscalebenefits.

2. Integrated retail

business

We believe our winning combination of digital and

physical assets is the right long term approach for

the sofa market. With our integrated platform, we’re

‘channelagnostic’andflexibletosupportcustomers

however they want to shop. This is supported by

our own dedicated manufacturing and supply

chain operations.

3. Sustainable

business model

We are committed to building a sustainable business

model, both in terms of our impact on the environment

and our long term success and resilience as a Group.

Ourscaleandprofitabilityhasallowedustoinvest

for the long term throughout the economic cycle,

leavinguswithwell-investedplatformsrelative

to our competition.

Sustainable growth

We believe the fundamental strengths of our business model described above leave the Group well positioned

formedium-termgrowthinshareholderreturns.Highlevelsoffreecashflowgenerationarealong-termfeature

of our business model.

Read more on page 13.

4. Home market

opportunity

The UK beds and mattresses segment represents

a sizeable medium term opportunity for the Group.

We believe that our existing customer base, our interest

freecreditofferandourGroupassetsincludingsourcing,

web and logistics platforms, marketing expertise

anddifferentiatedbrandpartnershipsleaveuswell

positioned to grow market share in this segment.

Contents

4 Chair’s statement

6 Chief Executive’s report

9 Market overview

11 Our customer journey

12 Business model

13 Our strategy

14 Key performance indicators

16 Financial review

19 Alternative performance

measures

21 Risks and uncertainties

29 Section 172 statement

32 Responsibility and

sustainability report

1. GlobalData August 2024

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

CHAIR’S STATEMENT

Building

for the future

This past year has seen continued and sustained improvements in the

operational capabilities of the Group to a level that the business has not seen

before. Building for the future, we have optimised our cost base and delivered

improved levels of customer satisfaction.

We believe that the outlook for DFS remains positive

despite the extremely challenging global and domestic

environment that we are operating in. As expected,

our revenue performance has been impacted by the

significantfallinmarketvolumesyearonyearandon

pre-pandemiclevels.Inaddition,thebusinesshashad

toabsorbsignificantlyhighercostsduetohighlevels

of international freight rates and continued elevated

interest rates. We have responded well to these

challenges by progressing with our cost action plan and

achievingsignificantsavingsof£27.5mtounderlying

costs. The savings achieved to date demonstrate our

ability to remain agile and reshape our operations in

light of prevailing market conditions.

The medium term prospects for the upholstered

furnituremarketremainsstrongandweareconfident

that our market leading position and long term growth

strategy will ensure the business is well positioned to

take advantage of the market recovery.

We view the recent acquisition of both ScS by the Italian

company Poltronesofà and Anglia Home Furnishings,

which trades as Fabb Furniture, by the Australian

companyNickScaliasfurtherevidenceofconfidence

that in the medium to long term the UK market will see

strong growth as the economy recovers and consumer

confidencereturns.

The ability of our colleagues across the business to

continue to innovate and to deliver in this challenging

environment has been invaluable and my thanks on

behalf of the Board go to all of them.

Financial results

Whilstoverallourfinancialresultsaredisappointing,

we recognise they are an inevitable result of the market

backdropduringtheyearbeingsignificantlymore

challenging than we expected before the year began.

The focus of the Board and the Executive team has been

between achieving the best possible short term results

and ensuring that the business is still well positioned to

take advantage of the inevitable market rebound.

This has meant balancing our approach to costs and

operational capability as well as to talent recruitment

and retention, being very judicious with capex at the

same time as ensuring that the business remains

primed to respond to a better market, and it means

balancing the need to retain cash in the business

to invest for the future with the expectations of

our shareholders.

Leverage at year end was 2.5x which remains above our

stated target level, although ample liquidity headroom

remains. Bringing the level down towards our target

remains a key focus using the twin levers of absolute

debtreductionandprofitimprovement.

As detailed in the Financial review at page 18 we are

pleased that the business has been able to work with

its lenders to amend the terms of its debt facilities

toprovidesufficientflexibilityandheadroom

going forward.

STEVE JOHNSON

Chair of the Board

Bioonpage 52

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

CHAIR’S STATEMENT CONTINUED

We will continue to assess the pace and priorities

of all our strategic objectives as market conditions

evolve over the next 12 months.

Culture and purpose

We strongly believe that our colleagues and their

contribution to our culture and values is what makes

DFS great. Our colleagues across the Group have yet

again played a pivotal role in the progress we continue

to make and I would like to thank them for their

continued outstanding contribution.

It is important that the Board stays close to the views

ofourcolleaguesandDirectorsdevotesignificant

timetoactivitythatletsthemhearfirst-handwhat

is on our people’s minds. Visits to our showrooms,

manufacturing sites, customer distribution centres

and Group Support Centre, as well as attendance at

our Voice Forums equip Directors to understand the

practical implications of our plans and the challenges

faced by our colleagues.

Environmental, social and governance (‘ESG’)

We continue to make excellent progress on our

environmental goals, and we were delighted to be

named a Climate Leader by the Financial Times earlier

this year. This is a testament to our commitment to

sustainable performance. In June 2024 we took the next

step on our journey and submitted our plan for Net Zero

for validation to the Science Based Targets initiative.

Board changes

At the end of July we gave our thanks to Loraine

Martins who stepped down from the Board. Loraine has

madeasignificantcontributiontoourPeopleStrategy

and has worked with the team to develop the Group’s

wider approach to equity, diversity and inclusion.

In August we welcomed Bruce Marsh to the Board.

Bruce is a seasoned retailer and is currently the Chief

FinancialOfficeratCurrysplc.Hebringsexpertise

inretail,finance,financialmarkets,investorsand

governance and will provide fresh insight as to how

the Company should address the ongoing challenges

facing UK retailers. The approach to any appointment

to the Board is on ensuring we have the right blend of

skills for the current and likely future environment and

that we have the right experience and tenure to deliver

continuity and succession over time.

Strategic focus

Inevitably when performance is under pressure, hard

choices have to be made on which strategic options to

prioritise and this has meant that we have temporarily

deprioritised our focus on growing our wider Home

offering.TheBoardisdeterminedtoachievetheright

balancebetweenjustifiablecautiongiventheshort

term environment and the need to ensure that the

business continues to invest and improve for the future.

We have carried out a detailed review of our strategy

duringtheyear.Weareconfidentthatourpillarsand

platforms strategy remains the right long term strategy

for the Group and we have continued to make good

progress on our areas of focus.

Wecontinuetoleverageourtwomarket-leading

complementary brands, DFS and Sofology – they

appealtodifferentcustomersegmentsandallowusto

target the majority of the market with creative direction

managed by each brand team. Each brand curates its own

ranges,supportedbyspecialistin-housedesignteams.

We continue to innovate in partnership with a small

group of specialist suppliers and brands. Over the last

12 months we were excited to bring our new

Cinesound

™

range to market. This cinema sofa turns

home entertainment into a 4D immersive experience,

packedwithstate-of-the-artfeatures–a3Daudio

system, vibration pads and powered head and foot rests.

We continue to invest in our national network of

showrooms across the UK and the Republic of Ireland

and in our websites to ensure they continue to inspire our

customers and provide a leading customer experience.

During the period, we were proud to announce that

we have entered into an exclusive agreement with

Ted Baker. The range has been incredibly well received

by our customers looking for that extra bit of luxury.

As a business with our customers at its heart the

ongoing evolution of our product range across both our

brands is a critical component of what we do. I am proud

of the progress that our teams have made working with

our suppliers and brand partners such as Ted Baker

andLa-Z-Boyaswellaswithourin-housefactories

to continue to improve our product proposition.

Governance and reporting

The Board generally meets eight times per year when

we have a formal agenda and additional meetings are

arrangedasrequiredforspecificitemsorsuchmatters

are delegated to ad hoc committees and reported

upon at subsequent meetings. More details of the

Board’s activities, and key decisions taken during the

year are set out later in the Governance section of

our Annual Report.

I am pleased to say that we were compliant with the UK

Corporate Governance Code (2018) (‘the Governance

Code’) throughout the year, and the following pages

set out further details. I invite you to consider that

alongsidethereportonhowtheDirectorshavefulfilled

their duties in accordance with section 172 of the

Companies Act 2006.

Dividend

At the time of the interim results in March 2024 the

Board declared an interim ordinary dividend of 1.1 pence

per share (2023: 1.5 pence per share).

Given the challenging trading conditions described

above the Board concluded that it would not be

appropriatetoproposeafinaldividend.Whilstthismay

be disappointing for some of our shareholders, we

believe it is in the best long term interests of the Group.

We continue to encourage all shareholders to attend

our ‘in person’ annual general meeting, which will be

held in Doncaster on 22 November 2024. This provides

a great opportunity to hear from and speak with

members of the Board and Group Leadership Team.

Looking ahead

I am proud of the Group’s achievements in 2024 and

remainconfidentintheplansthatwehavefortheyear

ahead.Ourclearstrategy,greatteam,market-leading

position, innovative products and the strength of our

brands all bode well for the future.

STEVE JOHNSON

Chair of the Board

25 September 2024

Group revenue

£987.1m

Loss before tax

£1.7m

Underlying profit before tax and

brand amortisation

£10.5m

1. Refertopages19and20forAPMdefinitions.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

TIM STACEY

Chief Executive Officer

Bioonpage 52

CHIEF EXECUTIVE’S REPORT

Managing challenging

conditions and positioning

the business for future growth

In financial year 2024 the Group has made good progress improving our

gross profit margin rate and reducing our operating costs whilst achieving

record NPS scores. This progress has been delivered against a backdrop

of very challenging market conditions.

Market update and financial overview

Consumerdemandfellsignificantlyinthefinancial

period driven by the cost of living crisis. The level of

decline was beyond our initial expectations with overall

demand levels reaching record lows. In addition supply

chain disruption in the Red Sea that emerged in the

secondhalfoftheperiodextendedourmade-to-order

product lead times delaying the recognition of revenues.

We took decisive action through the period as the

scaleofmarketdecline,nowover20%belowpre-

pandemic levels in volume terms, became apparent.

We accelerated a number of initiatives across our

CosttoOperateefficienciesprogrammereducingour

costsby£27.5myearonyear.Despitetheseactions,

theGroup’sprofitswereunfortunatelyimpacted

by the extent of the market decline and the supply

chaindisruption.Underlyingprofitbeforetaxand

brandamortisationreducedfrom£30.6minourFY23

financialperiodto£10.5minFY24andreportedprofit

beforetaxreducedfrom£29.7mtoalossof£1.7m.

Whenformulatingourcost-outactionplanswehave

been resolute in protecting and improving our customer

facing resources to continue to deliver good outcomes

for our customers and record high post purchase and

post delivery NPS scores were achieved. With our retail

brands clearly positioned and operations now leaner

andmoreeffectivethanever,theGroupisinastrong

position to capitalise when the market recovers and

deliver strong returns for our shareholders.

Progress on our three focus areas

The Group has consolidated its position as the clear

market leader having added 4ppts to our market share

since 2020.

We have improved our gross margins by 140 bps

to 55.8% as we target our historical level of 58%.

The growth has been supported by redistributing

goods across our supplier base to optimise the cost

and quality of production as well as from retail price

increasesinthefinalquarteroftheprioryear.

1. GlobalData August 2024.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

supported the brand in consolidating recent market

share gains. I’m also pleased to announce that we have

recently launched a new exclusive partnership with

La-Z-Boywhichwillbeagreatadditiontoourexisting

brand partnerships.

We adopt good governance practices to ensure our

brands play to their relative strengths, targeting their

customer segments accordingly to reduce the risk

of cannibalising one another’s sales.

OurSofologybrandoffersaninspiringandexciting

range of well targeted products that bring quality,

style and luxury within reach and targets a slightly

older demographic than the DFS brand.

Sofology over the year as a whole performed broadly in

line with the wider market. Following a relatively tough

start to the year we adapted the brand’s retail pricing

and introduced a number of new product ranges to

provide an overall refresh to the Sofology proposition.

These changes have had an almost instantaneous

impact with the brand returning to order intake growth

inthefinalquarteroftheyear.

To further bolster the brand’s potential we plan to

commence a refurbishment programme of the

Sofology showroom estate in calendar year 2025 to

modernise some of the older sites within the portfolio.

Thesewillbethefirstrefurbishmentscarriedout

across the estate and we will adopt a test and learn

approach to ensure we optimise the returns available.

When we see a prolonged period of improving like for

like performance and as our balance sheet strengthens

we plan to continue our showroom roll out to grow

theestatefromthecurrent58showroomsto65-70

showrooms and have our target locations lined up.

The Home market represents a great opportunity

for the Group to expand its addressable market to

thewider£5bnHome(non-upholstery)market,first

targetingthe£3bnbedsandmattresssubsegment.As

announced in our half year update we have completed

the development of supporting infrastructure including

a drop ship solution and warehouse management

system that provide the foundations for growth.

We have also expanded some of our exclusive brand

partnerships to include beds as well as upholstery. We

have decided to temporarily pause further investment

into marketing to drive sales and instead focus our

We have reduced operating costs across all areas of the

business, be it by operating segment or expense type.

This has been accomplished by undertaking a rigorous

review and reappraisal of the cost base to ensure it is

appropriate for both today’s market environment and

future, stronger market environments. This programme

is ongoing with examples of cost reductions to date

achieved via improved operating models, utilising AI,

enhanced procurement activities, and utilising data/

MI to improve operational performance. The savings

achievedinFY24willprovideafurtherupliftintothe

following year in addition to new initiatives that we

have planned. I’m pleased with the progress we have

made which has had the end customer impact core

todecision-makingtoensurewedonothamperour

ability to capture demand when the market recovers.

Strategic update

Ourstrategyistoprofitablyandsustainablygrowour

core upholstery brands, DFS and Sofology, utilising all

channels to create a seamless experience for our

customersandtogrowourshareofthe£5bnnon-

upholstery Home market. This growth is supported

by utilising and enhancing our enabling platforms;

technology and data, logistics, sourcing and

manufacturing, and people and culture.

Our pillars

TheDFSbrand,whichhasabroadappealoffersa

market-leadingchoiceofproducts.Itstrusted,friendly

service and digital approach to connect our showroom,

web and telesales channels enabling customers to

shop their preferred way has continued to improve

with post purchase NPS scores reaching record highs

of 92.8%.

We have successfully broadened DFS’s appeal to

a wider range of customers over time. This has

been facilitated, for example, by the addition of

exclusive brand partnerships and through adapting

our marketing strategy to focus more on improved

product showcasing supported by improved showroom

formats. Our exclusive brand sales now account for

over 41% of total sales. The most recent addition to

our exclusive brand partnerships in the period was Ted

Baker and the three ranges launched have performed

very well. We continue to develop new ranges to add to

our existing exclusive brands such as the new Carlisle

French Connection range. All these factors have

investmentsintoourcoreupholsteryofferinthisperiod

ofweakmarketdemand.ProfitabilityinourHomeoffer

has however stepped up, increasing year on year due to

improved gross margins and lower operating costs. We

continue to see great potential for the Group to drive

incrementalprofitswithlimitedfurtherincremental

investment as we target a 4% share in this market.

Our platforms

Our enabling platforms play a pivotal role in supporting

the Group to deliver value. This is achieved through a

numberofmeanssuchassourcingefficientlyutilising

theGroup’sscale,developingourmarket-leading

delivery services and providing our highly motivated

colleagues with data to drive insight and improved

decision-makingacrossthebusiness.

Sourcing and manufacturing: We are aiming to

improve our gross margins to our long term historical

pre-pandemiclevelof58%followingareduction

across 2021 and 2022. This reduction resulted from

rising input costs, freight rates and Bank of England

baseratesthatwerenotfullypassedonwithaprofit

mark up. In addition, lower market volumes impacted

theefficiencyofourownandexternalmanufacturing

operations. We expect to deliver cost of goods savings

through redistributing goods to optimise the cost

and quality across our supplier base and in addition

we expect further uplifts through reducing interest

rates over time. We took the decision to close the

smallest of our three manufacturing sites and one

ofourtwowoodmillsinthefirsthalfofthefinancial

period and redistributed production across the

remainder of our supplier base. This resulted in cost

savings that contributed to the 140 bps gross margin

improvement in the period. These types of decisions

areneverstraightforwardandhavesignificantimpacts

on our colleagues and other stakeholders. Following a

consultation with 215 colleagues, we were able to retain

44 colleagues including at our recently formed sewing

hub and we supported the remaining workforce through

a comprehensive outplacement support service.

Technology and data: Our investments continue

to centre heavily on utilising technology and data

toimprovetheefficiencyofouroperationsandthe

customer experience. We have recently undertaken

the process of moving away from a number of legacy

systems and implementing Google’s contact centre

CHIEF EXECUTIVE’S REPORT CONTINUED

AI platform in Sofology. This will help enable us to utilise

AI in the future to further improve our customer service

levels and optimise costs. To date we have automated

the process to take customer payments over the

phone as well as deliver a full self service customer

delivery proposition. We see numerous opportunities

ahead to reduce the number of customer contacts

to enable our teams to focus on the more complex

service situations. In the second half of the year we

also successfully launched our proprietary Intelligent

Lending Platform used in DFS, into Sofology. This has

broadened the number of lending partners available

to Sofology, increasing the probability of customers

obtaining the credit that is right for them, reducing the

time taken to deal with credit applications and reducing

the cost to the Group of providing credit to customers.

Logistics: Last year we completed the remaining

integration activities to combine and rationalise the

logistics assets from the DFS and Sofology brands.

NowtheSofaDeliveryCompany,whichfulfilsdeliveries

for both brands through utilising the same systems,

distributioncentrenetwork,fleetandworkforce

is performing very strongly with key performance

indicatorssuchasvehiclefill,labourproductivityand

delivery failure rates all improving. This has both driven

downcostssignificantlyandimprovedthecustomer

experience with post delivery NPS scores reaching

record highs. We believe that we have created a valuable

asset and there are additional opportunities available to

furtherrefineandimproveperformance.

People and culture: Our colleagues are the Group’s

most important asset. Ensuring the Group is a great

place to work that has an open, collaborative and

inclusive culture where people can be their best is

key to our future success. We are constantly looking

to evolve and improve our colleague experience

and we have been focusing over the last year on

colleague development. We have launched a number

of programmes to help our people thrive and grow,

for example by running a management academy

programme within the Sofa Delivery Company

to upskill over 150 colleagues, launching a Group

leadership academy programme with monthly

workshops attended by over 300 aspiring leaders

andviadevelopingfinanceacademycoursesledby

subject matter experts. To help ensure everyone feels

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

Conclusion and outlook

I want to sincerely thank all of our colleagues for their

enthusiasm and continued commitment to delivering

a great service to our customers in what has been

a very challenging period for the Group given the

market conditions.

Despite the challenges that the business has seen,

we are optimistic for the future and see signs that

market growth could soon return. We expect recent

improvements in housing transaction data and

strengthening consumer balance sheets to lead to

increasedupholsterymarketdemandacrosstheFY25

financialyear.Inaddition,thankstothesuccesswe

have had growing our gross margin and improving our

operationalefficiency,weexpecttodeliverprofitsinline

with market consensus

, weighted to the second half.

It is clear that the upholstery market has a long road

torecoverygiventhe20%declineonpre-pandemic

levels that we have seen. Despite the challenges we

havefaced,weremainconfidentthatthebusinessis

well positioned to capitalise on market recovery. Given

our strong market leadership position, the operational

leverage in the business, our well invested asset base

and negative working capital cycle we expect to deliver

strong returns for our shareholders.

TIM STACEY

Chief Executive Officer

25 September 2024

welcome we have established six colleague networks

and partnered with Diversity in Retail, enabling us to

collaboratewithotherbusinessesandbenefitfrom

adopting best practices. We are constantly seeking to

raise standards and I’m pleased to say we have achieved

accreditation in the Inclusive Employers Standard.

Sustainability

In June this year we submitted our Net Zero strategy

to the SBTi. We decided to shift our Net Zero target

to before 2050, aligning with climate science and

the UK government targets. I’m pleased to say that

this year we have secured commitments from our

manufacturing partners that cover 59% of our Scope 3

emissionstocommittodevelopingtheirownscience-

based Net Zero plans.

Whilst making up a relatively low proportion of our

total emissions I’m nevertheless proud that the

consolidationofourdeliveryfleets,AIrouteplanning

tools,anddriverefficiencytraining,aswellasremoving

gasfromourretailestatehasdeliveredasignificant

reduction in our Scope 1 emissions. We are already

making great strides to ensure our business can make

the most of the opportunities of a circular economy

to deliver sustainable performance for the Group

(see pages 32 to 51 for more details).

CHIEF EXECUTIVE’S REPORT CONTINUED

1. Companyderivedmarketconsensusforunderlyingprofit

beforetax£23.2m.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

We are the leading sofa

retailer in the digital age

Large potential customer base

The DFS Group has a specialist focus on the retail

upholstered furniture segment. The UK upholstery

furniture market was estimated by GlobalData to be

valuedat£3.1bn(incl.VAT)inthecalendaryear2023.

As a Group, we view the beds and mattresses segment

as a key opportunity increasing our Total Addressable

Market(‘TAM’)byapproximately£3bn.

Clear leader in the segment

The Group, through its DFS and Sofology and brands,

is the clear leader in the upholstered furniture market,

with 36%

marketsharebyvalueinFY23.Thismarket

remains highly fragmented and we see further

opportunities to grow our market share. We see four

broad categories of companies actively competing

in the upholstered furniture retail market: specialist

chains such as DFS, Sofology, ScS and Furniture Village;

independents that are typically single store operations;

predominantly online furniture retailers such as Wayfair;

and larger general merchandise or homeware retailers

such as Amazon, Argos, Dunelm, Ikea, John Lewis

and Next.

We believe the integration of digital and physical is

the right long term approach to serve our customers.

The Group has consolidated its position as

clear market leader in challenging conditions.

1. GlobalData August 2024 report. Market share calendar year 2023.

MARKET OVERVIEW

Ourwell-invested‘integratedretail’businessmodel

allowsustoadapttofast-changingconsumershopping

habits, and positions us well for the future.

Market conditions are currently challenging with the

UK upholstery market seeing a reduction in volumes

andreachingrecordlowsinFY24.

Historically, the Group has tended to gain market share

during periods of market weakness as weaker multiples

and independent chains have exited the market. For

example, the Group’s market share increased from

c.19%to24%duringthe2008-2010GlobalFinancial

Crisis impacted period and from 32% to 36% in the

2020 to 2023 Covid pandemic and cost of living crisis

(GlobalData).

Demandissupportedbyaseven-yearreplacement

cycle and underpinned by demographic trends.

We believe over shorter time frames the segment

is principally driven by three key factors: consumer

confidence,housingmarketactivityandconsumer

credit availability, discussed below. In addition to

these market drivers we do see from time to time some

volatility in market demand levels caused by particularly

hotorcoldweatherandsignificantpublicevents.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

(2.6)

3.1

(3.3)

(8.8)

(9.5)

(12.7)

(24.3)

(14.5)

(38.9)

(29.3)

(17.4)

2014

2015

2016

2018

2017

2019

2020

2021

2022

2023

2024 YTD

1,223

1,226

1,232

1,223

1,189

1,177

1,040

1,480

1,265

1,024

YoY +1.9%

2014

2015

2016

2018

2017

2019

2020

2021

2022

2023

2024 YTD

5.9

7.7

10.1

10.0

8.3

6.5

(2.0)

(3.5)

6.1

7.8

8.5

2014

2015

2016

2018

2017

2019

2020

2021

2022

2023

2024 YTD

MARKET OVERVIEW CONTINUED

Market conditions are currently challenging with UK upholstery market demand levels at a record low driven by the

cost of living crisis. Historically, the Group has been able to grow market share during economically challenging times.

Key market drivers

Consumer confidence

Levels of consumer spending, particularly for big ticket

items,areinfluencedbygeneralconsumerconfidence.

UKconsumerconfidence,asmeasuredbyGfK,has

weakened since 2016 amid uncertainty following the

referendum vote to leave the European Union. In 2020,

consumerconfidencefellfurtherduetoeconomic

andfinancialuncertaintyaroundthepandemic,but

recoveredin2021.Sincethenconsumerconfidence

hasbeenimpactedbyhighinflationlevelsandelevated

interest rates putting pressure on consumer budgets.

In 2024 through to September there has been an

improvementinconfidencelevels,albeitthescores

remain volatile month to month.

Housing market

Independent research conducted on our behalf

suggests that c.20% of upholstery purchases are

triggered by a house move. As the pandemic spread in

spring 2020, government social distancing measures

ledtoasharpcontractioninhousingmarketactivity,

which subsequently bounced back in 2021 as a result

of temporary government measures to reduce stamp

duty payable on residential property purchases.

Housing transactions since then have been impacted

by higher Bank of England base rates and the cost of

livingcrisis,howevertheJuly2024YTDpositionisin

year on year growth following a recovery over the last

four months.

Consumer credit

Upholstered furniture typically has relatively high

unit prices and the availability of consumer credit can

facilitate purchases and upselling. Consumer credit

growthslowedsincetheEUreferendum,reflecting

increased economic and political uncertainty.

Through the pandemic, UK consumers reduced

debt, as government restrictions reduced options for

discretionary spending (e.g. foreign travel and leisure).

Consumer unsecured lending has been in growth

since 2022.

1. GfKUKConsumerConfidenceaverageofindividualmonth

scores for each year.

2. HMRC – number of residential property transaction

completionswithavalueover£40,000fortheUK,

seasonally adjusted.

3. Monthly12-monthgrowthrateoftotal(excludingthe

Student Loans Company) sterling net consumer credit

lending to individuals (in percent) seasonally adjusted.

Consumer confidence

Housing transactions p.a. (‘000s

) Net unsecured lending growth

(%)

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

OUR CUSTOMER JOURNEY

Through our innovative

in-housedesignteamsand

with our buying expertise we

remain at the forefront of home

furnishing trends with each of

our brands offering a distinct

curated range. We inspire

consumers to consider a

purchase through memorable

advertising, inspirational web

content and the use of

augmented reality technology.

Sustainability is a key feature

in our product designs as we

strive to meet the expectations

of our customers by being

responsible, ethical and

sustainable in our products.

The combination of our

well-investedwebsites,national

showroom networks and

call centres which are staffed

bywell-trainedandhighly

motivated sales teams provide

amarket-leadingintegrated

retail experience to our

customers. Collectively across

all our brands we have styles

and price points that appeal

to the majority of the market

and we make our products

more affordable through

offering interest free credit.

The customer is at the heart of our Group journey

% of customers who

research online

81%

UK showrooms

173

DESIGN

& INSPIRE

INTEGRATED

RETAIL MODEL

CUTTING EDGE

TECHNOLOGY

MANUFACTURING

SERVICE

INNOVATIVE

DELIVERY OPTIONS

SOFA COLLECTION

& RECYCLING

We focus on embracing and

leveraging technology to

maintain our position as the

leading sofa retailer in the

digital age and improve our

operational efficiency.

Aftercare is provided by highly

skilled teams with the majority

ofafter-salesissuesbeing

addressed in customers’

homes by our own colleagues.

We are one of the largest

manufacturers of upholstered

furniture in the UK. Our

factories collectively produce

around 18% of all the furniture

we sell.

The Sofa Delivery Company is

ourleadingGroup-widesupply

chain platform. Through our

own network of customer

delivery centres and our own

delivery fleet we carefully deliver

our products to customers’

homes and provide a

comprehensive installation

service.

Getting rid of an old sofa

responsibly and conveniently

is a real issue for customers.

Unless old sofas are passed

on to family, friends or charity,

many go into landfill. Our

experienced specialist

partner Clearabee will collect

customers old sofas and take

them to the nearest recycling

centre where it will be broken

down to its component parts

to reuse, recycle or create

new energy.

Service managers

220

Delivery vehicles

253

Sofas saved from landfill

56,800

Reduction in customer calls

from enhanced delivery

arranging experience

Orders manufactured

in own factories

18%

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

BUSINESS MODEL

OUR ENABLERS

Customer ethos

‘Think Customer’ is our first value. By treating

customers as we would our own family, we aim

to deliver great service.

Unparalleled scale

We have a UK Group market share of c.36%

over three times that of our nearest competitor.

Complementary brands

Our complementary brands appeal to different

customer segments.

Well-invested platform

Modern,well-locatedshowroomsand

innovative apps and websites give customers

the convenience to shop exactly how they want.

Our own warehouses and delivery fleet use

state-of-the-artsoftwaretohelpusoperate

efficiently.

Made-to-order products

The majority of the products we sell are

made-to-order,enablingustooperatewith

negative working capital.

Vertically integrated model

Wehaveend-to-endcontrolofthecustomer

journey from design all the way through to

after-salesservicing.

Exceptional people

We have over 55 years of expertise and recruit,

train and retain what we believe are the highest

calibre people in the industry.

WHAT WE DO

Design and inspire

Our design teams and experienced buyers

curate attractive and distinct propositions

across our unique brands that appeal to most

tastes. Our marketing aims to reach our target

markets across all broadcast and digital media,

inspiring customers to consider a purchase.

Retail

Our websites and showrooms nationwide

combine to create an increasingly seamless

customer experience, allowing customers the

opportunity to visualise, sit on and feel the

product, while researching and then transacting

in store, at home or on the move.

Manufacture

We manufacture around 18% of the Group’s

sofa orders in our own British factories, resulting

in shorter lead times and greater oversight on

sustainability.

Deliver and install

Our delivery network operates from customer

distribution centres spread across the UK and

Irelandusingcustom-builtroute-mapping

technology to reduce lead times, lower

emissions and optimise efficiency.

Service

Sometimes things go wrong and, if they do,

we have our own teams of upholsterers that

are on hand to visit customers in their homes

andaddressanyafter-salesissues.

OUTCOMES

Sustain sector-leading

operating margins

Scale advantages across the value chain,

from sourcing and shipping rates to maximising

delivery and service fleet utilisation.

Grow our market share

We have a history of growing our market share

over the long term in all economic climates.

Our exclusive brands enable us to target the

majority of the market and we have a clear

opportunity to grow further.

Maintain strong cash generation

We aim to deliver high levels of free cash flow

generation, enabling us to both invest for

growth and return funds to shareholders.

Continue to invest in the business

We reward our staff fairly, maintain and enhance

our existing assets and selectively invest in

growth opportunities to optimise the returns

for our shareholders.

VALUE FOR STAKEHOLDERS

CUSTOMERS

92.8%

DFS post purchase NPS

EMPLOYEES

38%

employees > five years’ service

SUPPLIERS

33%

customer orders from British factories

SHAREHOLDERS

£191m

net cash distributed since flotation

COMMUNITY

£7.6m

raised since 2013 for BBC Children

in Need through customer donations

and fundraising initiatives

1. GlobalData August 2024 report. Market share calendar year 2023.

2. Includesthird-partymanufacturingandinternalmanufacturing.

3. Dividends and share buybacks net of 2020 equity raise.

How we create value… How we deliver value…

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

OUR STRATEGY

Our vision is to lead furniture retailing in the digital age,

and we pursue this through our ‘Pillars and Platforms’

strategy which will unlock new categories of growth,

whilst leveraging our proven and leading upholstery

marketmade-to-ordermodeladvantages.

The strategy of the business is made up of three pillars:

our DFS brand, our Sofology brand and our expansion

into the Home market. The growth of our three pillars

will be enabled by our four Group platforms: sourcing

and manufacturing, technology and data, people

and culture and the Sofa Delivery Company logistics

platforms.

ThestrategyreflectstheGroup’sexpertiseandscale

and the ability to utilise our enabling platforms to

improveoperationalefficiencyandgrowthacrossour

brand portfolio.

We are committed to building a sustainable business

model, both in terms of our impact on the environment

and preserving our long term success as a Group.

ESG

Platforms

Pillars

Best experience

Biggest range and the critical ‘sit test’:

88%

of DFS customers visit a store

before buying

Best in store service

92.8%

DFS post purchase NPS

Best sales teams

91%

people would recommend Sofology having purchased

within a Sofology showroom

Best online brand strength

‘DFS’ is searched for

1.8x

more than the term ‘sofas’

81%

of showroom customers research online before

coming in to a showroom

Best enhanced technology

The largest collection of augmented reality (AR)

assets accessed through a web browser in the

furniture category

Best ecommerce platform

Enhancement of the online experience through

the use of AI

RETAIL

DIGITAL

DFS & HOME

Customer proposition and service innovation

New products and services to engage customers

Focus

– Range enhancements including successfully launching

new brand partnerships

– Continued improvement of established customer

NPS scores

– Invest to grow beds and mattress sales when core

upholstery market demand recovers, leveraging the

foundations already laid

SOFOLOGY

Increase scale of business

To further grow the showroom estate throughout the UK

Focus

– Like-for-likesalesgrowth

– Rolloutofshowroomsontheroutetotargeted65-70

locations when market recovers

– Continued improvement of established customer

NPS scores

TECHNOLOGY AND

DATA

Using data and technology to

unlock growth in our brands

LOGISTICS

Best in market two person delivery

and installation

SOURCING AND

MANUFACTURING

Optimising our supplier portfolio

PEOPLE AND CULTURE

Delivering fundamental

cultural change

Focus

Development and enhancement

of customer contact platforms,

introducing AI to improve the

customer experience

Focus

Continue to optimise operational

performance

Focus

Grow gross margin rate to 58%

Focus

Continue to develop our

Employee Value Proposition (EVP)

ensuring our external perception

is appealing and matches our

internal reality

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

£1,287.2m

£935.0m

£1,359.4m

£1,474.6m

£1,423.6m

£1,311.8m

£1,165m

FY19*

FY20

FY21

FY22

FY23

FY24

FY23

FY19**

£50.2m

(£63.1m)

£109 .2m

£60.3m

£30.6m

£10.5m

£28.2mFY19**

FY19*

FY20

FY21

FY22

FY23

FY24

18.7%

13.5%

10.8%

FY19

FY20

FY21

FY22

FY23

FY24

1.0x

1.9x

2.5x

FY19

FY20

FY21

FY22

FY23

FY24

(£5 .0m)

(£7.0m)

(£10.0m)

FY19

FY20

FY21

FY22

FY23

FY24

KEY PERFORMANCE INDICATORS – FINANCIAL

Gross sales

£1,311.8m

Description

Gross sales represents the total amounts payable by

external customers for goods and services supplied by

the Group, including aftercare services (for which the

Group acts as an agent), delivery charges and value

added and other sales taxes.

Performance

Decline in sales due to reduced levels of market demand.

Description

Profitbeforetaxadjustedfornon-underlyingitems

and amortisation associated with acquired brands.

Performance

Decrease due to the lower level of gross sales

and revenue.

Underlying free cash flow to equity holders

(£10.0m)

Banking leverage

2.5x

Description

Underlying free cash flow to equity holders is the change

in net bank debt for the period after adding back dividends,

acquisition related consideration, share based transactions

andnon-underlyingcashflows.

Performance

Reduction driven by transitory working capital inflows

normalising as well as the lower relative profits in the period.

Furtherworkingcapitaloutflowinweek53ofFY24dueto

additional rent and VAT payments made relative to 52 week

periods.Excludingtheworkingcapitalmovement,FY24

freecashflowwas£7.5m(FY23:£29.4m).

Underlying return on capital employed

10.8%

Description

Underlying return on capital employed (‘underlying ROCE’)

is underlying post tax profits expressed as a percentage

of the sum of property, plant and equipment, computer

software, right of use assets and working capital.

Performance

Decrease driven by lower profit in the period.

Underlying profit/(loss) before tax

excluding brand amortisation

£10.5m

Description

Refer to APMs on pages 19 and 20.

Performance

Increase driven by lower EBITDA and an increase in net

debt, partly due to temporary working capital movements.

Key

* 52 weeks pro forma.

** 48 weeks reported.

1. Refertopages19and20forAPMdefinitions.

2. 53 week period.

3. Results for the 52 weeks to 27 June 2021 have been

representedtoreflecttheclassificationofoperations

in Spain and the Netherlands as discontinued in

accordance with IFRS 5.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

FY19

FY20

FY21

FY22

FY23

FY24

35.8

39.4

48.5

FY19

FY20

FY21

FY22

FY23

FY24

72.0%

73.8%

77.1%

FY19

FY20

FY21

FY22

FY23

FY24

86.3%

91.3%

92.8%

FY19

FY20

FY21

FY22

FY23

FY24

11.7%

18.6%

28.3%

FY19

FY20

FY21

FY22

FY23

FY24

KEY PERFORMANCE INDICATORS – NON-FINANCIAL

Net Promoter Score (%) –

Post purchase customer satisfaction

92.8%

Net Promoter Score (%) –

Established customer satisfaction

28.3%

Suppliers –

% paid on time

77.1%

Description

Average across all DFS stores based on post purchase

customer satisfaction surveys.

Performance

Significant year on year increase to a record high level.

Description

Average across all DFS stores based on established

customer satisfaction surveys (six months after order).

Performance

AsecondyearofimprovementsinceFY22which

was heavily impacted by pandemic related shipping

disruption, HGV reliability and extended manufacturing

lead times.

Description

Percentage of supplier invoices paid within agreed terms.

Performance

IncreasefromFY23drivenbycontinuousimprovement

within the operational teams.

Description

Average number of days between receipt and payment

of supplier invoices.

Performance

IncreasefromFY23duetostandardisationofkeysupplier

terms.

Description

Number of Sofology stores trading at the end of the

financial period.

Performance

Showroom openings temporarily paused until market

demand recovers.

Sofology UK stores

Suppliers –

Average days to pay

48.5 days

Strategic links Strategic links Strategic links

Strategic links Strategic links

Key to strategic links

Sourcing and manufacturing

Technology and data

Logistics

People and culture

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

JOHN FALLON

Chief Financial Officer

Bioonpage 52

FINANCIAL REVIEW

Focus on strengthening

profits and cash flow

The Group’s financial performance in FY24 has been heavily impacted by

the decline in market demand levels and in the second half by Red Sea related

shipping disruption. This has required decisive actions to protect profitability

and cash flow, whilst maintaining our position as the clear market leader.

We saw order intake decline by 1.8% for the year

in challenging market conditions, with market order

volumesdownover20%comparedwiththepre-

pandemic period.

Afterpositivegrowthinourfirstquartersummersale

trading period, we saw customer footfall and order

intake decline year on year through the second and

third quarters, including the important winter sale

tradingperiod(Januarytomid-March).However,within

this period we did record good positive order intake

growth across our guaranteed Christmas delivery

campaign, supported by increased customer choice

on7-10dayexpressdeliveryranges.Inthefinalquarter

of the period, we were pleased to see order intake

growth improve to +8.4% as we annualised weaker

comparatives and following actions in Sofology to

strengthen product ranging and pricing, and in DFS to

reintroduce 4 years interest free credit at select times.

Basis of preparation

The reporting period covers 53 weeks to 30 June 2024

(FY24).AsaresultoftheadverseimpactfromRed

Seashippingdelaysinquarterfour,theneteffectof

theadditionalweekonreportedrevenuesinFY24is

relativelylow(+c.£7myearonyear)andtheprofitimpact

isnotsignificant.Consequently,otherthanorderintake

growth metrics we have not included 52 week pro forma

numbersforFY24.Yearonyearorderintakehasbeen

calculatedbycomparingthefirst52weeksofthe53

weekfinancialperiodtothe52weekcomparatorperiod.

Revenue and gross sales

£m FY24 FY23 YoY

Gross sales

DFS (incl. Dwell) 1,047.0 1,125.5 (7.0%)

Sofology 264.8 298.1 (11.2%)

Total gross sales 1,311.8 1,423.6 (7.9%)

Digital sales % 24.3% 24.0%

Revenue 987.1 1,088.9 (9.3%)

Total gross sales, which are recognised on delivery of

orders to customers, decreased by 7.9% year on year

to£1,311.8mwithbothbrandsreportingadeclineon

prior year. The broader appeal of the DFS proposition

supported a relatively better sales performance, whilst

Sofology sales were more closely aligned with the market.

Gross sales saw a higher rate of decline than order

intake as a result of Red Sea disruption deferring

£12mofdeliveriesintoFY25andthehigherorder

bank at the start of the comparative period converting

into sales.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

The margin rate in the second half was below our

expectations as we responded to the weak market

conditions with additional promotional activity,

together with the Red Sea related freight cost

increases noted above.

Whilst the near term freight market is expected to

remainvolatileandhardtoforecast,weareconfident

that our scale and buying processes will enable us to

continuetosecuremarket-leadingrates.

We continue to see opportunities to grow gross margin

rate,supportedbyfurthercostofgoodsefficiencies

across our supply chains and as lower Bank of England

rates reduce interest free credit costs (on an annualised

basisa1%changeinbaseratesequatesto£7m-£8m

cost impact).

We hedge our USD FX requirements with 90% of our

expected USD spend currently hedged at a rate that

is4centsfavourabletotheFY24averageratepaid.

Every 1 cent movement in the USD rate equates to

ac.£1.1mchangeincoststotheGroup.

Selling, distribution and administration costs

Underlying selling, distribution and administration costs

totalled£408.8m(2023:£434.8m),representing31.2%

of gross sales (2023: 30.5%).

We continue to work hard to bring down our operating

costs across the business, and we are making good

progresstowardsthe£50moperatingefficiencies

targetwesetattheendofFY23.Whilstthisrequires

somedifficultdecisions,ithashelpedtoprotect

profitabilityinthecurrentperiodandsetsthebusiness

up for stronger future returns.

The£26.0mreductionincostsincluded£8.8mof

volumerelatedvariablecostsand£22.0mofsavings

frommoreefficientoperatingmodelsacrossourstores

and online sales teams, logistics and manufacturing

operations, customer service teams and across other

central support functions. This includes the Sofa Delivery

Company, where we are seeing strong improvements

in customer and operational KPIs, at the same time

assignificantlyloweringcoststhroughacombination

ofproductivityimprovements,areductioninthird-

partyfulfilmentpartnersandfurtherconsolidationof

operational distribution centres. In addition, we reduced

Digital sales mix increased slightly by 0.3ppts year on year

to 24.3%. Our market research consistently indicates

the majority of consumers utilise both channels in their

shoppingjourneyandwehaveawell-investedasset

base across both physical and digital sales channels

enabling a seamless customer experience.

Grouprevenueof£987.1mwas9.3%lowerthanthe

prioryear(£1,088.9m).Therateofdeclineisgreater

than the gross sales reduction due to the higher cost

of providing interest free credit.

Interest free credit remains an important part of our

overall customer value proposition. The increased

cost is a result of higher Bank of England base interest

rates and to a lesser extent an increase in the mix of

salesmadeoncredit,allpartiallyoffsetbytheimpact

of reducing our maximum every day interest free credit

offerfrom48monthsto36monthsfromMarch2024.

Gross profit

Grossprofitof£550.8mwas£41.4m(7.0%)loweryear

on year, primarily due to the revenue shortfall.

We delivered good further progress on gross margin

rateintheyear,whilstcontinuingtooffercustomers

market-leadingquality,choiceandvalue.Asa

percentage of revenue, gross margin in the period

was55.8%(FY23:54.4%),anincreaseof+140bpsyear

onyear(inadditiontothe170bpsincreaseinFY23).

The margin improvement was supported by our

decision to close our smallest manufacturing facility

andwoodmillinthefirsthalfoftheyear,whichenabled

us to shift production volumes across our supplier base

and reduce our cost of goods, contributing to an overall

productmarginimprovementofc.£9.8m.Thisdecision

was disclosed as a post balance sheet event in our

FY23annualreport.

In addition, average freight rates across the period

weresignificantlylowerthantheprioryearwhichhelped

topartlyoffsettheadverseimpactsofhigherinterest

free credit costs and a lower USD rate applied to our

Far East purchases. The net impact across these

itemswasanetreductiontogrossmarginofc.£5.1m.

Despite being lower year on year, freight costs were

higherthanweexpectedinthefinalquarteroftheyear

as a result of Red Sea disruption related increases.

marketingby£3.8mintheperiod,principallythrough

reducing our investment in driving the awareness of

our Home ranges until market conditions recover.

Inflationarycostincreaseswerecontainedto

c.£12.0m(3%),mainlyrelatingtowages.Thisincrease

waspartlyoffsetby£4.7mofcostavoidanceand

one-offsavingsincludingrebatesonhistoricalbusiness

rates,andthroughnotpayingafinancialperformance-

related bonus to senior management and our central

support teams.

Lookingforward,weareconfidentwehavelineofsight

toadditionalcostefficienciesthatcanhelpustooffset

futureexpectedinflationarycostpressures.

Depreciation, amortisation, impairment

and underlying net finance cost

Depreciation, amortisation and underlying interest

chargeshaveincreasedby£4.7mto£132.9m

(2023:£128.2m).

Underlyingnetinterestincreasedby£7.0mto£41.1m

(2023:£34.1m)asaresultofthehighercostofdebt

servicing due to the higher average SONIA rates and

a higher average net debt level through the period.

Depreciation, amortisation and impairment costs

reduced£2.3m.Lowerdepreciationchargesand

impairment on right of use assets arose as a result of

the consolidation of our distribution centre network

and associated lease exits in the prior period and

renegotiating property leases approaching expiry

to lower rent levels.

Non-underlying costs

FY24(£m)

Income

statement

Cash

outflow

Restructuring costs 6.5 4.1

Land slippage costs 3.1 0.2

Release of lease guarantee (0.7) –

Refinancingcosts 1.9 0.8

Total 10.8 5.1

Non-underlyingcostsfortheyearwere£10.8m(2023:

benefitof£0.5m),including£5.1mofcashoutflowsin

the year.

FINANCIAL REVIEW CONTINUED

£6.5mofcostswereincurredinrelationtothe

restructuring of our manufacturing operations and

central support functions in response to lower demand

and to enable productivity improvements. This consists

ofredundancyandterminationcoststotalling£4.1m,

non-cashwrite-offlossestotalling£2.0mandother

closurecoststotalling£0.4m.

£1.9mofcostswereincurreduponrefinancingour

banking facilities in September 2023, with the majority

ofthiscostcoveringthewriteoffofunamortised

issuecosts.Thecashoutflowsassociatedwiththese

activitiestotalled£0.8m.

£2.9mofnon-cashcostsand£0.2mofcashcostsrelate

to a provision made for expected remediation works

requiredtoanareaoflandslippageidentifiedatone

of our remaining manufacturing sites. We expect the

necessaryworkstobecarriedoutandpaidforinFY25.

£0.7mofnon-cashleaseguaranteeprovisionrelease

associated with former subsidiary companies partly

offsetstheabovecosts.

Profits, tax and earnings per share

Reported loss before tax for the 53 week period to

30June2024was£1.7m(FY23:profitof£29.7m).

Reportedlossaftertaxfortheperiodwas£4.4m

(FY23:profitof£26.2m).

Thetaxchargerecognisedinthefinancialstatements

was£3.0m(FY23:£7.1m)despitetherebeinga

reported loss for the period. This is primarily due to

disallowabledepreciationonnon-qualifyingassets.

The Group updates its Tax Strategy Statement each

year, which is published on the Group’s website, in

compliance with its duty under the Finance Act 2016,

which sets out details of the Group’s attitude to tax

planning and tax risk.

Underlyingprofitbeforetaxandbrandamortisationwas

£10.5m,whichis£20.1mlowerthanthecomparable

period(FY23:£30.6m).Thisreflectsrecordlowmarket

demandlevelsandhigherinterestcosts,partlyoffsetby

gross margin improvements and operating cost savings.

Basic underlying earnings per share from continuing

operationswas1.5pence(FY23:9.6pence).

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

Totalworkingcapitaloutflowintheperiodwas£26m

inclusive of additional rent payments included in the

leaseliabilitiesline.£13moftheoutflowisdueto

additionalVAT(£5m)andrent(£8m)paymentsin

this 53 week accounting period relative to 52 week

periods.Theseoutflowswillreverseinfutureperiods.

Theremainingworkingcapitaloutflowisduetothe

lower level of trading activity in the period. We expect

our negative working capital model to result in working

capitalcashinflowswhenmarketdemandrecovers.

In September 2023 we successfully completed the

refinancingofourdebtfacilities,increasingthetotal

amountavailablefrom£215mto£250m.Thefacilities

comprisea£200mrevolvingcreditfacilitywitha

syndicate of banking partners which is in place until

September2027,withafurther16-monthextension

option,and£50mofUSprivateplacementnoteswith

redemption dates split equally between September

2028 and September 2030.

The facility is subject to half yearly covenant tests

of 3.0x maximum leverage net debt/EBITDA and 1.5x

minimumfixedchargecover(bothmeasuredonan

IAS17basis),whichwehavefullysatisfiedduringFY24,

ending the period with leverage of 2.5x

andfixed

charge cover of 1.57x.

Whilst the Group expects to stay within the existing

facility covenants, in September 2024 we agreed a

widening of covenants with our lenders, which provides

additional headroom in the event of unanticipated

downside scenarios that result in a further decline in

market volumes and lower EBITDA.

The amended leverage covenant widens to 3.9x at

H1FY25and3.7xatFY25,beforereturningto3.0xat

H1FY26.Theamendedfixedchargecovercovenant

widensto1.3xatH1FY25,1.3xatFY25and1.4xat

H1FY26,beforereturningto1.5xatFY26.Therevised

covenant agreement includes some limited restrictions

on the payments of future dividends as detailed in the

note opposite.

Cash flow, net debt and lending facilities

Netbankdebtintheperiodincreasedfrom£140.3m

to£164.8m.

£m FY24 FY23

Underlying EBITDA 142.0 157.4

Other* 1.2 6.6

Capital expenditure (21.6) (34.9)

Interest (18.4) (10.3)

Ta x (3.0) (0.7)

Principal and interest paid

on lease liabilities (92.4) (85.1)

Working capital (17.8) (40.0)

Underlying free cash flow (10.0) (7.0)

Non-underlyingitems (5.1) (0.3)

Free cash flow (15.1) (7.3)

Shareholder returns (9.4) (43.0)

Cash flow (24.5) (50.3)

Closing net bank debt (164.8) (140.3)

* Other includes discontinued operations, gains on disposal

ofrightofuseassets,profitondisposaloffixedassets,

FX revaluations and share based payments expense.

Cashcapitalexpenditureof£21.6mintheperiod

reducedfrom£34.9minFY23and£25-£30mguided

atthestartofFY24,asthebusinesstookamore

disciplined approach to capital spend prioritisation in

response to the more challenging market conditions

andourlowerprofitexpectations.Approximately

50% was incurred on maintenance activities. Growth

investment was predominantly incurred on technology

investments to enhance the customer experience

andsupportouroperationalefficiency.Inaddition,one

new DFS showroom was opened in Greenwich and

we refurbished one DFS showroom (59 showrooms

completedoverthelastfiveyears).£9.8mofcapital

expenditure was also incurred on leased motor vehicle

additions(FY23:£8.7m)whichincludescompanycars

and commercial vehicles.

Cashinterestpaidincreased£8.1myearonyearand

non-underlyingcashcostsof£5.1mwereincurred

due to the reasons provided above.

Dividends

TheBoarddoesnotproposeafinalFY24dividend.Our

interim dividend of 1.1 pence per share was predicated

ondeliveringahigherfullyearunderlyingprofitthan

we achieved. Based on our dividend cover policy of

2.25x-2.75xunderlyingEPS,theinterimdividendhas

already covered the implied full year total dividend.

Furthermore, this is consistent with our current

leverage position and our focus on reducing leverage

andnetdebtovertimetoour0.5x-1.0xtargetrange.

Outlook

After two challenging years of market and Group

revenue declines, we see increasing reasons to be

optimistic about a return to top line growth over the

course of the year ahead. However, we are planning

prudentlywithafocusongeneratingincreasedprofits

andfreecashflowthroughimprovedcommercialand

operatingperformance,additionalcostefficiencies

and disciplined management of our working capital and

capital expenditure. In the medium term as the market

recoveryaccelerates,weareconfidentofgenerating

strong returns for our shareholders.

JOHN FALLON

Chief Financial Officer

25 September 2024

FINANCIAL REVIEW CONTINUED

1. Refertopages19and20forAPMdefinitions.

2. Covenant amendment dividend terms:

 Amaximum£2.0mdividendmaybedeclaredinrespectofH1FY25performance(i.e.FY25interimdividend)subjectto:

– LeverageattheDecember2024assessmentbeinglessthan2.50xandfixedchargecoverbeinggreaterthan1.50x;and

– Forthefuturetwotests,leverageisforecasttobelessthan2.50xandfixedchargecoverisforecasttobegreaterthan1.60x

(after dividend payments).

Any subsequent dividends declared during the remainder of the covenant amendment period are subject to:

– Leverage being less than 2.50x at the last test and is forecast (after the payment of such dividend) to remain below 2.50x at each

of the next two tests; and

– Fixed charge cover being greater than 1.60x at the last test and is forecast (after the payment of such dividend) to remain above

1.60xateachofthenexttwofinancialcovenanttests.

Subject to lender consent we retain the right to revert to the previous covenant terms at any time.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

ALTERNATIVE PERFORMANCE MEASURES

InreportingtheGroup’sfinancialperformance,

the Directors make use of a number of alternative

performance measures (‘APMs’) in addition to those

definedorspecifiedunderUK-adoptedInternational

Financial Reporting Standards (‘IFRS’). APMs are not

IFRS measures, nor are they intended to be a substitute

for IFRS measures.

The Directors consider that these APMs provide useful

additional information to support understanding

of underlying trends and business performance.

In particular, APMs enhance the comparability of

information between reporting periods by adjusting

fornon-underlyingitems.APMsarethereforeusedby

the Group’s Directors and management for internal

performance analysis, planning and incentive setting

purposes in addition to external communication of

theGroup’sfinancialresults.

In order to facilitate understanding of the APMs used

by the Group, and their relationship to reported IFRS

measures,definitionsandnumericalreconciliations

are set out below.

DefinitionsofAPMsmayvaryfrombusinessto

business and accordingly the Group’s APMs may not

be directly comparable to similar APMs reported by

other entities.

APM Definition Rationale

Gross sales Amounts payable by external customers for goods and services supplied by the

Group, including the cost of interest free credit and aftercare services (for which the

Group acts as an agent), delivery charges and value added and other sales taxes.

KeymeasureofoverallsalesperformancewhichunlikeIFRSrevenueisnotaffected

bytheextenttowhichcustomerstakeuptheGroup’sinterestfreecreditoffering.

Brand contribution Grossprofitlesssellinganddistributioncosts,excludingpropertyandadministration

costs.

Measureofbrand-controllableprofitasitexcludessharedGroupcosts.

Adjusted EBITDA Earnings before interest, taxation, depreciation and amortisation adjusted to exclude

impairments.

Acommonlyusedprofitmeasure.

Non-underlying items Itemsthatarematerialinsize,unusualornon-recurringinnaturewhichtheDirectors

believe are not indicative of the Group’s underlying performance.

Clearandseparateidentificationofsuchitemsfacilitatesunderstandingof

underlying trading performance.

Underlying EBITDA Earnings before interest, taxation, depreciation and amortisation from continuing

operations,adjustedtoexcludeimpairmentsandnon-underlyingitems.

Profitmeasurereflectingunderlyingtradingperformance.

Underlying profit before tax

and brand amortisation PBT(A)

Profitbeforetaxfromcontinuingoperationsadjustedfornon-underlyingitems

and amortisation associated with the acquired brands of Sofology and Dwell.

Profitmeasurewidelyusedbyinvestorsandanalysts.

Underlying earnings per share Post-taxearningspersharefromcontinuingoperationsasadjustedfornon-

underlying items.

Exclusionofnon-underlyingitemsfacilitatesyearonyearcomparisonsofthekey

investor measure of earnings per share.

Net bank debt Balancedrawndownoninterest-bearingloans,withunamortisedissuecostsadded

back, less cash and cash equivalents (including bank overdrafts).

Measure of the Group’s cash indebtedness which supports assessment of available

liquidityandcashflowgenerationinthereportingperiod.

Cash EBITDA Net cash from operating activities before tax, less movements on working capital

and provisions balances and payments made under lease obligations, adding back

non-underlyingitemsbeforetax.

Measureofthenon-underlyingoperatingcashgenerationofthebusiness,

normalisedtoreflecttimingdifferencesinworkingcapitalmovements.

Underlying free cash flow to equity holders The change in net bank debt for the period after adding back dividends, acquisition

relatedconsideration,sharedbasedtransactionsandnon-underlyingcashflows.

Measure of the underlying cash return generated for shareholders in the period

andakeyfinancialtargetforExecutiveDirectorremuneration.

Leverage (gearing) The ratio of period end net bank debt to cash EBITDA for the previous twelve months. Key measure which indicates the relative level of borrowing to operating cash

generation, widely used by investors and analysts.

Underlying return on capital employed

(underlying ROCE)

Underlyingpost-taxoperatingprofitfromcontinuingactivities,expressedasa

percentage of the sum of: property, plant and equipment, computer software,

right of use assets and working capital.

Representsthepost-taxreturntheGroupachievesontheinvestmentithasmade

in its business.

APM glossary and definitions

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

ALTERNATIVE PERFORMANCE MEASURES CONTINUED

Adjusted EBITDA Note

FY24

£m

FY23

£m

Operatingprofitfromcontinuingoperations 2 41.3 63.8

Depreciation 3 77.8 80.5

Amortisation 3 13.7 11.6

Impairments 3 0.3 2.0

Adjusted EBITDA from continuing operations 133.1 157.9

Underlying EBITDA Note

FY24

£m

FY23

£m

Adjusted EBITDA from continuing operations 133.1 157.9

Non-underlyingoperatingitems 3 8.9 (0.5)

Underlying EBITDA from continuing operations 142.0 157.4

Underlying profit before tax and brand amortisation – PBT(A) Note

FY24

£m

FY23

£m

(Loss)/profitbeforetaxfromcontinuingoperations 2 (1.7) 29.7

Non-underlyingitems 3 10.8 (0.5)

Amortisation of brand names 10 1.4 1.4

Underlyingprofitbeforetaxandbrandamortisation 10.5 30.6

Net bank debt Note

FY24

£m

FY23

£m

Interest bearing loans and borrowings 18 187.4 165.8

Unamortised issue costs 18 1.6 1.2

Cash and cash equivalents (including bank overdraft) (24.2) (26.7)

Net bank debt 164.8 140.3

Movement in net bank debt

FY24

£m

FY23

£m

Closing net bank debt (164.8) (140.3)

Less: Opening net bank debt 140.3 90.0

Movement in net bank debt (24.5) (50.3)

Underlying free cash flow to equity holders Note

FY24

£m

FY23

£m

Movement in net bank debt (24.5) (50.3)

Dividends 21 9.4 12.1

Purchase of own shares – 30.9

Non-underlyingcashitemsincludedincashflowstatement 5.1 0.3

Underlyingfreecashflowtoequityholders (10.0) (7.0)

Exclude:

Workingcapitaloutflow 17.8 40.0

Operating result from discontinued operations 29 (0.3) (3.6)

Underlyingfreecashflowtoequityholdersexcludingoperatingresult

fromdiscontinuedoperationsandworkingcapitaloutflow 7.5 29.4

Leverage Note

FY24

£m

FY23

£m

Net bank debt (A) 164.8 140.3

Net cash from operating activities before tax 26 118.9 122.4

Add back:

Pre-taxnon-underlyingitems 10.5 (4.3)

Less:

Movement in trade and other receivables 26 0.9 (13.2)

Movement in inventories 26 3.2 (8.6)

Movement in trade and other payables 26 15.9 55.8

Movement in provisions 26 (2.2) 6.0

Payment of lease liabilities (67.6) (61.6)

Payment of interest on leases (24.8) (23.5)

Cash EBITDA (B) 54.8 73.0

Leverage (A/B) 3.0x 1.9x

IAS17bankcovenantdifference (0.5x) –

Bank leverage 2.5x 1.9x

FY24cashEBITDAismateriallydifferentfrombankcovenantIAS17-basedEBITDAduetoweek53cashflows.

Underlying return on capital employed from continuing operations Note

FY24

£m

FY23

£m

Operatingprofitfromcontinuingoperations 41.3 63.8

Non-underlyingoperatingitems 8.9 (0.5)

Pre-taxreturn 50.2 63.3

Adjustedeffectivetaxrate

25.0% 22.6%

Tax adjusted return (A) 37.7 49.0

Property, plant and equipment 8 83.8 97.4

Right of use assets 9 315.0 312.6

Computer software 10 19.6 22.0

418.4 432.0

Inventories 14 59.0 55.8

Trade receivables 15 6.7 7.7

Prepayments 15 4.0 3.0

Accrued income 15 0.1 0.1

Other receivables 15 1.2 0.3

Payments received on account 16 (40.9) (39.1)

Trade payables 16 (100.4) (97.6)

Working capital (70.3) (69.8)

Total capital employed (B) 348.1 362.2

Underlying ROCE from continuing operations (A/B) 10.8% 13.5%

1. EffectivetaxrateforFY24hasbeenadjustedtoeliminatethedisproportionateimpactofdisallowabledepreciationonnon-qualifying

assets in the year.

Reconciliations to IFRS measures

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

Principal risks

Strategic risks

Operational risks

RISKS AND UNCERTAINTIES

Taking risks is an inherent part of doing business. To manage that risk our Group Leadership Team

supported by our Group Risk function has developed effective risk management processes to ensure

good risk management is integrated into our business decision-making.

Identification of risks

The Group continues to develop its risk management

processes, fully integrating risk management into

businessdecision-making.TheGroupRiskTeam

supports the Group Leadership Team (‘GLT’) and

the risk owners in identifying the risks and ensuring

they have the relevant processes and controls in

placetomanagetheriskseffectively.Theteamworks

with the business units responsible for the ongoing

identification,assessmentandmanagementoftheir

existing and emerging risks. The output of these

assessments is aggregated to compile an overall Group

level view of risk, utilising both external risk management

software and feeding into our internal dashboards to

provide greater accessibility and awareness at senior

levels. The team is committed to supporting the

business in providing support and coaching to further

strengthen risk culture within the Group.

The Board has overall responsibility for the management

ofriskandtheidentificationofprincipalrisksthatmay

affecttheGroup’sstrategicobjectivesandoverseesthe

implementation of processes to manage these risks

by the GLT and operational management. The Group

risk register details the existing risks facing the Group,

emerging risks arising and horizon risks to be considered

andmonitored.TheGrouphasidentifiednineprincipal

risks which are reviewed formally with the risk owners,

the GLT and Board throughout the year.

The graphic to the right details how responsibility for

risk management is allocated across the Group.

Each principal risk is owned by a member of the GLT,

with strategic and operational risks being owned

and managed by the senior management team. The

Audit and Risk Committee, delegated by the Board,

isresponsibleforthereviewoftheeffectivenessof

the internal control framework.

Board

Overall responsibility

for risk management

Audit and Risk Committee

Oversees risk

management process

Group Risk Team

Implements process and

reports to Audit and Risk

Committee

Group Leadership Team

Managesspecificrisksand

embeds risk management

throughout the Group

Group Governance and Risk Committee (‘GRC’)

Ensureseffectivegovernanceofriskmanagementprocess

Internal

audit plan

Review

emerging risks

Horizon

scanning

TheseriskshavebeenidentifiedbytheGroup

Leadership Team as the ones that pose the greatest

threat to the success of the Group.

These risks pose a threat to the Group

but are considered well controlled, and the

impact if materialised would be sustainable.

Granular risks that have localised

impact on individual departments,

and/or business areas.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RISKS AND UNCERTAINTIES CONTINUED

Management and mitigation of risk by the GLT is

determined by a Group risk appetite agreed by the

Board. The Group Governance and Risk Committee

(‘GRC’) meets monthly to review changes in the

regulatory/legal landscape and the Group’s key risks and

concerns. Further details of the work of the GRC are set

out on page 55 of the Corporate Governance report.

An example of this is the support the Risk team and

the Health and Safety team have jointly provided to

the Sofa Delivery Company leadership team which has

resulted in risk management being embedded in all day

to day operations, and every strategic change program.

Thecrossworkingofthedifferentfunctionshas

resulted in a more rounded and informed view of risks.

Evaluation of risks

The Directors have made a robust assessment of the

principal and emerging risks and uncertainties facing

the Group, including those that would threaten its

business model, future performance, solvency

or liquidity.

Principal risks and mitigation

The Group’s principal risks are discussed in the

following pages, together with related mitigating

activities. Other risks which are currently either not

known to the Group, or are not considered material,

could also impact the Group’s reported performance or

assets. The Group continuously considers and reviews

the risks and if there are additional controls that could

be implemented to reduce or better manage particular

risks these will be considered in line with the Group’s

risk appetite.

Changes to principal risks in the year

As part of our risk management process the Group

principal risks are regularly reviewed with the GLT and

the Audit and Risk Committee. As a result of these

reviews, although there are no additional risks the

current risks have been updated to ensure they

reflecttheriskstheGroupcurrentlyfaces.

The cyber risk has been expanded to include the risks

associated with data, including accuracy and use.

Due to changes in the internal leadership

responsibilities it was agreed to focus the previous

ESG risk clearly on the environment and sustainability,

whilst the previous risk regarding lack of skilled workers

has been expanded to become a people and culture

risk to include social risks, community, culture, values

and wellbeing.

Risk heat map

Theimpactsofidentifiedrisksaremeasuredagainst

predefinedcriteriainanumberofareas–Financial,

Operational, Health & Safety, Legal and Regulatory,

and Technology – to establish a robust and objective

assessment. The heat map illustrates the distribution

ofidentifiedrisksaccordingtotheirrelativelikelihood

of occurrence and the potential severity of their impact

after taking into account mitigating activities, and shows

the year on year movement in the risk assessment.

HighLow

POTENTIAL IMPACT

LIKELIHOOD

Low High

Principal risks

Financial risk and liquidity

Supply chain and

manufacturing resilience

People and culture

Regulatory and compliance

Macroeconomic uncertainty

Consumer proposition

and industry competition

Cyber security and data

Environmental and

sustainability

Business change

2024

2023

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RISKS AND UNCERTAINTIES CONTINUED

Principal risk

REGULATORY AND COMPLIANCE

Strategic link

Movement

What is the risk?

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

and guidance. Failure to comply with or to take appropriate steps to prevent a breach of these requirements could result

in formal investigations or prosecutions, legal and/or financial penalties, reputational damage and loss of business. It is

essential that as a Group we are aware and can fulfil all our obligations in the regions in which we operate, the UK and the

Republic of Ireland.

Potential impact

– Changesinlegislationwithsignificantretrospectiveorfutureeconomiceffectscouldimpactoperatingresults.

– FailuretomeetourcomplianceobligationscouldnegativelyimpacttheGroup’sreputationorresultinfines/penalties,

reducingprofitability.

– Non-compliancecouldresultinpotentialcivilorcriminalliabilityfortheGroup’scompaniesand/orseniormanagement.

– The Group’s reputation could be negatively impacted if it fails to support customers in the purchase of regulated

products.

Mitigation

– Comprehensive training and monitoring programmes (including individual colleague NPS, internal audits and mystery

shopping programme) are in place to ensure employees are appropriately skilled to deliver high levels of customer

service and maintain regulatory compliance.

– Management information provided to management teams to identify issues and take relevant action.

– Strongworkingrelationshipswithourfinancialservicesandinsuranceproviderstoensureweworktogethertomeet

regulations and support customers.

– Rigorousoversightandescalationprocessesinplacetomaintainstatusoflimitedpermissiontoofferconsumer

financegrantedbytheFinancialConductAuthority.

– Review of regulatory landscape and forthcoming changes to ensure timely, structured and sustainable planning and

implementation.

– Escalation of relevant matters to the Audit and Risk Committee for consideration.

– Robust policies to ensure compliance with data protection requirements, including annual data protection training

for all colleagues.

– Regularreviewofpricingandcoverlevelsofinsuranceproductsofferedtomaintainandenhancethecustomervalue

proposition.

– Robust sales principles and compliance frameworks across all brands.

– Mandatory training programme for colleagues ensuring they have the correct level of knowledge and skill to support our

customers in their sales journey.

FY24 progress

– The introduction of Consumer Duty has placed a higher focus on demonstrating good customer outcomes and

all activities are under ongoing review to ensure we continue to deliver these.

Principal risk

FINANCIAL RISK AND LIQUIDITY

Strategic link Movement

What is the risk?

Accuracy of reporting and adequate access to liquidity is key to delivering the strategy. Any impact on the Group’s

working capital requirements may result in insufficient headroom and an inability to access debt or equity financing

which will directly affect the ability to enact the Group strategy.

Potential impact

– Failuretocomplywithbankingcovenantscouldleadtoimmediatecashflowandgoingconcernissues.

– Ifinsufficientheadroomismaintained,liquiditychallengeswillbeencountered.

– Macroeconomic environment and Company performance may lead to working capital swings, liquidity challenges

andmayimpactabilitytoobtainfinancing.

– Risk of facility maturity with no new facility in place.

– Inaccuratefinancialreportingresultinginafailuretomanagecashflowandpayoursuppliersandprovidinginsufficient

fraud protection.

Mitigation

– Goodworkingrelationshipsmaintainedwithallfinancialcounterparties,ensuringthatcounterpartiesfairlyunderstand

ourfinancialperformance.Regularreviewsoffinancingarrangementstoensureadequatefundsinplaceandfinancing

costs kept to a minimum.

– Management of foreign exchange risk through the use of appropriate hedging arrangements in accordance with the

Board approved treasury policy.

FY24 progress

– AneartermwideningoftheGroup’sbankingcovenantshasbeenagreedtoreducetheriskofcovenantnon-

compliance and therefore ensure continued availability of funds.

Platforms: Movement:

Increase

Unchanged

Decrease

Sourcing and

manufacturing

Technology

and data

Logistics People and

culture

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RISKS AND UNCERTAINTIES CONTINUED

Principal risk

SUPPLY CHAIN AND MANUFACTURING RESILIENCE

Strategic link

Movement

What is the risk?

We are reliant on external suppliers, worldwide to provide our finished products to customers or supply raw materials

for our UK manufacturing sites. If that supply chain is affected by availability, labour shortages, transport details or failure

of a key supplier, this could increase the costs to the business or impact our ability to fulfil customer orders.

Potential impact

– Failuretosupplycustomerordersontimeortoexpectedquality,couldleadtolossofrevenueand/orprofitsand

adverse impacts on the reputation of the Group and its retail brands.

– Inefficientproductionschedulesduetorawmaterialssupply,couldresultinincreasedcosts.

– Increased lead times as a consequence of production details or transport disruption could result in loss of sales.

Mitigation

– Sales&OperationsPlanningfunctionestablishedtoproactivelymanagetheend-to-endsupplychainacrossthe

Group.

– Annualshippingcontractsthatsetoutfixedpricingandcapacityavailabilityaremaintainedinordertomanage

uncertainty of prices and volumes in the container shipping industry, particularly in relation to deliveries from the

Far East.

– Long standing relationships backed by contracts with our key suppliers and the introduction of a stocked model

with the brands.

FY24 progress

– Despite the challenges noted, the mitigating actions already in place has meant the situation has been well managed,

supported by strong customer NPS scores.

– TheGroup’ssupplychainfromtheFarEasthasbeenimpactedbytheRedSeaconflictresultingincargovessels

routing around Africa adding circa two weeks onto transit times.

– The shipping route around Africa reduced market capacity and there was a spike in general demand which resulted

in the market rates volatility.

– The Group was subject to some surcharges levied by our carrier partners which increased our freight costs versus

forecast.

– Customer lead times were extended to account for the longer transit times mitigating any customer impact but

deliveriesrealisedinthefinancialyearwereimpacted.

Movement:

Increase

Unchanged

Decrease

Principal risk

CYBER SECURITY AND DATA

Strategic link Movement

What is the risk?

Our data and our IT systems enable us to fulfil our obligations to customers and manage our operations. Ensuring we

both protect our data, and utilise it effectively is necessary to deliver our strategy. If a critical system, or our business data

was not available, regardless of the cause, it could impact our operations, result in a loss of sales as well as incur

regulatory penalties and reputational damage.

Potential impact

– Inabilitytoaccesscoreoperatingsystems(supplychain,customerdelivery,call-handling,financialtransaction

processing) could adversely impact customer experience and lead to increased costs or loss of revenue.

– Lossofcustomerdatacouldleadtoalossofreputationandregulatoryfines.Delaysorerrorsinreportingon

operational performance could result in increased costs or lost revenue.

– Failuretoutilisedataeffectively,orinaccuratedatacouldresultinpoordecisionsbeingmadewhichimpacttheperformance

and growth of the Group.

Mitigation

– Full IT security backup and business continuity procedures in place and regularly reviewed, tested and updated.

– Technical security measures against data loss through a systems breach are regularly reviewed and updated, including

bythird-partyexperts,theresultsofwhicharereportedtotheBoard.

– Third-partypenetrationtestingiscarriedoutroutinelytochecktheresilienceoftheGroup’ssystemstocyberattack.

– Mandatory cyber awareness programme for relevant colleagues.

– Substantialongoinginvestmentinwebsitedevelopmentanddigitalmarketing,complementedbythird-party

monitoring of both customer satisfaction with our digital services and the emergence of new online competitors.

– IT systems are regularly reviewed and upgraded to ensure they continue to support the needs of the Group.

– Ongoingreviewofdatawithinthebusinesstoensurewecancontinuetomakeinformedandeffectivedecisions.

FY24 progress

– Continued to transform and educate our Human Firewall through improved user password strength and complexity,

annual mandatory training along with a programme of phishing simulations.

– Enterprise backup solution in place (with regular testing) across the whole of the estate (on premise and cloud) which

manages,verifiesandsecurelystoresourbackupsoffsitewhichprovidesimmutabilityandenhancedcontrolsagainst

ransom-wareattacks.

– Industry leading Manage, Detection, Response and SOC services from a Global enterprise company, increased scope

of AI detection and response to include business communications systems. Vulnerability management tools have

alsobeenupgradedtoanindustry-leadingsolutiontodriveimprovedvulnerabilityremediation.

– Annual pentest covered the widest scope to date, including such areas as web applications internally and externally

delivered, physical security and remote access.

Platforms:

Sourcing and

manufacturing

Technology

and data

Logistics People and

culture

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RISKS AND UNCERTAINTIES CONTINUED

Principal risk

MACROECONOMIC UNCERTAINTY

Strategic link Movement

What is the risk?

Unexpected or difficult to forecast external factors have increasingly impacted the business environment which the Group

operates in. These external factors have included the ongoing consequences of the pandemic, a cost of living crisis,

high levels of wage inflation, the invasion in the Ukraine and the ongoing situation in the Middle East. High interest rates,

increasing the cost of providing IFC and the cost of debt, and depressing the level of housing marketing. Looking forward

there remains the potential for more global geopolitical and economic uncertainties. This can lead to unpredictable

supply chains, trading performance and financial results, especially in a market for big ticket, discretionary spend items,

all of which can then have a negative impact on performance.

Potential impact

– Highinflation,interestratesandglobalrecessionarypressurescouldresultinrisingcreditrisksandacontinuedfall

in consumer demand.

– ConflictsinothercountriesincludingtheUkraineintensifiesand/orwidensintoothergeographiesleadingtobarriers

to trade or rising costs.

– Rising political and economic tensions between China and the west lead to barriers to trade or rising costs.

– Highinterestratescouldresultinunaffordablyhighcostsofborrowing.

– Higher oil prices may lead to higher fuel and energy prices.

Mitigation

To minimise the impact of macroeconomic uncertainty on the Group there is a clear focus on what we can control

including:

– Continuous review of product ranges to ensure they provide an attractive customer proposition at a variety of price

points.

– Range selection supported by detailed data analysis and customer choice enhanced through exclusive and strategic

brand partnerships.

– RegularreviewsofinterestfreecreditofferingtobalancethecosttotheGroupwiththeflexibilityrequiredbyour

customers.

– Management of cost base in periods of lower income through reduced discretionary and variable spend.

FY24 progress

– TheGrouphasamendeditsapproachtointerestfreecreditreducingthestandardofferto3yearsincreasingitto

4yearstosupportpeaksaleperiodsandgivecustomersflexibilityintheirpurchasechoices.

– TheGrouphasbeenfocussedonreducingitscostbase,andhasimplementedanoperationalefficiencies

programme across all areas.

Principal risk

ENVIRONMENTAL AND SUSTAINABILITY

Strategic link

Movement

What is the risk?

Failure to anticipate and address positively the strategic, regulatory impact our operations have on the environment

would fall short of the expectations of our key stakeholders, including our customers, colleagues, investors and

regulators which could lead to reputational damage and financial loss. An inability to anticipate and mitigate

environmental risks could cause disruption in the availability and quality of raw materials such as leather and timber,

affecting production capacity, product quality, and overall supply chain resilience, leading to a significant increase in costs.

Potential impact

– Financial penalties relating to disclosure requirements and legislation breaches.

– Poor risk rating received by risk analysts devaluing the business impacting share price.

– The product is unattractive to consumers resulting in loss of sales/revenue.

– Climate impacts to operations or wider value chain, resulting in operational costs.

– High capital expenditure requirements to transition costs to new technologies.

– Reputational risk due to unethical practices within the value chain.

Mitigation

– Full transparency and traceability of higher risk material value chains with ongoing due diligence audits to mitigate risk.

– Robust data monitoring and reporting, aligned to key reporting frameworks.

– Carbon reduction plan developed with value chain engagement and support.

– Ongoingconsumersentimentmonitoringtoidentifyrisksandopportunitiesofproductandcommercialoffering.

– Strong governance in place on environmental strategy including audit and risk controls.

– Externalauditandcertificationofsuppliersofgoodsforresaleandexternalassuranceonreportedcarbonemissions.

FY24 progress

– Engaged wider value chain in Net Zero strategy, garnering support to submit to the SBTi.

– Developed commercial models to ensure sustainable performance throughout transition to Net Zero.

– Developed innovative solutions to manufacture low carbon product.

– AchievedsignificantreductionsinScope1againstFY19baseline.

– Created a new ESG Committee with senior leaders to ensure good governance of ESG risks and opportunities.

Movement:

Increase

Unchanged

Decrease

Platforms:

Sourcing and

manufacturing

Technology

and data

Logistics People and

culture

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RISKS AND UNCERTAINTIES CONTINUED

Principal risk

CONSUMER PROPOSITION AND INDUSTRY COMPETITION

Strategic link

Movement

What is the risk?

The reputation of, and value associated with, the Group’s brands and product offering is central to the success of the

business.Failuretomaintainawell-designed,highqualityproductrangethatispricedattractivelycouldcompromisethe

success of the Group.

Potential impact

– Failure to predict changes in customer tastes or to respond to the impact of changes in the competitive environment

couldreducetheGroup’srevenues,andprofitability.

– Reputational damage resulting from customer complaints, falls in actual product quality or poor customer service

couldhaveanegativeeffectonthereputationofourbrands,leadingtolossofrevenueandprofits.

– Competitorscouldimprovetheiroffering,reducingourmarketshare.

Mitigation

– Continualreviewofproductsandservicestoensuretheysuitcustomers’needs,arecompetitivelypriced,offergood

value, meet the right quality and sustainability standards and are supported by excellent customer service.

– In-houseproductdesignteamandexternaldesignpartnersensureproductrangeisattractiveandinnovative.

– Internalmanufacturing,closesupplierrelationshipsandmade-to-ordermodelallowsanyqualityissuestobe

addressed swiftly.

– UseofNPS,andincentivisationofcolleaguesonthebasisofNPSscoresencouragescustomer-focusedbehaviours

throughout the customer journey.

– Frequentcompetitoranalysisandmysteryshoppingatcompetitors’storesandonlineofferings.

FY24 progress

– Launch of DFS collaboration with Ted Baker as part of a focus to ensure our products are right for our customers.

– Introduction of new ranges into Sofology to ensure our products meet our customers’ expectations.

– Both DFS and Sofology have focused on increased ‘in stock’ products to allow us to meet the demands of our

customers for quick delivery times.

Principal risk

PEOPLE AND CULTURE

Strategic link

Movement

What is the risk?

We aim to create an inclusive workplace with a positive contribution to the communities we serve as well as all our

stakeholders, including our customers, colleagues, communities and suppliers, and creating a ‘great place to work’. We

need to ensure we have the right skills for today and the future. To do this effectively we need to ensure we live our values,

creating a culture that continues to meet the expectations of our colleagues and stakeholders by responding to external

pressures and working with everyone to develop an inclusive and diverse workplace. Failing to do this could impact

businessperformance,thedeliveryofourpurpose,ourstrategyandthelong-termsustainabilityofourbusiness.

Potential impact

– Failure to attract and retain high quality colleagues could negatively impact operational performance and customer

service levels.

– ExcessivewageinflationcouldincreasetheGroup’scostbase,reducingprofitability.

Mitigation

– Regularfunctionspecificremunerationbenchmarkingandbusiness-wideannualsalaryreviewsensurecolleague

remuneration is competitive.

– Significantresourcesandfocusinvestedinbuildinganinclusiveandengagingculture.

– Suiteofadditionalbenefitsavailabletocolleagues,withparticularemphasisoncolleaguewellbeing.

– Internaltraininganddevelopmentprogrammesdevelopedinareaswhereskillsshortagesareidentified.

– A focus on training and developing colleagues within the Group to provide opportunities for colleagues to ‘grow’

and progress internally.

– Regularengagementsurveysandcolleague-lednetworkgroupstounderstandthevoiceofcolleaguesandtheculture

within the Group.

– A robust and proactive approach to health and safety to ensure a safe working environment for everyone.

FY24 progress

– Continualreviewofcolleaguewellbeingofferresultinginalignmentofbenefitsavailabletoeveryone.

– Membership of Diversity in Retail, alongside Inclusive Employers, to strengthen our strategic approach and create

peer to peer connections.

– Executive sponsorship and governance to support our inclusion colleague network groups.

Movement:

Increase

Unchanged

Decrease

Platforms:

Sourcing and

manufacturing

Technology

and data

Logistics People and

culture

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RISKS AND UNCERTAINTIES CONTINUED

Movement:

Increase

Unchanged

Decrease

Principal risk

BUSINESS CHANGE

Strategic link

Movement

What is the risk?

The Group undertakes a number of significant investment or business change projects that are key to successfully

executing its strategy. Failure to successfully implement these changes could mean the business fails to deliver its strategy.

Potential impact

– Thebusinesschangeprogrammedoesnotdelivertheidentifiedchangesrequiredtosupportthebusinessstrategy.

– Colleagues are resistant to change and cause operational challenge.

– Internal resources are not informed and fail to support the initiative.

– FailuretoexecutetransformationprojectssuccessfullycouldreducetheGroup’soperationalefficiency,erodethe

Group’smarketleadershippositionandhaveanegativeimpactonfinancialperformance.

Mitigation

– An executive member (the COO) has responsibility for transformation, overseeing a programme structure and a team

of project managers dedicated to its execution.

– Risk assessments completed for all critical workstreams and challenged through Board and Audit and Risk Committee

discussions.

– Experienced senior management engaged in the design and delivery of the integration and transformation plans

providing regular updates to the Board.

– Regular review of transformation programmes to ensure priorities and areas of focus are appropriate to support

delivery of the Group’s strategy.

FY24 progress

– BusinessChangeteamstructuredefined,seniorleadappointedandclearscopeofaccountabilitiesinplace.

– ‘Operate for Less’ workstream main focus, with clear line of sight across all operating costs, split into three main areas

(People, Property, Other).

– Significantcostreductions/inflationaryincreasemitigationsdeliveredinyearviainternal/processchange,contract

renegotiation and/or supplier partner change.

– ExternalSMEpartnersinplacetosupportinitiativesasrequired,enablingalowerfixedheadcountinternally.

– Scoping commenced on remaining areas of Group integration opportunities to further enhance optimal commercial

approach, create a consistent way of working and mitigate risk.

Platforms:

Sourcing and

manufacturing

Technology

and data

Logistics People and

culture

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RISKS AND UNCERTAINTIES CONTINUED

Viability reporting

In accordance with the UK Corporate Governance

Code, the Directors have assessed the prospects

oftheGroupoveraperiodsignificantlylongerthan

12monthsfromthedateofapprovalofthefinancial

statements. The period assessed was the three years

from 30 June 2024 as in the opinion of the Directors

thisreflectsthelongestperiodoverwhichtheimpact

of key risks can be reasonably assessed within a

big-ticketretailbusinessgiventhepotentialvolatility

of the trading environment.

Approach

TheGroupestablisheda‘basecase’modeloffinancial

performance over the three year assessment period

whichreflectedprudentexpectationsoffuture

customer demand and the execution of the Group’s

strategic plans.

The Directors then made a robust consideration of the

key risks and uncertainties that could impact the future

performance of the Group and the achievement of its

strategic objectives, as discussed on pages 21 to 27

of this Annual Report.

The primary impacts of those risks which could

significantlyaffectthefutureviabilityoftheGrouparea

decrease in customer orders, reducing revenue, and an

increase in the Group’s costs, including those resulting

from the impacts of climate change on materials

andsuppliers,reducingprofitability.Theeffectoflost

revenueonprofitbeforetaxandcashwasappliedto

the base case model using an expected ‘drop through’

rate, based on expected gross margins and variability

of costs. Cost increases were modelled on general

andspecificassumptionsforinflation.Theanalysis

considered a range of severe but plausible scenarios

impactingrevenueandmargin,asignificantreduction

incustomerspending,andimpactsonprofitability

frominflationarycostpressures.

Foreachscenario,sensitivityandstress-testing

analysis was performed to model the impact on the

Group’sprofitabilityandcashflows.Theassessment

consideredhowriskscouldaffectthebusinessnow,

and how they may develop in future.

Key assumptions

The base case forecast assumes a growth in the

Group’smarketof2%inFY25,fromanalreadylow

baserelativetopre-pandemiclevels,followedby

a slow recovery (mid single digit annual growth) in

subsequentyears.Thebasecasealsoreflectsa

cautious assessment of the anticipated growth in the

Group’s market share driven by delivery of our strategic

initiatives. Revenue is assumed in line with order intake,

keeping order bank levels relatively consistent across

the assessment period.

GrossmarginpercentageforFY25isexpectedtobe

aheadofFY24throughmoreeffectivesourcingandthe

annualised impact of price increases and freight rate

reductionsalreadyimplemented.Othercostsreflect

anticipatedinflationaryincreasesandbenefitsfrom

specificcostsavinginitiatives.Capitalexpenditureis

assumed to remain in line with planned investments

and strategic initiatives.

In sensitising the base case for lower revenue

scenarios,therateofdropthroughtoprofitisassumed

to be consistent throughout the assessment period.

Theviabilityassessmentreflectsthecontinued

availability of the Group’s debt facilities, comprising of a

£200.0mrevolvingcreditfacilitymaturinginSeptember

2027(withanoptiontoextend£175.0mofthefacility

toJanuary2029)and£50.0moffixedrateprivate

placementdebtnotes,£25.0mmaturinginSeptember

2028and£25.0mmaturinginSeptember2030.

Results

The range of severe but plausible scenarios included

amarketdeclineofupto7%inFY25comparedtothe

base case, and a sustained reduction in gross margin.

These impacts were modelled individually and in

certain combinations, in conjunction with a range of

mitigating actions that could be taken to preserve the

Group’sprofitabilityandcashflows.Mitigatingactions

included reductions in discretionary costs and capital

expenditure and a reduction or pause in dividend

payments.Reversestress-testingwasalsoperformed

on the most severe scenarios.

Whilst the Group expects to stay within its existing

facility covenants, in September 2024 the Group

agreed a widening of covenants with its lenders,

which provides additional headroom in the event

of unanticipated downside scenarios that result in a

further decline in market volumes and lower EBITDA.

The amended leverage covenant widens to 3.9x at

H1FY25and3.7xatFY25,beforereturningto3.0xat

H1FY26.Theamendedfixedchargecovercovenant

widensto1.3xatH1FY25,1.3xatFY25and1.4xat

H1FY26,beforereturningto1.5xatFY26.

This allows the Group to maintain both covenant

complianceandsufficientliquidityinallthesescenarios.

Based upon this assessment the Directors have a

reasonable expectation that the Group and Company

will be able to continue in operation and remain

commercially viable over the three year period of

assessment.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

SECTION 172 STATEMENT

Engaging with our stakeholders

This statement explains how the Board has embedded

stakeholderconsiderationsintoitsdecision-making

and, for each of the Company’s key stakeholder groups,

the key matters that the Board considered during the

year. Throughout the year we have engaged with all of

our stakeholder groups to understand the impact of

the decisions we make.

ThetablebelowidentifieswhereintheAnnualReport

information on the issues, factors and stakeholders

the Board has considered in respect of Section 172(1).

Section172(1)(a)-(f) How we engage Where to find it Page numbers

The likely

consequences

of any decision

in the long term

The Board reviewed the progress made

against the Group’s strategy and ensured

that both decisions taken and future plans

supportthelong-termsuccessoftheGroup.

– Focus is on how we deliver on our purpose and culture and ensure we live up to our values.

– Look to ensure we balance the way we reward our people with how we provide a return on

investments to our shareholders.

– Focus on how we manage the Group’s cost base given the current economic uncertainty.

– Non-ExecutiveDirectorsreceivestakeholderfeedbackandinsightsboththroughtheirdirectaccess

to the Group’s key stakeholders and through regular reports from the Group Leadership team,

includingupdatesoncustomersatisfactionmetricsandemployeeYourSaysurveyresults.

– All Board members are available to meet with shareholders on request and several meetings including

withnon-executivedirectorshavetakenplaceduringtheyear.

– As a standing agenda item the Board receives an update from the Investor Relations team including

shareholder feedback and meets with the Company’s brokers.

– The Group Chief Executive’s report at each Board meeting includes updates on key suppliers and

partners.

– The Board has appointed the Responsible and Sustainable Business Committee to focus on climate

risks and social inclusivity.

– Chief Executive’s report

– Our strategy

– Key performance

indicators

– Financial review

– Risks and uncertainties

– Viability reporting

– Responsibility and

sustainability report

– Corporate governance

report

– Directors’ remuneration

report

6-8

14-15

16-19

21-28

32-51

54-60

67-87

The interests of

our colleagues

Our colleagues are at the heart of our business.

The Board has ultimate responsibility for

ensuring that all of our colleagues are treated

fairly and given the support they need to grow

and develop their careers.

– During the year colleagues have taken part in our Voice forums held by members of the Board

to raise any concerns or issues with them directly.

– Regularvirtualandin-personsessionsareheldwithcolleaguesfromallthebrandstokeepthem

informed and gather their feedback.

– WeencourageopenandhonestdiscussionswithourcolleaguesandundertakeregularYourSay

surveys to understand how colleagues are feeling.

– We have six Colleague Resource Groups, known as our Inclusion Networks, to represent and

support colleagues.

– WearefocusedonourEmployeeValuePropositionandhaveimprovedourbenefitspackage

to include holiday buy back scheme.

– We have an independent whistleblowing helpline.

– Thereareregularbriefingsoncolleagueengagementactivities,retentionrates,learningand

development activity, and pay and reward initiatives.

– Chair’s statement

– Our fundamentals

– Chief Executive’s report

– Our strategy

– Key performance

indicators

– Responsibility and

sustainability report

– Risks and uncertainties

– Corporate governance

report

– Directors’ remuneration

report

4-5

6-8

14-15

32-51

21-28

54-60

67-87

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

SECTION 172 STATEMENT CONTINUED

Section172(1)(a)-(f) How we engage Where to find it Page numbers

The need to

build strong

beneficial

relationships

with our

customers and

suppliers.

We are committed to our purpose of bringing

great design and comfort to our customers

inanaffordable,responsible,andsustainable

manner. We work with our suppliers to develop

new innovative products and to reduce the

impact on the environment.

– We talk to our customers to understand what they want for their homes and their families.

– We are developing new sustainable products to reduce not only ours but our customers’ and our

suppliers’ carbon footprint.

– Wedevelopnewproductofferingsworkingwithsuppliersandbrandpartners.

– Wehavethemarketleadingfinancialservicesproducts(interestfreecredit(‘IFC’)andourproduct

insurance) available for our customers.

– We seek feedback from our customers through NPS customer satisfaction surveys.

– Monitoringourownmanufacturingoperationsandourthird-partysupplierstoensurequalityand

safety standards are met.

– Chair’s statement

– Our fundamentals

– Business model

– Chief Executive’s report

– Market overview

– Responsibility and

sustainability report

– Corporate governance

report

– Directors’ remuneration

report

4-5

6-8

32-51

54-60

67-87

The impact of

the company’s

operations on

the community

and the

environment

As a responsible business, the Group is

committed to acting in the best interests of

our communities and in a sustainable manner.

We are committed to working to lessen our

impact on the environment and improve the

communities in which we operate.

Led by the Responsible and Sustainable

Business Committee the Group’s ESG

strategy has clear targets that aim to integrate

sustainability throughout all aspects of our

business to minimise any adverse impact we

might have on the environment.

– We support national charities, including Children in Need and during the year The Sofa Delivery

Company established a national partnership with Andy’s Man Club. In addition, the Group provided

£35,000ofourproductstoarangeofgoodcauses.

– Colleagues each have a volunteer day to support them working in the community – 201 days

inFY24.

– We are focused on developing new sustainable products to reduce our carbon footprint.

– InFY24werefreshedourmaterialityassessmenttosupportourESGstrategy,thisisacrucialtool

toensurethatweconsiderallstakeholderperspectivesinourstrategicplanninganddecision-

making.Weinterviewedorsurveyedallstakeholdergroups,leadingtoasignificantshiftin

priorities towards social concerns.

– In June we submitted our Net Zero strategy to the SBTi.

– Chair’s statement

– Our fundamentals

– Chief Executive’s report

– Our strategy

– Responsibility and

sustainability report

– Risks and uncertainties

– Corporate governance

report

4-5

6-8

32-51

21-28

54-60

The desirability

of the company

maintaining a

reputation for

high standards of

business conduct

To support good governance all of our

colleagues receive mandatory training on

our Code of Conduct, Data Protection,

ModernSlavery,CyberSecurity,Anti-Bribery

& Corruption and IFC Consumer Duty. Our

suppliers are bound by our Supplier Code of

Practice for product quality, safety, employee

rights and ethical business. We work with the

regulatory bodies which authorise and regulate

our business activities.

– We are transparent in our approach and publish our policies including our Group Code of Conduct

on our corporate website.

– We have a clear Tax Strategy.

– We rolled out our ‘Consumer Duty’ compliance programme to all employees in customer facing

roles with a clear focus on vulnerable customers and how we meet their needs.

– We continue to review our customers’ journey to ensure we deliver the best customer

experience.

– Changes to our IFC application process this year ensure we give customers the opportunity

tofindtherightpaymentoptionforthemwiththelendermostsuitablefortheircircumstances

withthebenefitofreviewingtheirdocumentationatatimethatsuitsthem.

– Responsibility and

sustainability report

– Corporate governance

report

– Directors’ remuneration

report

32-51

64-60

67-87

The need to act

fairly as between

members of the

company

The Board seeks to ensure investors receive

a fair and balanced return on their investment.

The Group has continued to engage with our

investors to ensure their views and interests

are considered when developing strategy.

– Aseriesofeventsisheldthroughoutthefinancialyear,includingourin-personAGM,

andpresentationsofourhalf-yearandfull-yearresults.

– The Board meets with investors and potential investors throughout the year.

– Management have regular discussions with our lenders about our strategic priorities.

– TheChairoftheBoardensuresthatinvestorconsiderationsaresufficientlydiscussedduring

Boarddecision-makinginmeetings.

– Chair’s statement

– Business model

– Corporate governance

report

4-5

54-60

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

SECTION 172 STATEMENT CONTINUED

S172 non-financial and sustainability information statement

The table below sets out where the information required to be disclosed under sections 414CA and 414CB of the

Companies Act 2006 can be found in this Annual Report.

Reporting requirement Relevant information Policies and Standards

The Company’s

employees

Section 172 statement – Engaging our colleagues

– page 29

Responsibility and sustainability report – pages 32

to 51

Directors’ remuneration report – pages 67 to 87

– Diversity & Inclusivity Policy

– Equal Opportunities Policy

– Whistleblowing Policy

– Group Health and Safety Policy

Anti-corruptionand

anti-briberymatters

Responsibility and sustainability report – page 50 – Group Code of Conduct

– Anti-BriberyPolicy

– Supplier Code of Practice

– Whistleblowing Policy

Respect for

human rights

Modern slavery

Responsibility and sustainability report – page 50 – Anti-SlaveryandHuman

TraffickingPolicy

– ModernSlaveryStatementYear

ended 25 June 2023

– Data Privacy Policy

– Group Human Rights Policy

Social matters Responsibility and sustainability report –

pages 32 to 51

– Tax Strategy

– Group Code of Conduct

– Group Communities and

Charitable Giving Policy

Environmental

matters

Section 172 statement – Having regard to the

impact of the Company’s operations on the

community and the environment – page 30

Responsibility and sustainability report –

pages 32 to 51

– Environmental Policy

– Group Timber Policy

– Group Leather Policy

– Group Water Policy

– Sustainable Sourcing Policy

– Biodiversity Policy

Copies of the Committees’ terms of reference and our policies are available at

https://www.dfscorporate.co.uk/governance/policies-statements.

Board Information

Board Strategic Discussion

Board Decision

Board Review

Board Decision

Board Review

The chart below demonstrates the Board process in considering Section 172(1) in its decision-making.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RESPONSIBILITY AND SUSTAINABILITY REPORT

The past year has been

one of progress, collaboration

and reflection

Alongside our Board, majority shareholders, suppliers,

and colleagues, our customers were invited to give their

views on the scale of impact of material topics to our

Group, through our materiality assessment process.

This approach helps us to consider all stakeholder views

inourstrategicplanninganddecision-making,andthe

outcome of the activity has enabled us to highlight

key priorities to inform our ongoing ESG agenda.

As such, we’ve adapted the governance around our

commitments, forming a new ESG Committee with

members from the GLT and senior management to

work as a combined task force to address key issues,

ensuring unwavering dedication and evolution towards

our goals.

We know that customers share our care and concern

forourpeople,andareconfidentthatourongoing

focus on fair wages, topics of inclusion and diversity,

and the wellbeing of our colleagues respond well to this.

Activities that have taken place this year demonstrate

thiscommitment,andarereflectedinourongoingplans.

We remain passionate about channelling our energy and

resources into supporting our people, our communities,

and our planet, despite the challenging economic

climate, as we believe it is the right thing to do and

delivers long term sustainable value.

As always, customers have been at the heart of our business –

in our core values, how we shape our operations and, an important part

of how we measure our success. Their feedback helps define our priorities,

both today and in the future.

ALISON HUTCHINSON

Chair of the Responsible and

Sustainable Business Committee

Bioonpage 53

Our people

We’ve continued to invest in our people through

apprenticeship schemes and learning and development.

This year, we launched three new academies across the

Group, from leadership in our logistics team, through to

finance,withover650managerstakingpartinatleast

one course. Our ongoing commitment to the health

and happiness of our people is demonstrated by our

strongwellbeingoffering,withrevisionsduringthis

year including a new aligned approach to enable better

access to healthcare for all our colleagues, through to

the creation of communities via our colleague networks.

Our inclusion and diversity ambitions are continuing to

advance steadily. Accurate measurement of our impact

relies on gathering baseline demographic data from our

colleagues, and that will be a core focus for our teams

over the next 12 months. This can only be achieved

througheffectiveengagementandeducationto

ensure that colleagues trust the business with their

sensitive information.

Our communities

Support for our communities continued through our

Group Giving Back commitment to raise or donate up to

1%ofprofitbeforetaxeachyear.OurDFSpartnership

withBBCChildreninNeedraisedover£700,000in

donations,bringingthetotalraisedsince2013to£7.6m.

TheSofaDeliveryCompanylaunchedanewaffiliation

with Andy’s Man Club, focused on raising awareness

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

of men’s mental health and Sofology customers

havedonatedover£41,000totheircharitypartner,

Home-StartUK,viathePenniesscheme,whichwillgo

towards its Cost of Living Crisis Appeal. In addition to the

donation, we have pledged to gift sofas to vulnerable

families and families in crisis throughout the UK.

Our planet

We were delighted to be awarded the title of Climate

LeaderbytheFinancialTimesthisyear.Thisisreflected

in our accomplishments, where we exceeded our

original Scope 1 reduction target of 10%. And, with

the overwhelming support we received from suppliers

for our ‘In This Together’ engagement campaign, we

were able to submit our Net Zero strategy to the SBTi

in June this year.

We are continually evolving our Net Zero strategy to

adapt to new technologies and protocols. This year,

we determined the scale of change and investment

needed to meet our Net Zero ambition is not moving

at the pace we anticipated, and we need more time.

Therefore,wehaveredefinedourambitiontoreach

Net Zero before 2050, aligned with the UK target,

external factors, and climate science.

Our intention for the year ahead is to continue the

momentum on our ESG agenda. We are forging ahead

with product innovation as we strive for circularity, and

our Net Zero ambitions will see us continuing to push

boundaries with carbon reductions across all scopes.

We continue to make steady progress when it comes

to building a more diverse representation across our

workforce and are proud to empower our people to

support our communities through volunteering and

fundraising.

Our commitment to leading by example across our

industrystandsfirm,andouraspirationsforanethical,

sustainable and better future for our community, our

people, and our environment, will guide our journey

intoFY25.

ALISON HUTCHINSON

Chair of the Responsible and

Sustainable Business Committee

Senior Independent Non-Executive Director

RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

Highlights

We achieved over

14%

reduction

in Scope 1

emissions compared to our

FY19baseline

Over

1,500

retail colleagues receiving training for

our new customer

journey

experience

frameworks

83%

of colleagues agree or strongly agree that

“My manager

is supportive

of creating an

environment

where everyone

is welcome”

59%

of our Scope 3 emissions have a supplier

commitment to create their own

science-basedtargetby2029

Culture and Values

Our values run through everything we do.

They guide our actions to create a

sustainable and responsible business.

Think customer

We treat them as we would our own family

and keep them at the forefront of our minds

because they are the heart of our Group.

Be real

We bring our whole selves to work and are

confidenttospeakup.Weaccepteach

other for who we are and respect each

other as part of our family.

Aim high

We play to win for the same team, focused

on our shared family ambition. We are bold,

brave and welcome challenge as a chance

to innovate.

138

graduates of our Driver School since

launching last year

Since 2013, DFS has raised

£7.6m

for charity partner

BBC Children in Need

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

Our ESG targets

Our Targets Target date

Status Progress

Sustainable sourcing

Page 40

OEKO-TEXSTePcertificationforupholsteryrangesforcotton,

viscose and polyester

July 2022, 2023

& 2024

Cotton

Viscose

Polyester

0 20 40 60 80 100

89%

73%

Sustainable sourcing

Page 40

BCI certification is required on all cotton sources July 2024

FY24

Viscose

37%

Carbon reduction

Page 43

20% of Scope 3 emissions have a supplier commitment to develop their

own Net Zero Roadmap and report on it by 2029. 59% of Scope 3 emissions

are covered by commitment.

June 2024

FY24

Viscose

59%

People

Page 37

A minimum of 50% of store management will be female December 2023

FY24

Female Male

Viscose

32%:68%

Sustainable sourcing

Page 39

90% sustainably sourced timber (certified FSC & PEFC) used in all products December 2025

FY24

Viscose

83%

Sustainable sourcing

Page 39

All leather used on upholstery is sourced from supply chains with

LWG certification

December 2024

FY24

Viscose

76%

Sustainable sourcing

Page 40

Zero polystyrene in product packaging December 2024

FY24

Viscose

93%

Carbon reduction

Page 42

Reduce Scope 1 CO

emissions June 2025 NEW

CY23

Viscose

13.6 tCO

Circularity

Page 40

20% of all new textiles contain recycled content June 2027 NEW

FY24

Viscose

3.88%

Missed

Responsible sourcing

certifiedmaterials

Policy available

(human rights, timber etc)

Externally

assured

Bonus target

Achieved In progress

Please refer to our Basis for Reporting document for a full explanation for these targets and their methodologies www.dfscorporate.co.uk/media/69984/Basis-For-Reporting-FY-24.pdf

Key

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RESPONSIBILITY AND SUSTAINABILITY REPORT

CONTINUED

Our people are the heart of our business and our

success stems from their happiness and wellbeing,

both inside and outside of work. Our Everyone

Welcome framework highlights the importance of

building an inclusive workplace and illustrates how

we approach wellbeing, learning and development

to create opportunities for all.

The outcome of our materiality assessment reiterates

theimportanceofputtingourpeoplefirst,andweknow

that topics of wellbeing, fair pay, and health and safety

are as much of a priority to the customers considering

our brand, as they are to us. We continue to ensure we

keep our people at the centre of our strategic priorities

with continuous improvement of the colleague

experience.

Colleague wellbeing

We are committed to supporting our colleagues in leading

healthyandfulfillinglivesateverystage.Recognising

the challenges that everyday life can present, we have

developedacomprehensivewellbeingofferingdesigned

to provide meaningful support during these times,

underpinned by our strong, supportive culture.

Our ongoing focus on mental health emphasises

the importance of open communication and mutual

support. In alignment with this, during Mental Health

Week2024,werevisitedourBigGroupCheck-In

initiative,whichinvolvedaleader-ledsocialcampaign

encouraging colleagues to connect with their peers

and extend acts of kindness.

We encourage our leaders to demonstrate vulnerability

and empathy, particularly in times of change and

challenge.Aslinemanagersoftenserveasthefirst

point of contact for colleagues in distress, we equip

themwithresourcesandtrainingtoeffectivelysupport

their teams and direct them to appropriate resources.

Reduction in workplace related injuries

so far this calendar year

22%

Completion rate Group-wide of our

Everyone Welcome LMS module

87%

Percentage of colleagues agree or

strongly agree with the statement

‘I can bring my whole self to work’

80%

KEYFIGURES

Looking after

our colleagues

OUR PEOPLE

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RESPONSIBILITY AND SUSTAINABILITY REPORT

CONTINUED

This year, we have further enhanced our wellbeing

proposition with the following initiatives:

– Wealth Wise: In partnership with Schroders

PersonalWealth,wehaveintroducedthisfinancial

wellbeing programme to address the impact of the

cost of living crisis on our colleagues.

– Aligned health benefits: We have standardised

healthbenefitsacrosstheGrouptoensure

equitable access to healthcare, including a reduced

contribution rate for health cashback plans.

– Menopause support: Our continued partnership

withPeppyoffersspecialisedmenopausesupport,

which is also available to partners or loved ones of

thosedirectlyaffected.

– Mental health first aid: We have increased our

investmentinthetrainingofmentalhealthfirst

aiders in collaboration with St John Ambulance,

ensuring that more colleagues are available to

provide support when needed.

– Employee assistance programme: Our 24/7

employee assistance programme, operated by

Health Assured, remains accessible, with ongoing

communicationeffortstoensurecolleaguesare

aware of available resources.

– Andy’s Man Club partnership: We have launched

anofficialpartnershipwithAndy’sManClub,raising

awareness of the importance of mental health and

suicide prevention on International Men’s Day.

Learning and development

Attracting and retaining skilled and diverse talent

is essential to our success, driving creativity and

innovation that propel our future growth. By investing

in our colleagues, we empower them to reach their

full potential, thereby contributing to our continuous

improvement and progress.

DFS

This year, we focused on upskilling our Regional

Managers, Branch General Managers, and Assistant

Managers to ensure a consistent customer experience

across our stores and online channels. Over 200

colleaguesparticipatedinface-to-faceworkshops,

followed by a virtual workshop attended by more than

600 sales colleagues.

Sofology

At Sofology, we prioritised colleague growth by

deliveringface-to-faceproducttraining.Product

specialists visited each of our 58 showrooms to

conducthalf-dayworkshops.Leaderswerethen

responsible for further developing 420 Sofologists

through interactive regional workshops.

The Sofa Delivery Company

The Sofa Delivery Company launched the Management

Academyprogrammeforallfirst-linemanagers,

employing a blended learning approach. Over 150

colleaguesparticipatedinface-to-faceandvirtual

workshops aimed at enhancing management

capabilities. The programme included modules on

Inclusion, Recruitment and Wellbeing, totalling 5,250

learning hours.

Group Support Centre

Since the launch of the Group Leadership Academy

programme in January 2024, 300 leaders have engaged

in monthly workshops covering a wide range of topics,

fromproductivityandefficiencytocommercialacumen.

Tobuildsector-specificskills,weintroducedanew

FinanceAcademy,offeringcolleaguesaccesstoonline

content and workshops led by subject matter experts.

Health and safety

Our ongoing strategy is focused on cultivating a

proactive safety culture and mitigating risk across all

levels of the organisation. Central to this strategy is

continuous coaching and education, empowering

colleagues with the knowledge and tools necessary

to identify hazards and report potential risks. We are

actively driving cultural change by promoting open

communication and engagement, ensuring that safety is

integrated into every aspect of our operations. Through

regular safety audits, colleague feedback mechanisms,

and innovative initiatives such as the Health & Safety

league table within The Sofa Delivery Company, we are

committed to making safety a shared responsibility and

embedding it as a core organisational value.

The Health, Safety and Environment (‘HSE’) team is now

fullyqualifiedtoconductnoiseassessments,ergonomic

evaluations, and Fire Risk Assessments. This enhanced

capability allows us to support colleagues more

effectivelyandcost-efficiently,providinggreaterflexibility

to respond swiftly to changes, thus safeguarding our

people and ensuring business continuity.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RESPONSIBILITY AND SUSTAINABILITY REPORT

CONTINUED

– Six active Colleague Networks.

– Achieved Bronze accreditation in the Inclusive

Employers Standard.

– Yearonyearincreaseincolleaguesdisclosingtheir

disabilities,reflectingstrengthenedpsychological

safety.

– 32% female representation in showroom

management across the Group.

– 40% female representation in senior leadership

roles.

– 87% completion rate across the Group for our

bespoke ‘Everyone Welcome’ cinematic adventure

LMS module.

– Face-to-faceInclusionworkshopsdeliveredtoover

500 colleagues.

Future Objectives

Ourongoingeffortstoachievegenderbalancein

showroom management across both brands remain

a priority. We are also committed to achieving an equal

gender split in our senior leadership population and are

developing initiatives to enhance ethnic diversity within

this group.

To facilitate change, we will introduce positive initiatives

aimed at nurturing our future leaders, supported by

a comprehensive review of our current policies and

processes to ensure they are more inclusive and

conducive to helping our people thrive. Our year on

year objectives will be realistic, taking into account

attrition rates, market challenges and the

opportunities available.

Our focus on continuous improvement has resulted in

asustaineddecreaseinworkplace-relatedinjuries,with

a 22% reduction so far this calendar year compared to

the same period in 2023.

The HSE team continued to demonstrate excellence

by being commended at the SHE Excellence Awards in

FY24,receivingrecognitionintheSaferLogisticsAward

category for ongoing risk improvements within the

manufacturing transport yards.

Equity, diversity and inclusion

Enhancing diversity in leadership is pivotal to positively

influencingourcultureandfosteringaworkplacewhere

all individuals feel genuinely welcome, particularly those

from underrepresented groups. We remain committed

toourlong-termgoalofreflectingthediversityofthe

customers we serve and the communities in which we

operate.Ourongoingculturaltransformationefforts

continue to advance, with a strong focus on equality,

diversity, and inclusion. Colleagues are actively engaged

in understanding their roles in this important journey.

By leveraging data, we are able to identify areas

requiring further attention while also celebrating the

progress we have made.

Progress made to date:

– 80% of colleagues agree or strongly agree with

the statement, “I can bring my whole self to work”.

– 83% of colleagues agree or strongly agree that

“My manager is supportive of creating an

environment where everyone is welcome”.

Gender Mix by role

Board Male Female

At 30 June 2024 3 43% 4 57%

At 25 June 2023 3 43% 4 57%

GLT* Male Female

At 30 June 2024 3 60% 2 40%

At 25 June 2023 3 50% 3 50%

Senior Leaders Male Female

At 30 June 2024 52 60% 34 40%

At 25 June 2023 56 60% 37 40%

Total Male Female

At 30 June 2024 3,048 64% 1,682 36%

At 25 June 2023 3,435 65% 1,853 35%

* Excluding CEO and CFO

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

Customers and colleagues raised

for BBC Children in Need over

£700,000

All senior leaders are required

to complete modern slavery

training

Percentage of manufacturing partners

having at least one on-site audit

100%

KEYFIGURES

Supporting our

communities

OUR COMMUNITIES

We are proud of our unwavering commitment

to supporting our communities and the active

engagementofourcolleaguesinfulfillingourpromises.

Giving Back programme

Launchedin2020,ourGivingBackprogrammereflects

our dedication to social responsibility. Through this

initiative, we commit to raising and donating up to 1%

ofourprofitbeforetaxannually,offeringeachcolleague

one paid volunteering day, and donating up to 1% of our

products (by volume) each year to charitable causes.

DFS remains a proud partner of BBC Children in Need.

InFY24,ourcustomerscontributedover£670,000,

withourcolleaguesraisinganadditional£34,000,

bringingthetotaltojustover£700,000.Sincethe

inception of our partnership, the Group has raised

over£7.6millionthroughthegeneroussupportofour

customers.Thesefundsprovidecrucialone-to-one

support and specialist counselling for children and

young people facing mental health challenges.

InFY24,Sofologycustomersandcolleaguesdonated

over£41,000throughPenniestosupporttheircharity

partner,Home-StartUK,particularlyitsCostofLiving

Crisis Appeal.

We extend our sincere thanks to all our customers

for their generous contributions to these important

causes and acknowledge the dedication of our

colleaguesinmakingatangibledifference.

Beyondthesefinancialcontributions,theGrouphas

donatedover£35,000worthofproductstovulnerable

families and those in crisis across the UK, as well as to

various local communities and charities.

TheSofaDeliveryCompanyofficiallylaunchedits

partnershipwithAndy’sManClubduringthisfinancial

year. To support this vital cause, we conducted

dedicated team meetings with all 1,300 colleagues

to introduce the charity’s mission and discuss suicide

prevention. Remarkable stories emerged during

International Men’s Day, as colleagues across the

Group collaborated to raise awareness of the charity

both within and outside the organisation. In July 2024,

ourcolleaguesraisedover£5,000forthecharityby

supportingateaminThe3PeaksYorkshireChallenge.

Ethical supply chain

AtDFSGroup,ourcultureandvaluesarefirmlyrooted

in doing what is right. We set clear expectations for

behaviour that all our colleagues and suppliers are

required to follow. We are committed to upholding

human rights across our business and supply chain,

with zero tolerance for any form of modern slavery.

For further details, please refer to our Modern Slavery

andHumanTraffickingStatement,whichisavailableon

our corporate website: www.dfscorporate.co.uk/esg/

modern-slavery-and-human-trafficking-statement.

To support our colleagues in maintaining ethical

standards and reporting concerns, we have implemented

aclearwhistleblowingpolicyandaconfidentialreporting

hotline. As part of our commitment to managing the

risk of modern slavery, all leaders and senior team

members are required to complete mandatory training

on identifying various forms of modern slavery and the

appropriate reporting procedures.

We also hold our value chain partners to the highest

ethical standards. We are committed to ongoing

assessments of modern slavery risks within our

supply chain and will continue to take proactive steps

to address these issues.

All manufacturing partners within the Group are

required to sign a Supplier Code of Practice, which

outlinestheframeworkforanannualon-siteaudit.

This audit incorporates ethical criteria and due diligence

measures to prevent modern slavery and forced labour.

In 2024, 100% of the Group’s suppliers underwent at

leastoneon-siteaudit,withnoinstancesofunethical

practicesidentified.Additionally,wemandatethatevery

supplierobtainsSMETAcertification,whichevaluates

labour standards, health and safety, environmental

performance, and ethics at the supplier site.

For more information please see our Group Code of

Conduct and DFS Code of Practice.

https://www.dfscorporate.co.uk/media/63456/Group-

Code-of-Conduct-revision.pdf

https://www.dfscorporate.co.uk/media/68866/DFS-

Supplier-Code-of-Practice-_-V004-_-Live-.pdf

“Our Group is a values driven

business with people at the heart

of everything we do.”

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

Our Sofa Cycle framework, launched in 2020, ensures

we take a holistic view of our business’s environmental

impact and establishes an ambition to become a

circular business. The framework encompasses not

only our operational impacts but also those of our value

chainandend-of-lifeofourproduct.Usingacircular

framework, we highlight the impact of design, sourcing,

andmanufacturingdecisionsontheend-of-lifeofour

products, logistics, and consumer use. This ensures

we engage our entire value chain in addressing the

environmental impact throughout every aspect of

a product’s journey.

Sustainable sourcing

Our commitment

We work closely with our manufacturing partners and

value chain to ensure responsible and sustainable use

of materials through transparency and traceability. We

seek to support our suppliers by demonstrating best

practices through our operations and manufacturing.

Our approach

Our Sustainable Sourcing Policy** is structured around

seven core principles:

– Suppliers must act in an ethical manner.

– Protect human rights.

– Support our suppliers and partners.

– Deliver value to our customers and shareholders.

– Take responsibility for the impact on the environment.

– Be fair and transparent with suppliers, including how

information is used.

– Champion sustainable innovation within the industry.

We have a number of targets for core materials,

includingcertificationinkeyareasofthevaluechain

based on activity impact. As a target date expires,

the requirements move from ambition to expectation.

This approach provides fair warning, leaving suppliers

sufficienttimetoconsultandadapt.

Timber

Progress:

Timber

Progress:

Leather

Protecting

our planet

OUR PLANET

Our total carbon footprint

(Scope 1, 2 and 3) in FY24 was

216ktCO

Percentage of our products

made with certified timber

Over 80%

Through our ‘In This Together’ campaign,

we’ve secured a supplier commitment to

develop a Net Zero Roadmap which covers

59%

of our Scope 3 emissions

KEYFIGURES

* DFS Furniture PLC incorporating DFS Trading Ltd T/A DFS and Sofology Ltd T/A Sofology FSC

LicenseholderFSC-C192921.

** www.dfscorporate.co.uk/media/62843/DFSGroup-Sustainable-Sourcing-Policy-V1.pdf

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

Sustainable Sourcing continued

Textiles

Target:

Textiles

Target:

Recycled textiles

Target:

Recycled textiles

Target:

Bromide-free fire retardants

Target:

Bromide-free fire retardants

Target:

Packaging

Target:

Packaging

Target:

Operational targets

Waste

Water

Biodiversity

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

216,000 tCO

e (FY23)

21,500 tCO

e (FY39/40)

54.6%

Phase 1

Phase 2

Phase 3

Net Zero

Suppliers evolve

manufacturing methods

to support circular design

New circular retail models

and products

Fully circular products

and Net Zero operations

Remaining unabatable

emissions o�set or removed

Suppliers engage their

value chains while

reducing their emission

Replace legacy technolgy

with lower footprint

alternatives

Increase reuse and

recycling in operations

Suppliers set their own

Net Zero targets

Using sustainable

materials

Reducing our emissions

in operations

of our Scope 3 emissions

(3.01 and 3.04) will have a

supplier Net Zero roadmap

TARGET – By 2028

72%

reduction in

Scope 1 emissions

TARGET – By 2033

RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

NET ZERO PATHWAY

Carbon

Carbon accounting

In accordance with SBTi and GHG Protocol accounting standards, we have shifted our

carbon calculations from activity data supplied by our value chain to spend data audited

by our audit partners, KPMG. This ensures accuracy and aligns with the methodology of

ourpeersandvaluechain.However,industry-standardemissionfactorsforfurnitureused

are lower than our own activity calculations (which we were unable to validate across the

completesupplychain),resultinginayear-on-yeardropinreportedScope3emissions.

Our Net Zero strategy

DFSGroupdefinesNetZeroastheabsolutereductionofcarbonemissionsacross

allscopesbyatleast90%comparedtobaselineyearwiththeoffsetorremovalofthe

remaining, unabatable emissions.

InFY23wesharedourNetZerostrategy,splitintothreephaseswithcleartimelines.While

ourapproachhasnotvariedsignificantly,werecognisedtheinnovationandinvestment

needed, is not in place to support the timeline we originally planned. As such, we have

shifted our timeline to before 2050 by extending Phase 2 and 3 to work concurrently,

collaborating with our value chain to develop plans to decarbonise.

PHASE 1 – FY24-30

Initiallyconcentratingonourownoperations,wewilladapttolower-emissiontechnologies

throughout our estate and logistics infrastructure and introduce circular business models.

We’ll also engage our supply chain, support the development of their own Net Zero

roadmaps,andspecifylower-emissionmaterialsinourproducts.

PHASE 2 – FY30-40

We will encourage suppliers to reduce their emissions and engage their value chains

inNetZeroplanning.Internally,we’llcontinuematerialchangesandfinaliselowcarbon

technologyforourdeliveryfleet.

PHASE 3 – FY30-50

We aim to ensure all suppliers design and manufacture for repair, reuse and recycling to

support a circular business model. Innovation in logistics, materials, and manufacturing

iscrucial,andwehaveclearshort-termstepstoachieveourlong-termgoals.

Creating a circular business model

Central to our Net Zero strategy is evolving DFS Group to a circular economy, ensuring

products are designed, and manufactured for multiple lifecycles, extracting maximum use

fromthematerialsandenablingreuse,repurposeandrecyclingofthosematerials.InFY24,

we launched a new Leadership Development programme in which senior leaders were

tasked with developing circular commercial models to support our Net Zero ambition.

Their proposed new commercial models are designed to prolong the lifecycle of our product

and ensure its return to the Group for refresh, repair and resale, and will be developed further

over the next 12 months. We also collaborated on research sprints with Imperial College,

London,todevelopnewproductdesignswithinnovativematerialoptions,specifically

designed to reduce the environmental impact of our product. All these concepts will

require further testing and development to ensure viability and sustainable performance.

Supplier activity

Material changes

Our operations

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

2023

2024YTD

2022

2019

2020

2021

6,189

16,873

5,195

17,462

1,697

18,058

223

16,215

15,291

14,441

RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

Scope 1 progress

In 2024, we continued our reduction strategy by

removing gas across the estate and transferring

company cars and service vehicles to electric or hybrid

options. We also trialled 7.5 tonne electric vehicles,

howeverhaveyettofindasuitablesolutiontointroduce

at scale across the Group. Our emissions rose in the

secondhalfofthefinancialyearduetoincreased

delivery volumes from our successful Winter Sale and

Easter promotions, which diminished the Scope 1

reductions achieved in our calendar year.

Scope 2 progress

We continue to utilise renewable sources. Our

year-on-yearmarket-basedemissionshaveincreased

with the wider adoption of electric and hybrid company

cars. Though charging at our operational sites or on

company fuel cards is fully traceable to renewable

sources, where we are unable to verify a source, we have

assumednon-renewableenergyforotherEVcharging.

DNV has externally assured our Scope 1 and 2 footprints.**

** www.dfscorporate.co.uk/media/64958/DFS-ARA-Assurance-

statement.pdf

Scope 1 and 2 emissions

Directemissions–Scope1

Indirectemissions–Scope2

Scope 1 and 2 emissions

The tables below show our energy use and associated greenhouse gas emissions in line with the UK government’s Streamlined Energy and Carbon Reporting requirements.

Rest of the world

(ROI)

Total FY24

kWh UK

Rest of the world

(ROI & NL)

TotalFY23

kWh

% increase/

(decrease)

Scope 1

Diesel and Kerosene 36,253,180.0 1,307,338.1 37,560,518.1 37,985,804.0 1,006,184.92 38,991,989.0 (3.67)

Natural gas 17,013,423.0 415,090.0 17,428,513.0 18,302,302.0 415,074.00 18,717,376.0 (6.89)

Petrol 4,237,034.8 66,217.9 4,303,252.7 5,539,165.4 3,797.52 5,542,962.9 (22.37)

Scope 2

Electricity 25,929,697.0 599,872.0 26,529,569.0 26,170,487.6 578,708.15 26,749,195.7 (0.82)

Electric vehicles* 161,729.0 742.0 162,471.0 83,306.3 0.00 83,306.3 95.03

Total energy consumption 47,341,883.8 1,081,921.9 48,423,805.7 50,095,261.2 997,579.7 90,084,829.9 (46.25)

Absolute emissions (tCO

Rest of the

world (ROI)

Total FY24

tCO

e UK

Rest of the

World (ROI

& NL)

TotalFY23

tCO

% Increase/

(decrease) FY22 FY21 FY20 FY19

Scope 1 emissions 14,029.8 411.2 14,441.0 14,961.2 329.7 15,290.8 (5.6) 16,215 18,058 17,462 16,873

Scope 2 emissions

Market based 64.0 0.0 64.0 38.8 10.4 49.3 29.9 223 1,697 5,195 6,189

Location based 5,369.0 160.0 5,529.0 5,531.4 122.0 5,653.4 (2.2) 5,828 5,797 5,195 6,189

Total Scope 1 and 2

Market Based 14,093.8 571.2 14,505.0 20,531 462 20,993.5 (30.91) 16,438 19,755 22,657 23,062

Emission intensity (tCO

e/£m gross sales)

Emission intensity (tCO

e/£mgrosssales)

FY24 FY23

% Increase/

(decrease) FY22 FY21 FY20 FY19

Scope 1 emissions 11.0 10.7 2.45 11.0 13.3 18.6 14.5

Scope 2 emissions

Market based 0.05 0.07 (33.08) 0.2 1.2 5.6 5.3

Location based 4.2 4.0 5.56 4.0 4.3 5.6 5.3

Grosssales(£m) 1,311.8 1,423.6 (7.85) 1,474.6 1,359.4 935.0 1,165.0

* FY23Electricvehicleenergyconsumptionhasbeenrestatedduetoacalculationerror.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

2024 Scope 3 emissions by category – % of Scope 3 emissions

3.01–Purchasedgoodsandservices–78.39%

3.02–Capitalgoods–1.11%

3.03–Fuelandenergyrelatedactivities–2.35%

3.04–Upstreamtransportationanddistribution–14.02%

3.05–Wastegenerateinoperation–0.16%

3.06–Businesstravel–0.38%

3.07–Employeecommuting–3.40%

3.08–Upstreamleasedassets–0.01%

3.11–Useofsoldproducts–0.17%

3.12–Endoflifetreatmentofsoldproducts–0.01%

Scope 3 emissions* Absolute emissions (kt CO

e) Emission intensity (kt CO

e/£mgrosssales)

FY24 FY23

% increase/

(decrease) FY22 FY21 FY20 FY19 FY24 FY23

% increase/

(decrease) FY22 FY21 FY20 FY19

3.01 – Purchased goods and services 158.2 320.0 (50.56) 321.1 309.2 215.8 284.8 120.6 224.8 (46.35) 217.8 227.5 230.8 244.5

3.02 – Capital goods 2.2 3.7 (40.41) 17.4 15.1 10.3 8.2 1.7 2.6 (35.33) 11.8 11.1 11.0 7.0

3.03 – Fuel and energy related activities 4.7 5.2 (9.21) 4.0 4.2 4.0 3.9 3.6 3.6 (1.47) 2.7 3.1 4.3 3.3

3.04 – Upstream transportation and distribution 28.3 36.7 (22.98) 74.6 58.5 33.2 36.7 21.6 25.8 (16.42) 50.6 43.0 35.5 31.5

3.05 – Waste generate in operation 0.3 0.3 20.15 1.4 1.3 0.9 1.3 0.2 0.2 30.39 0.9 1.0 1.0 1.1

3.06 – Business travel 0.8 0.5 62.67 1.2 0.8 1.3 1.3 0.6 0.3 76.54 0.8 0.6 1.4 1.1

3.07 – Employee commuting** 6.9 7.6 (9.21) 4.7 4.1 4.5 5.4 5.3 5.3 (0.85) 3.2 3.0 4.8 4.6

3.08 – Upstream leased assets 0.0 0.6 (100.00) 4.0 3.2 3.1 2.5 0.0 0.4 (100.00) 2.7 2.4 3.3 2.1

3.11 – Use of sold products** 0.3 0.3 – 0.6 0.7 0.5 0.7 0.3 0.2 35.65 0.4 0.5 0.5 0.6

3.12 – End of life treatment of sold products 0.0 0.1 (75.88) 10.2 9.7 7.1 9.0 0.0 0.1 (73.83) 6.9 7.1 7.6 7.7

Total Scope 3 emission intensity 201.7 375.0 (46.20) 439.2 406.8 280.7 353.8 153.9 263.3 (41.60) 297.8 299.3 300.2 303.5

* Wheredataissharedbysupplierpartners,whichisdifficulttoverify,itisreportedingoodfaith.Allinformationprovidedrepresentsendoffinancialyear(FY24)figuresunlessotherwisestated.

** 3.07–Employeecommutingand3.11–UseofsoldproductswererecalculatedforFY23asanerrorwasfoundinthesourcedata.Thefiguresstatedabovearetherevisedcalculations.

This approach mirrors the ‘supplier engagement’ target

set out by the SBTi. We hoped to secure commitments

which would cover 20% (88 tCO

e)ofourFY23Scope3

emissions, thereby endorsing our plans to submit to

the SBTi.

Utilising our experiences to provide guidance and

support, we encouraged suppliers on their own journeys.

The campaign was successful, garnering commitments

from manufacturing partners covering 49% of Scope 3

emissions and a further 10% from raw material suppliers

and logistics partners.

Science Based Targets initiative (SBTi)

In June 24, we submitted our plan to the SBTi to reduce

our carbon footprint by at least 54.6% on Scopes 1 and

2 by 2033 and Scope 3 by 90% or more before 2050.

We hope to have the SBTi validate this plan very shortly.

Scope 3 progress

Our value chains are a vital part of our business and

contribute almost 93% of our Scope 3 emissions. Their

support for our Net Zero journey and collaboration

on our plan are critical to the success of our strategy.

InFY23,animpactassessmentofourmanufacturing

partners indicated only 40% had either set a Net Zero

target or calculated their carbon footprint.

To address this, we launched our ‘In This Together’

campaign, engaging our partners in our Net Zero

journey. Our request to suppliers was to commit to

delivering the following by May 2029:

– Calculating their own full carbon footprint

– Developing their own Net Zero strategy aligned

to climate science

– Publishing their plan and their progress against it

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

The reporting period of this disclosure was the hottest year recorded

since records began. Climate-related risks are continuously evolving,

as are the transition risks and opportunities. DFS Group is committed

to building a sustainable business model in terms of our impact on the

environment and preserving our long-term success as a Group.

As climate reporting continues to evolve along with the pressing nature

of climate change issues, so does our performance and strategic reporting.

Compliance Statement

WehavecompliedwiththeFinancialConductAuthoritylistingruleLR9.8.6Rbyincludingclimate-related

financialdisclosuresconsistentwithalltheTCFDrecommendationsandtherecommendeddisclosures.

In preparing these disclosures, we have considered Section C and E of the TCFD Annex: Implementing

therecommendationsoftheTCFD.Notethatthisreportreflectsthelistingrulesasattheyearenddate.

TCFD Summary

Our progress in FY24

1. Engaged suppliers in creating their own

NetZerostrategyalignedtoscience-based

targets, securing commitments covering

59% of all Scope 3 emissions.

2. Submitted our Net Zero strategy to

Science Based Targets Initiative for

validation in June 2024.

3. Confirmeda14%reductionofScope1

emissionsagainstFY19baseline.

4. Introduced new policies for water and

biodiversity and strengthened our

deforestation requirements within

our Sustainable Sourcing Policy.

5. Completed an updated materiality

assessment.

6. Developed new commercial models to

support our evolution to a circular business.

Areas of focus in FY25

1. Continue engaging and supporting our

suppliers in developing their Net Zero

strategy aligned to science based targets.

2. Secure SBTi validation for our

Net Zero strategy.

3. Continue to integrate climate risk

consideration into our business strategy

anddecision-makingprocesses.

4. Develop our reporting capabilities

for TPT and ISSB.

5. Continue to develop and test new

commercial models to support circularity.

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

Scenarios

We assessed our risk and opportunity exposure

in two scenarios.

Low Carbon World scenario (1.5°C)

Alow-carbonscenarioassumestheimplementation

of policies and technologies that support circular

economies,materialefficiencystrategies,andthe

promotion of alternative fuels and technologies within

a reasonable timeframe to limit global warming to

below 1.5°C. As a result, global Net Zero CO

emissions

are expected to be achieved around 2050.

Hot House World scenario (4°C)

A hot house scenario assumes that policies and

infrastructuretosupportsustainabilityarenoteffective.

Thereislittletonoadaptationofresourceandenergy-

intensive behaviours. As a result, economies fail to

transitiontoalow-carbonworld,andthephysical

impacts of climate change become increasingly severe.

The following sources informed the assumptions in

the scenario analysis:

– Intergovernmental Panel on Climate Change

– Shared Pathways scenarios of projected global

changes are used to derive greenhouse gas (‘GHG’)

emissionscenariosassociatedwithdifferentworlds

and forecasts on physical climate implications of

GHG concentrations.

– International Energy Agency scenarios – focus

ontheconsequencesofdifferentenergypolicies

and investment choices. The Net Zero 2050

scenario (1.5°C) explores what is needed to ensure

global emissions reach Net Zero by 2050.

– NGFS (Network for Greening the Financial

System) scenarios –exploredifferentassumptions

for how climate policy, emissions, and temperatures

evolve. The net zero 2050 limits global warming

to 1.5°C through stringent climate policies

and innovation, reaching global Net Zero CO

emissions around 2050. The NGFS considers

various scenarios, adding two additional scenarios

in 2023: the Fragmented scenario, which considers

divergent geopolitical approaches to climate

change and the Low Demand scenario, in which

Risk management

InFY24,weupdatedourmaterialityassessment

usingtheSASBframeworkandin-depthstakeholder

engagement. The critical environmental topics for our

business and stakeholders were material use, longevity,

and circularity, followed by carbon emissions and plastic

and packaging Waste.

Furtherclimate-relatedriskswereidentifiedand

assessed through the scenario analysis exercise in

FY23.Weinvolvedvariousinternalstakeholdersinthe

process, and our wider value chain representatives were

consulted on the outcome. We applied a percentage

ofprofitbeforetaxasabenchmarktoconsiderthe

materiality of the impact of climate change risks and

opportunities.

The exercise considered a shift in our stakeholders’

values toward more sustainable products and services,

existing and emerging regulatory requirements, and

technologytransition,reflectedinthefiverisktypes

described in Table 1.

Risk management framework

Climate change is included in our principal risks

(Environmental and sustainability risk – PR6). The CFO

owns the risk and is supported by the Sustainability

Director and risk managers, who are closely related to

eachspecificriskidentified.TheCFOisaccountable

for ensuring that the relevant controls and mitigation

strategiesareeffectiveandinplace,whiletheBoard

has oversight responsibility for principal risks.

We continuously monitor the risk factors and the

effectivenessofthecontrolsassignedtotherisk.

Climate change is currently rated a medium risk,

requiring a quarterly review of the controls and

mitigationeffectiveness.

See page 49 for a detailed process on managing

climate-relatedrisks,includinghowthedecisionsto

mitigate, transfer, accept, or control the risks are taken.

enforceable legislative requirements are coupled

with stringent carbon prices.

We conducted a scenario analysis in 2022 with support

from Willis Towers Watson and included geographic

aspects of our value chain for manufacturing and core

materialstoenhancefinancialconsiderations.

Timeframes

Throughoutouranalysis,wehavedefinedthetime

frames as follows:

Horizon Years Rationale

Short 1-3years Aligned with our business

strategyandfinancial

forecasting.

Medium 3-10years Aligned to the strategic

plan timeframe.

Long 10-30years Aligned with our Net Zero

ambition by 2050.

Throughthisexercise,weidentifiedtenmaterialclimate

risks and opportunities. Table 1 below summarises the

transition risks and opportunities.

Net Zero strategy

DFSGroupdefinesnetzeroastheabsolutereduction

of carbon emissions across all scopes by at least 90%

comparedtobaselineyearwiththeoffsetorremoval

of the remaining, unabaltable emissions.

Our Sofa Cycle Framework underpins our Net Zero

ambition and will be delivered by evolving the business

to a circular model. We aim to achieve this by mitigating

the environmental impact of each aspect of the

product lifecycle – from sustainable sourcing to

end-of-life–byengagingourentirevaluechain

in the journey. See page 41 for more details.

Engaging with our suppliers directly on our Net Zero

strategyandclimate-relatedissuesgivesusthe

resilience to mitigate and adapt to climate change

issues as they evolve.

Table 1 on pages 46 to 48 details our response to the

risksandopportunitiesidentifiedinthescenario

analysis exercise.

Metrics and targets

The scenario analysis highlighted a number of metrics

used to monitor our climate risks as described in Table

1 (column ‘indicators’). We continuously quantify and

measure those metrics internally.

Greenhouse gas measures

Engaging our suppliers in our Net Zero strategy is

critical to our approach. This year, we used a new

metric of ‘Scope 3 emissions covered by a supplier

commitment to develop a Net Zero strategy’ to track

the viability of our Net Zero strategy. The supplier

engagement target was considered a performance

metric and part of the bonus structure. See Director’s

Remuneration report page 81 for further details.

Please note, our Scope 3 calculation methodology in

FY24shiftedtospend-basedcalculations,toensure

consistency with our industry and suppliers as well as

usingverifieddatawhichisauditedbyathirdparty.

We also use Scope 1 and 2 intensity metrics as

ourcross-industrymetricstotrackourprogressin

achieving our Net Zero ambition which are externally

assured – see page 42.

Our approach

DFS Furniture plc Annual Report & Accounts 2024

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RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

Risk

MANDATES AND REGULATION

ON OUR PRODUCTS

Risk type

Indicator

Production cost.

Risk rating

Risk/opportunities description

Regulatory pressure is applied to the materials used

in the manufacturing of our products, leading to

increasing production costs.

This includes the possibility of introducing carbon

footprintlabelling,plastictaxesorbansonsingle-use

plastics,andzero-netdeforestationpolicies.

Our response

Our Sustainable Sourcing Policy is regularly reviewed

to keep current with our regulatory obligations.

Furthermore, we set clear ambitions for our suppliers

to continually improve upon the requirements to stay

ahead of legislative changes such as increasing the

volume of recycled content in our packaging

and textiles.

We align our supplier contracts with the supplier

requirements within the Sustainable Sourcing Policy.

Risk

CARBON PRICING

Risk type

Indicator

Direct operating

cost.

Risk rating

Risk/opportunities description

Carbon pricing already exists in some of the

jurisdictions where we operate. Under both scenarios,

the pricing of GHG emissions is expected to increase,

which could impact our direct operating costs.

Our response

We continue to monitor developments in this area.

Risk

CLIMATE CHANGE LITIGATION

Risk type

P RPP

Indicator

Compliance

cost/non-direct

operating cost.

Brand value.

Risk rating

Risk/opportunities description

Investors, insurers, shareholders, and public interest

organisationscouldbringclimate-relatedlitigation

claims against DFS. Reasons for claims could include

failure to adapt to climate change, greenwashing

for overstating positive environmental impacts and

understatingrisks,andinsufficientdisclosureon

materialfinancialrisks.

Our response

We continuously monitor the legislative landscape

to ensure compliance with the relevant disclosure

requirements. We are aware that the sustainability

reportinglandscapeisfast-evolving.

InFY25weintendtoinvestintrainingforour

Sustainability team and legal counsel in the new

ISSB framework and other standards.

Risk

BUILDING CODE REQUIREMENTS

Risk type

Indicator

Maintenance

cost/capex/opex.

Risk rating

Risk/opportunities description

Increased maintenance costs are associated

with upgrading stores, distribution centres, and

manufacturing sites to adhere to stringent building

codes and guidelines.

Our response

All landlords are required to comply with building

code requirements. The majority of our tenancy

agreements will be reviewed prior to the 2030

deadline ensuring we have the opportunity to factor

complianceandopportunitycostsintofinancial

planning.

Table 1: Summary of our climate risks and opportunities

Short term risk and opportunities

Risk type:

Policy and legal

Technology

Market

Reputation

Physical

Scenarios:

Transition risks – 1.5º

Physical risks – 4º

Risk rating:

High

Medium

Low

DFS Furniture plc Annual Report & Accounts 2024

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RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

Risk

INVESTMENT RISK

Risk type

Indicator

Cost of capital.

Risk rating

Risk/opportunities description

Failure to meet publicly stated sustainability targets

or failure to meet disclosure requirements poses

a risk to our business as customers and investors

increasingly expect high levels of sustainability

performance from organisations.

However, demonstrating a robust and deliverable

strategy, potentially opens the opportunity to access

lowercostcapital,suchassustainability-linkedloans.

Our response

We incentivise teams and leadership as part of the

employee bonus scheme to meet the publicly stated

targets which are derived from our sustainability

strategic objectives.

Though we have not met every target this year

we believe our targets and submission to the

SBTi demonstrate we are ambitious and setting

sufficientlychallengingobjectives.

Table 1: Summary of our climate risks and opportunities continued

Short term risk and opportunities continued

Risk type:

Policy and legal

Technology

Market

Reputation

Physical

Scenarios:

Transition risks – 1.5º

Physical risks – 4º

Risk rating:

High

Medium

Low

Risk

TRANSITION TO LOWER EMISSION

TECHNOLOGY AND MAINTAINING

A CIRCULAR SYSTEM

Risk type

Indicator

Capex to increase

energyefficiency.

Capex to

increase recycling

capability.

Capex/opex for

transitioning to

electric vehicle

fleet.

Risk rating

Risk/opportunities description

Innovation, especially in technology will be essential

to achieving our Net Zero ambition.

The technology transition costs could include:

– Energy infrastructure across our estate.

– Switchingourlogisticsfleettolow-emissionvehicles.

– Investing in technology to improve the lifecycle of

products.

Our response

We have developed integrated strategic planning to

ensure the introduction of low carbon technology

within our property, manufacturing and logistics

aligned to our Net Zero trajectory. This includes

the anticipated replacement cycles for legacy

infrastructure and lifecycles of vehicles and projected

costsarebuiltintothefouryearfinancialplan.

Risk

INCREASED COST OF RAW

MATERIALS AND PRODUCTS

Risk type

Indicator

Production cost.

Risk rating

Risk/opportunities description

Asoursuppliersbeartheeffectofcarbonpricingand

othersustainability-drivenimpacts,theycouldpass

on the cost to us, hence increasing our cost of raw

materials and products.

Our response

Phased and adapted pricing and margin structure

to accommodate cost changes.

Medium to long term risk and opportunities

Risk

SHIFT IN CUSTOMER/

CONSUMER VALUE

Risk type

Indicator

Revenue.

Risk rating

Risk/opportunities description

Customers have demonstrated they will align

themselveswithbrandsthatreflecttheirvalues.

Failure to meet these shifting values could cause

customers to switch to alternative products or

competitors.

Growing awareness of climate issues and change

in consumer priorities could provide an opportunity

to widen our customer base, and increase revenues,

profitsandmarketshare.

Our response

Customer satisfaction was ranked the top issue in our

materiality assessment in 2024.

We conduct regular consumer monitoring on

appetite and attitudes toward sustainable brands and

products as well as our ongoing performance metrics

such as NPS.

Additionally, we use customer research to validate

our approach to circular models to ensure we are

developing commercially viable solutions.

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RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

Risk

COST OF CAPITAL

Risk type

Indicator

Cost of capital.

Risk rating

Risk/opportunities description

As credit ratings begin to incorporate climate change

considerations, there is a risk that the cost and

availability of capital would increase/ decrease.

Our response

We support ESG inquiries and disclosures to

third-partyandcreditratingagenciesaswellas

engaging shareholders.

Table 1: Summary of our climate risks and opportunities continued

Medium to long term risk and opportunities

Risk type:

Policy and legal

Technology

Market

Reputation

Physical

Scenarios:

Transition risks – 1.5º

Physical risks – 4º

Risk rating:

High

Medium

Low

Risk

PHYSICAL RISK

Risk type

Indicator

Asset value

located in an

area of material

climate hazard

intensity.

Risk rating

Risk/opportunities description

Damage or loss of value to our facilities due to

climate hazards.

Our scenario analysis considers heat stress,

flooding,drought,fireweather,andwindstorms

as climate hazards.

Our response

All our own facilities are located in the UK, which is

not exposed to as many climate hazards as other

countries. Therefore, the overall risk to our facility

is considered low to moderate within the short to

medium term horizon. Our own facilities including

manufacturing and distribution are leased with an

averageoffiveyearsremaining,theyareunlikely

to see long term climate changes in 2050 unless

renewed.

Risk

SUPPLY CHAIN

Risk type

Indicator

% of supply from

supplier facilities

thatareinhigh-

risk areas.

Risk rating

Risk/opportunities description

The climate hazards considered in our scenario

analysisare:heatstress,flooding,drought,fire

weather, and windstorm. Any of these hazards

could cause disruption in our value chain and

disrupt production and delivery.

Our response

Climate or geopolitical disruption of our supply chain

is addressed in a similar approach.

Our supplier facilities are spread across the UK, Europe,

andAsia.Theoverallexposureofdrought,fire,weather

and windstorm to our suppliers’ facilities is moderate,

whilsttheexposureoffloodingisconsideredveryhigh

in Asia. We have addressed this with our key partners

and have contingency plans in place.

DFS Furniture plc Annual Report & Accounts 2024

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RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

See full corporate governance framework on page 55.

The Board recognises the crucial role of addressing

climate change risks and opportunities for the

Group’slong-termsuccess.Wehaveestablisheda

clear governance framework for climate change and

sustainability.

The Board holds overall responsibility for monitoring

ourprogresstowardsclimate-relatedgoalsandtargets,

and has designated the RSC.

The RSC meets at least three times per year to

review and assess the Group’s sustainability strategy,

governance, and performance against targets, as well

as review and approve policies related to our focus

areas: our planet, our people, and our community.

non-financialmetrics.InFY24,theyconductedan

internal audit of environmental data control systems.

The ESG Committee meets six times per year and

reports to the GLT and RSC. Senior management

forms part of these forums to ensure they are

influencingandmonitoringtheprogressofthe

climate change objectives. Responsibilities include

updating the RSC on climate change and sustainability

developments as well as driving the overall strategy of

thebusinessandmanagingitsclimate-relatedrisks

and opportunities.

Managementisinformedaboutclimate-related

matters both internally and externally:

Climate change remains a central topic in RSC and

Boardmeetings,reflectingitsimportanceinour

strategic plan. The Committee’s terms of reference

are available on the Company’s website.

In January 2024, the GLT completed a comprehensive

materiality assessment.* The Group Board were

independently interviewed as key stakeholders on their

views of the topics which were summarised and shared

as part of the process. Upon completion, the materiality

assessment was presented to the Board and used

throughout the Strategy Days held in April 2024.

Climate-relatedriskismonitoredbytheAuditand

Risk Committee (‘ARC’) and the Board through regular

meetings. The ARC also provides assurance on

– Internally through regular updates from the ESG

Committee and Sustainability team, who ensure

governance, including risk management, strategy

andimplementation,andanyfinancialimplications

are raised.

– Externally through input from sustainability experts

and groups, to ensure our sustainability strategy

is relevant and abreast of the continually changing

reporting and regulatory landscape.

– Externally through collaboration with the industry

bodiesandnon-profitorganisations,suchasFSC,

Leather Working Group, Circular Change Council,

Undaunted (formerly CCCI/Imperial College) and

WWF to advocate for circularity, deforestation,

and decarbonisation across industry.

* See our Materiality Disclosure at www.dfscorporate.co.uk/

media/69987/Materiality-Disclosure.pdf

Governance

ForsignoffFor review

For approval review

G LT

GROUP ESG

COMMITTEE

GROUP ESG

COMMITTEE

RSC

STEERING AND

COLLEAGUE GROUPS

STEERING AND

COLLEAGUE GROUPS

Governance framework

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RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

Ethical business

Our commitment

We are committed to conducting all of our business

in an honest and ethical manner, acting professionally,

fairly and with integrity in all our business dealings and

relationships. We implement effective systems to

counter the risk of bribery and corruption.

We apply our policies across all of our operations,

and also require all of our suppliers to commit to apply

the same or equivalent policies. The Group does not

operate in any tax havens or use any tax avoidance

schemes.

Our Anti-Bribery Policy and our Tax Strategy are

available on our website https://www.dfscorporate.

co.uk/governance/policies and our key principles

are stated below:

Bribery and corruption

The principle: We will not accept bribery or corruption,

in any form or in any place, and we do not offer, give

or take a bribe or inappropriate payment, either directly

or indirectly.

What this means in practice:

– Offering, giving, taking or promising things that may

influence, or affect an organisation or individual

in order to gain business, or an advantage, is not

allowed in any form.

– Accepting or offering a bribe/kickback payment

of any kind is prohibited; a bribe doesn’t have to

be successful to be corrupt.

– We will never use our charity or sponsorship

activities to gain an unfair advantage.

– We expect all colleagues, partners and suppliers

to report any breaches, or suspected bribes or

corrupt behaviour.

Gifts and hospitality

The principle: Giving or accepting a gift or hospitality

should only be done if it can be proved to be of small

and modest value. They should never influence the

decisions we take.

What this means in practice:

– We don’t offer or accept gifts or hospitality as part

of contract negotiations or sales transactions.

– Any gifts given or received are modest in value

and recorded appropriately.

Business transactions and information

The principle: All business records, information and

transactions must be recorded accurately and honestly.

We’re steadfast in our approach to preventing any kind

of fraud, embezzlement, money laundering or other

financial crime.

What this means in practice:

– We have robust controls in place to prevent and

detect any form of fraud or money laundering.

– The records of our business dealings and finances

are accurate and well maintained.

– If we suspect any kind of irregularity in our finances,

they are reported straight away to the management

team.

– Timesheets and expenses that are submitted for

payment are accurate and timely.

Data Privacy Policy and cyber security

The Group’s operations depend upon the continued

availability and integrity of its IT systems, including the

security of customer and other data held by the Group,

and risk of attacks is ever increasing. Cyber security and

data has been identified as a principal risk. See page24

for further details on the procedures and system in

place to mitigate the risks.

The Group will take all steps necessary to comply with

the principles as set out in the GDPR and DPA 2018

and have a formal Data Privacy Policy.

Human rights and modern slavery

The culture and ethos across DFS Group is about doing

the right thing. We set clear standards for conduct,

which we expect colleagues and suppliers to adhere

to. We respect human rights in our business and our

supply chain and do not tolerate modern slavery in any

form as documented in our Modern Slavery and Human

Trafficking Statement on our corporate website:

www. dfscorporate.co.uk/esg/modern-slavery-and-

human-trafficking-statement

To assist our colleagues in doing the right thing and

to raise any concerns or suspicions we have a clear

whistleblowing policy and confidential reporting hotline.

As part of managing the risk of modern slavery, we

have a supply chain compliance programme in place.

Our training initiatives include:

– An e-learning module on modern slavery which

has been deployed to senior and middle managers

across the Group. The training provides guidance

on spotting the signs of different types of modern

slavery and how to report concerns.

Our commitment

We are committed to acting ethically and will continue

to take steps to assess the risk of modern slavery

taking place in our supply chain.

To help achieve this we will:

– Continue working with our tier 1 suppliers and

manufacturers to ensure compliance with our

policies in relation to human rights.

– Continue to assess our training requirements

to ensure that they are fit for purpose and deliver

training based on this assessment.

– Address any gaps highlighted in the Ardea gap

analysis report to strengthen our policies and

procedures.

– Strengthen our due diligence processes by

undertaking risk mapping and identifying modern

slavery risk through procurement.

– Ensure that any new supplier commits to the

Group’s Supplier Code of Practice/SLA including

SMETA (SEDEX Members Ethical Audits)

certification.

For more information please see our Group Code

of Conduct and the Group’s Supplier Code of Practice

https://www.dfscorporate.co.uk/media/46609/Group-

Code-of-Conduct.pdf

https://www.dfscorporate.co.uk/media/68866/DFS-

Supplier-Code-of-Practice-_-V004-_-Live-.pdf

DFS Furniture plc Annual Report & Accounts 2024

Strategic Report

RESPONSIBILITY AND SUSTAINABILITY REPORT CONTINUED

MATERIALITY ASSESSMENT

A materiality assessment is required under TCFD regulations but is also a useful tool to ensure the business

includesallstakeholderperspectivesinstrategicplanninganddecision-making.InFY24,werefreshedour

assessmentbyinterviewingorsurveyingallstakeholdergroups.Ofnote,therewasasignificantshiftinprioritiesto

social priorities such as fair wages and diversity and equality over environmental concerns. For more information,

please see our Materiality Disclosure at www.dfscorporate.co.uk/media/69987/Materiality-Disclosure.pdf.

Topic Definition

Customer

satisfaction

and quality

Measurementusedtodeterminehowsatisfied

customers are with its products and services.

Health, safety

and wellbeing

Programmes, guidelines and procedures to

protect the safety, welfare and health of any

person engaged in work or employment.

Data security

and privacy

Protection of customer data and adhering to

current regulations such as GDPR to reduce the

risk and exposure to potential cyber attacks.

Fair wages

An income earned during normal working

hours that meets the basic needs of workers

and their families, with some leftover for extra

expenses and savings.

Equality and

diversity

Creating an inclusive environment where

everyone is welcome, ensuring employees

are treated respectfully and have equal

opportunities.

Material use,

longevity and

circularity

Responsible use of resources by improving

theefficiencyofmaterialsinourproductsand

re-usewherepossiblewhiledesigningout

waste by keeping products and materials in

use for longer.

Labour

conditions

Labour conditions and workplace standards

includinghumanrights,fairwagesandbenefits,

organised labour and freedom of association.

Topic Definition

Carbon

emissions

GHG (Greenhouse Gas emissions) produced

by the activities and operations and the

movement of resources in the supply chain.

Plastic

packaging

and waste

Theefficiencyandrecyclability/reusabilityto

limit waste created in operations.

Energy

consumption

Overallenergyefficiencyandaccessto

alternative energy sources.

Deforestation

and

biodiversity

loss

Protection and restoration of the natural

capital and biodiversity impacted by harvesting,

farming and production of raw materials.

Environment

tax

Tax imposed on activities that have a negative

impact on the environment, such as carbon

emissions, pollution, or resource depletion

(e.g., carbon tax and plastic tax).

Air pollution

Operational and supply chain activities

contributing to air pollution.

Water quality

and drought

Water governance in operations (own and

supply chain) to reduce consumption and

protect quality.

Impact to DFS

High

Low High

Importance to external stakeholders

LOOKING AHEAD

Asclimate-relatedconsiderationsbecomemorecentraltoourbusiness,weexpectthemtobecome‘businessas

usual’inourstrategyandfinancialplanning.Wearedevelopingcommercialsolutionstoprovidebusinessresilience

during the transition and capitalise on the opportunities highlighted. Investments needed to transition and manage

potentialimpactswillcontinuetobeintegratedinfinancialplanninggoingforward.

TCFD CONSISTENCY INDEX

Pillar Recommended disclosures

Location within

this report

Governance (a)Boardoversightofclimate-relatedrisksandopportunities Page 49

(b)Roleofmanagementinassessingandmanagingclimate-relatedrisks

and opportunities

Page 49

Strategy (a)Climate-relatedrisksandopportunities Page45-48

(b)Impactontheorganisation’sbusiness,strategyandfinancialplanning Page45-48

(c)Resilienceofstrategy,takingintoconsiderationdifferentclimate-related

scenarios, including a 2°C or lower scenario

Page 45

Risk

management

(a)Processesforidentifyingandassessingclimate-relatedrisks Page 25 and 45

(b) Risk management process Page 25 and 45

Metrics and

targets

(a)Metricsusedtoassessclimate-relatedrisksandopportunitiesinline

with our strategy and risk management process

Page 42, 43 and 45

(b) Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions

See www.dfscorporate.co.uk/media/69984/Basis-For-Reporting-FY-24.pdf

for our Basis for Reporting

Page 42 and 43

(c)Targetsusedtomanageclimate-relatedrisks,opportunitiesand

performance

Page 34, 41 and 45

This Strategic Report was approved by the Board on 25 September 2024.

On behalf of the Board.

TIM STACEY

Chief Executive Officer

JOHN FALLON

Chief Financial Officer

DFS Furniture plc Annual Report & Accounts 2024

Governance

Contents

52 Directorsandofficers

54 Corporate governance report

61 Audit and Risk Committee

report

65 Nomination Committee report

67 Directors’ Remuneration report

88 Directors’ report

91 Statement of Directors’

responsibilities in respect of

the annual report and the

financialstatements

92 Independent auditor’s report

DIRECTORS AND OFFICERS

STEVE JOHNSON

Non-Executive Chair

TIM STACEY

Chief Executive Officer

JOHN FALLON

Chief Financial Officer

–

Date of joining DFS: December 2018 Date of joining DFS: July 2011 Date of joining DFS: November 2022

Experience: Steve has over 25 years’ experience in the retail

sector, in both public and private equity businesses.

StevepreviouslyservedasCEOofFocusWickesDIYGroup

and Woolworths, as well as working with several other retailers.

Prior to this Steve spent eight years at ASDA having started his

career with Bain & Company.

SteveisanexperiencedIndependentNon-ExecutiveDirector,

wasontheBoardofBigYellowPLCuntil2020andwasthe

Senior Independent Director of Lenta Limited until March 2022.

Steve has significant retail and M&A experience. Most recently

he held the position of Executive Chairman at the Matalan

Group before stepping down in July 2022.

Experience: Tim has been with DFS for over ten years and has

anin-depthknowledgeofallaspectsofthebusiness.Priorto

being appointed Group CEO in November 2018, Tim served

as the Chief Operating Officer, he was responsible for the

showrooms, supply chain and customer service in addition

to online operations and international development.

Tim has significant experience in digital retail having joined DFS

as Director of Online and Business Development and having

ledthemulti-channeltransformationofDFS.Hewaspreviously

theMulti-ChannelDirectorforBoots.comandDirectorfor

Online and Business Development for Alliance Boots.

Tim also has significant experience in M&A, operations,

customer services and marketing.

Experience: Prior to joining DFS, John spent more than

20 years at ASDA, most recently as Group CFO, and played

a key role in the recent change of ownership. During his time

at ASDA John has gained extensive retail experience across

a broad range of roles, including Commercial Finance Director,

Group Financial Controller and Internal Audit Director.

Qualifications:

– BA (Engineering) MEng (University of Cambridge)

Qualifications:

– BA (Hons) Accounting and Finance

(Nottingham Trent University)

– Member of the Institute of Chartered Accountants

in England and Wales

Qualifications:

– BA (Hons) in Accounting & Finance

(Manchester Metropolitan University)

– Member of the Charted Institute of Management

Accountants

External appointments:

– No external appointments

External appointments:

– No external appointments

External appointments:

– No external appointments

Independent:

– Yes

Independent:

– Not applicable

Independent:

– Not applicable

Committee membership key

AuditandRisk

Committee member

NominationCommittee

member

Remuneration

Committee member

Responsibleand

Sustainable Business

Committee member

DenotesChair

–

None

DFS Furniture plc Annual Report & Accounts 2024

Governance

ALISON HUTCHINSON

CBE

Senior Independent

A NR S

Non-Executive Director

GILL BARR

Non-Executive Director

A NR S

JO BOYDELL

Non-Executive Director

A NR

BRUCE MARSH

Non-Executive Director

A NR S

LIZ MCDONALD

Group General Counsel

and Company Secretary

Date of joining DFS: May 2018 Date of joining DFS: March 2023 Date of joining DFS: December 2018 Date of joining DFS: August 2024 Date of joining DFS: August 2018

Experience: Alison has a background in both

digital and retail financial services and was

previously Group CEO of Kensington Group PLC.

Over the last 12 years Alison, as the CEO of

The Pennies Foundation charity has worked with

the retail industry to establish the fintech charity

the Pennies.

UntilMarch2022,AlisonwasaNon-Executive

Director of Liverpool Victoria Friendly Society Ltd.

She previously held several senior management

positions, including Marketing Director, at

Barclaycard having started her career at IBM.

In 2016, Alison received a CBE for her services

to the Economy and Charity.

Experience:GillwasaNon-ExecutiveDirector

of Morgan Sindall from 2004 to 2012, PayPoint

from 2015 to 2024, McCarthy & Stone from 2019

until it delisted in 2021, N Brown from 2017 to

2023 and WIncanton PLC until it was acquired in

April 2024. She is an experienced Remuneration

Committee Chair (Morgan Sindall, N Brown, and

McCarthy & Stone), skilled at reflecting investor

perspectives in remuneration plans that motivate

growth and shareholder value.

Gill’s executive career focus has been on strategy

and customer centric business development.

She was Group Marketing Director of

TheCo-operativeGroupfrom2011to2014

and was previously Marketing Director of John

Lewis. She spent seven years at Kingfisher PLC

where she held a variety of senior marketing and

business development roles.

Experience: Jo has been the Chief Executive

Officer of Travelodge since May 2022, having

previously served as the Chief Financial Officer

since 2013 and has broad based finance

experience in hospitality, leisure and retail.

Prior to joining Travelodge, Jo held senior finance

rolesacrossanumberofconsumer-facing

companies including Mothercare, Jessops,

Ladbrokes PLC, Hilton Group plc and EMI Group.

Experience: Bruce has been the Chief Financial

Officer of Currys plc since July 2021. Prior to

that, Bruce was UK Finance Director of Tesco for

seven years where he was involved in the business

turnaround and the acquisition of the wholesaler

Booker.

Previously he worked for seven years at Kingfisher,

first as Group Strategy Director and then as

Managing Director of Kingfisher Future Homes.

Earlier in his career he held senior finance and

general management positions within Dixons

Retail plc and McDonalds.

Experience: Liz is a qualified solicitor responsible

for the corporate affairs of the Group and leads a

team of specialists focused on Legal, Regulatory

Compliance, Risk and Health & Safety.

Previously she worked as a General Counsel and

Company Secretary. Liz has held leadership roles

at Poundworld, My Dentist, the Peel Airports

Group, and KCOM Group PLC, having started her

career with the Halifax.

Qualifications:

– B.Sc. Technology & Business Studies

(Strathclyde University)

Qualifications:

– B.Sc. Psychology (Aberdeen University)

– MBA London Business School

Qualifications:

– BA (Hons) Physics (University of Oxford)

– Associate of the Institute of Chartered

Accountants in England and Wales

– ICAEW Business & Finance Professional

Qualifications:

– B.Sc. Operational Research

(Lancaster University)

– Member of the Institute of Chartered

Accountants in England and Wales

Qualifications:

– LLB (Hons) in Law (Manchester Metropolitan

University)

– Solicitor

– Admitted by the Law Society in 1996

External appointments:

– Chief Executive of The Pennies Foundation charity

– ViceChairandSeniorIndependentNon-

ExecutiveDirectorofYorkshireBuildingSociety

– SeniorIndependentNon-ExecutiveDirectorof

Foresight Group Holdings Limited

External appointments:

– No external appointments

External appointments:

– Director and Chief Executive Officer of Thame

and London Limited, the parent company of the

Travelodge Group and for Travelodge Hotels

Limited and Director of other subsidiary

companies within the group

External appointments:

– Chief Financial Officer of Currys PLC

External appointments:

– No external appointments

Independent:

– Yes

Independent:

– Yes

Independent:

– Yes

Independent:

– Yes

Independent:

– Not applicable

LoraineMartinsservedasaNon-ExecutiveDirectorthroughouttheyearandresignedon31July2024.

DIRECTORS AND OFFICERS CONTINUED

Committee membership key

AuditandRiskCommitteemember

NominationCommitteemember

RemunerationCommitteemember

ResponsibleandSustainable

Business Committee member

DenotesChair

–

None

DFS Furniture plc Annual Report & Accounts 2024

Governance

Welcome to the Governance section of our 2024

Annual Report.

AtDFS,werecognisetheimportanceofeffective

corporategovernanceinsupportingthelong-term

success and sustainability of our Company. This

report details how the Board has ensured that the

Group’s activities are underpinned by high standards

of corporate governance. In a challenging global and

economic environment, our governance framework

demonstrateditsresilienceandsupportedeffective

decision-making.ThisenabledtheBoardtorespond

quicklyandtotakedecisionsthatcreatelong-term

sustainablevalueforthebenefitofourshareholders

and wider stakeholder groups. Over the coming year

we will continue full compliance with the UK Corporate

Governance Code 2018 (‘the Code’) provisions and

work to ensure compliance with the new UK Corporate

Governance Code 2024.

Our Board in 2024

All our Directors served throughout the year. As you will

have seen from my introductory statement on pages

4 and 5 there have been two changes to the Board

since the year end. Loraine Martins stepped down from

the Board in July, and in August we were pleased to

welcomeBruceMarshtoourBoardasaNon-Executive

Director. Bruce’s biography can be found on page 53,

demonstrating the wealth of retail experience he brings

to the Group.

During the year, we undertook an externally led evaluation

of the Board and its Committees. The evaluation, which

incorporated a detailed assessment of the views of the

Directors and the Group Leadership Team (‘GLT’), has

provided the basis for the Board Action plan. More detail

on this can be found on page 59 of this report.

ESG

Environmental, social and governance (‘ESG’) continues

to be a key focus area for our stakeholders.

We continue to make good progress against our

targets, achieving most, but with some requiring more

work. In June we submitted for validation to the Science

Based Targets initiative detailing our route to Net Zero

before 2050 aligning with the UK government target.

We are already making great strides to ensure our

business can make the most of the opportunities of a

circular economy to deliver sustainable performance

for the Group. Further information on all of our ESG

initiatives can be found in our Responsibility and

sustainability report on pages 32 to 51.

Our commitment to good governance.

I am pleased to say that we were compliant with the

Code throughout the year, and the following pages set

out further details. Full details of how the Directors have

fulfilledtheirdutiesinaccordancewithSection172of

the Companies Act 2006 are contained in the Section

172 statement on pages 29 to 31.

2024 AGM

This year our AGM will be held on 22 November 2024

at 2.30pm at our Group Support Centre in Doncaster.

The meeting arrangements and the resolutions can be

found in the Notice of AGM available on our website:

www.dfscorporate.co.uk.

Finally, I want to thank my fellow directors for all of their

work in supporting the GLT and our strategy for the

future.Weareconfidentthatwehavetherightstrategy

in place, supported by a robust governance framework.

As the economy recovers this will enable us to deliver

value for all of our stakeholders over the long term and

allow us to respond with agility in the face of emerging

challenges.

STEVE JOHNSON

Chairman

25 September 2024

Key activities during FY24

– Monitoring the long term financial planning,

budgeting and the operating performance

and strategy of the Group, in the context

of a challenging trading environment and

of external market expectations

– Overseeing the Group’s new syndicated

financing arrangements

– Overseeing stakeholder communications

– The external Board evaluation led by

Gould Consulting

– Overseeing the strategic changes in our

manufacturing operations

– Development of the new Remuneration

Policy

CORPORATE GOVERNANCE REPORT

“In a challenging global and economic environment, our governance

framework demonstrated its resilience and supported effective decision-

making, enabling the Board to respond quickly and to take decisions

that create long-term sustainable value for the benefit of our shareholders

and wider stakeholder groups.”

STEVE JOHNSON

Chair of the Board

Bioonpage 52

DFS Furniture plc Annual Report & Accounts 2024

Governance

CORPORATE GOVERNANCE REPORT CONTINUED

Governance at a glance

Governance framework

Responsible for providing leadership to

the Group’s business, including setting

the Group’s purpose, strategy and

valuesandpromotingitslong-term

sustainable success. The Board has

adopted a formal schedule of matters

reserved for its approval.

The terms of reference for each

Committee are documented and

agreed by the PLC Board. These terms

of reference are reviewed annually

and are available on our website

www.dfscorporate.co.uk.

Role of the Chair and Chief Executive Officer

AsChair,SteveleadstheBoard,ensuringitseffectivenessinallaspectsofitsrole.Tim,theCEO,isresponsibleformanagingtheoperationoftheGrouptocreatevalueoverthelongterm.Therearecleardivisionsofaccountabilityand

responsibility that have been agreed and documented by the Board.

Role of the Chair

LeadingtheBoardandensuringitseffectiveness.

FacilitatingeffectivecontributionsofNon-Executive

Directors to the leadership of the Group.

EnsuringthateffectivestrategicplanningfortheGroupis

undertaken.

EnsuringeffectivecommunicationbetweentheBoardand

its investors; promoting a culture of openness and debate.

Developing the Board Action plan.

Ensuring the submission to the Board by the Chief

ExecutiveOfficerofobjectives,policies,andstrategies

for the Group, including the Group business plan and

annual budget.

Role of the Chief Executive Officer

Leading the senior management in managing the

performance of the Group.

Planningandensuringtheeffectiveexecutionofthe

Group’s strategy.

EnsuringtheeffectiveimplementationoftheBoard’s

decisions.

Maintaininganeffectiveframeworkofinternalcontrols

and risk management.

Leading the climate change and sustainability objectives

of the Group.

Leading and motivating, the GLT, focusing on talent

acquisition and retention.

Managing the Group’s relations with all of its stakeholders,

the public and the media.

Role of the Senior Independent Director (‘SID’)

Acting as a sounding board for the Chair.

MeetingwiththeNon-ExecutiveDirectorsannually,

without the Chair being present, and collating feedback

on the Chair’s performance as part of the annual Board

evaluation process.

Meeting with the Company’s shareholders to consider

matters where it may be inappropriate to have those

discussions with the Chair and/or Executive Directors.

Role of the Company Secretary

Advising the Board and its Committees on corporate

governance policies and procedure, and for the

management of Board and Committee meetings.

Managing the provision of timely, accurate and considered

information.

Advising the Board and representing the Company in legal

matters.

Ensuring that the Directors receive accurate, timely and

clear information.

Audit and Risk

Committee

Oversees financial reporting,

internal controls, risk management,

compliance and audit.

Remuneration

Committee

Oversees linking remuneration

with strategy and determines

the levels of remuneration.

Nomination

Committee

Oversees the composition

of the Board and

succession planning.

Responsible and Sustainable

Business Committee

Oversees the delivery of

our ESG strategy.

Seecommitteereporton

pages 61 to 64

Seecommitteereporton

pages 67 to 87

Seecommitteereporton

pages 65 to 66

Seecommitteereporton

pages 32 to 51

Akeyelementofourbusinesssuccessishavinggoodcorporategovernanceso,wehaveimplementedeffectiveframeworksandpracticestoensurethathighstandardsofgovernance,aswellasgoodvaluesand

behaviours, are consistently applied throughout the Group.

DFS Furniture plc Annual Report & Accounts 2024

Governance

CORPORATE GOVERNANCE REPORT CONTINUED

Diversity Compliance Statement

WeconfirmthattheCompanyhasmetthetargetssetoutinLR9.6.8R(9)(a)(i)-(iii)onboarddiversity.

The table below sets out the range of gender and ethnicity as they relate to our Board, senior Board positions

(CEO,CFO,SIDandChair)andexecutivemanagementasat30June2024.InlinewiththeListingRuledefinition,

‘executive management’ consists of the GLT.

Gender identity/sex of members of the Board and executive management

30 June 2024

Number

of Board

Directors

Percentage

of the Board

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in

executive

management

Percentage

of executive

management

Men 3 43% 3 3 62.5%

Women 4 57% 1 2 37.5%

Other categories – – – – –

Notspecified/prefernottosay – – – – –

1. ExecutiveManagementexcludingtheChiefExecutiveandChiefFinancialOfficer

Ethnic background of members of the Board and executive management

30 June 2024

Number

of Board

Directors

Percentage

of the Board

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in

executive

management

Percentage

of executive

management

White British or other White

(includingminority-whitegroups)

6 86% 4 5 100%

Mixed/Multiple

Ethnic Groups

– – – – –

Asian/Asian British – – – – –

Black/African/Caribbean/

Black British

1 14% – – –

Other ethnic group,

including Arab

– – – – –

Notspecified/

prefer not to say

– – – – –

1. ExecutivemanagementexcludingtheChiefExecutiveandChiefFinancialOfficer.

Governance at a glance

Gender diversity

Age

Ethnicity

Balance of the Board

Male–3

Female–4

46-55years–2

56-65years–4

65+years–1

White–6

B.A.M.E.–1

ChairoftheBoard–1

ExecutiveDirectors–2

Non-ExecutiveDirectors–4

Board diversity

The Board Equity, Diversity and Inclusion Policy was updated in March 2024 to align with business best practice.

DFS Furniture plc Annual Report & Accounts 2024

Governance

Board tenure

The length of time each of the Directors has served on the Board at the date of the report,

is shown below.

Steve Johnson

Tim Stacey

John Fallon

Alison Hutchinson

Jo Boydell

Gill Barr

Bruce Marsh

0 1 2 3 4 5 6

Governance at a glance

Appointment, election and re-election

The Board may appoint any person to be a Director,

and any Director so appointed shall then be eligible

forelectionbyshareholdersatthenextAGM.Non-

Executive Directors’ appointments are for an initial

period of three years. All Directors stand for annual

re-electionincompliancewiththeCode.Neitherthe

ChairnoranyNon-ExecutiveDirectorhavebeenin

their position for more than nine years in accordance

with the recommendations of the Code.

Independence

TheBoardreviewstheindependenceofitsNon-

Executive Directors annually. The Board considers that

the Chair was independent on appointment and that all

oftheNon-ExecutiveDirectorsareindependent.

The Company maintains clear records of the terms

ofserviceoftheChairmanandNon-Executive

Directors to ensure that they continue to meet

therequirementsoftheCode.TheNon-Executive

Directors’ appointment letters anticipate a minimum

time commitment of two days per month, recognising

that there is always the possibility of an additional time

commitment and ad hoc matters arising from time to

time, particularly when the Company is undergoing a

period of increased activity. The Board considers that

eachoftheNon-ExecutiveDirectorshavesufficient

time to devote to their role and that each Director’s

contributionisimportanttothelong-termsustainable

success of the Company. The Directors’ biographies

can be found on pages 52 and 53.

Board skills and experience

The Board comprises Directors with a broad range of skills and experience. The chart below provides an overview

of the experience around the Board table. The competencies highlighted in the matrix will be considered in relation

to the appointment of any new Directors to the Board. The Directors considered the level of experience in each

areaidentifiedaskeytothesuccessoftheGroup.

Retail–7

Financial–6

CustomerServices/Marketing–5

People,Diversity&Inclusivity–5

Operations–6

Governance&Regulatory–7

Digital–5

Mergers&Acquisitions–7

Environmental–5

Logistics–6

Manufacturing–4

CORPORATE GOVERNANCE REPORT CONTINUED

DFS Furniture plc Annual Report & Accounts 2024

Governance

DFS Furniture plc AnnualReport&Accounts2024

Governance

Governance at a glance

Name Meetings attended Maximum meetings Independent Responsibility and role during 23/24 Date of appointment

CHAIRMAN

Steve Johnson 8 8

6 December 2018

EXECUTIVE DIRECTORS – At each Board meeting, the Board receives and discusses reports from each of the Executive Directors.

Tim Stacey CEO 8 8 – LeadingandmanagingGroupperformanceandstrategytoensurethelong-termprofitableoperationoftheGroup. 1 November 2018

John Fallon CFO 8 8 – Leading,managing,andmaximisingGroupfinancialperformanceandinvestorrelations. 14 November 2022

NON-EXECUTIVE DIRECTORS

Alison Hutchinson (SID) 8 8

Overseeing the implementation of the strategy and development of the Group whilst maintaining a system of internal

controlandriskmanagement.BoardCommitteemembersalsohavefurtherspecificresponsibilitiesinrelationtoreviewing

theintegrityoffinancialinformation,dealingwithsuccessionplanningandBoarddiversity,andsettingremuneration.

1 May 2018

Jo Boydell 8 8

6 December 2018

Loraine Martins 8 8

28 June 2021

Gill Barr 8 8

1 March 2023

STANDING ATTENDEES

Liz McDonald

(Company Secretary)

8 Advising the Board on all legal, corporate governance and compliance issues. 30 September 2018

ATTENDED BY INVITATION – Members of the GLT are invited to attend Board meetings to present papers and discuss key matters.

Nick Smith 2 TheGLTisledbytheCEOandisresponsibleforexecutingstrategyandtheday-to-daymanagementofthebusiness.

Their attendance at Board and Committee meetings assists the Directors in gaining a clearer insight into the Group’s operations.

ThisprocessalsoaffordstheteamtheopportunitytobringmatterstotheattentionoftheBoard.

Emma Dinnis 1

Alex Salden 2

Russ Harte 3

Committee meetings

Committee

Audit and Risk

Committee

Remuneration

Committee

Nomination

Committee

Responsible and Sustainable

Business Committee*

Steve Johnson 3 4 2 3

Tim Stacey 3 4 2 2

Alison Hutchinson 3 4 2 3

John Fallon 3 4 2 3

Jo Boydell 3 4 2 3

Loraine Martins 3 4 2 3

Gill Barr 3 4 2 3

* The Responsible and Sustainable Business Committee (‘RSC’) comprised Alison Hutchinson, Tim Stacey and Loraine Martins.

** All Directors are invited to Audit and Risk Committee meetings and the Responsible and Sustainable Business Committee meetings,

andtheChairoftheBoardisinvitedtoattendRemunerationCommitteemeetings.TheChiefExecutiveOfficerandChiefFinancial

OfficerareinvitedtoattendboththeRemunerationandNominationCommitteemeetingswhereappropriatetodoso.

Board meeting attendance

The Board held eight scheduled meetings during the year, including a two day Strategy session held in April 2024

with additional ad hoc meetings held as required. Meetings took place at a number of operational locations to

provideanopportunitytopromotecolleagueengagement.DuringtheyeartheChairandtheNon-Executive

DirectorsmetonthreeoccasionswithouttheExecutiveDirectorspresent,andtheNon-ExecutiveDirectors

met privately with the CEO twice.

The Board has a full programme of Board meetings planned for the year ahead and intends to meet eight times,

with additional meetings being held to review important trading periods or strategic matters, as required. All

Directors have the right to have their concerns over, or opposition to, any Board decision noted in the minutes.

All Directors have access to the Company Secretary and may take independent legal advice.

External appointments

The Executive Directors may accept outside appointments provided that such appointments do not impact

their ability to perform their duties as Executive Directors of the Company.

DFS Furniture plc Annual Report & Accounts 2024

Governance

CORPORATE GOVERNANCE REPORT CONTINUED

How the Board operates

Agenda planning is undertaken in advance of every meeting to ensure there is appropriate allocation of time to

striketherightbalancebetweenregularstandingitems,suchasreportsoncurrenttrading,financialperformance

and budgets, the strategic plan, and regulatory and health and safety matters. At the start of the year a schedule

of Special Topics is agreed between the CEO and Chairman after a discussion with the wider Board. ‘Deep dives’

into these Special Topics are provided by members of the GLT throughout the year. These enable the Board to gain

a deeper understanding of the strategic direction of the business, exchange views and robustly debate elements

oftheCompany’sperformance,specificprojectsorareasofstrategicsignificance.IfaDirectorisunabletoattend

a meeting, they are consulted prior to the meeting and their views made known to the other Directors. All Board

decisions are recorded and any Board decision made outside of a meeting is made by written resolution. The Board

hasaformalscheduleofmattersspecificallyreservedforitsdecisionandapproval,acopyofwhichisavailablefrom

the Company Secretary, Liz McDonald.

New Directors induction

All new Directors undergo a detailed, tailored induction programme including meetings with the Company’s

external advisors and with colleagues from across the Group to familiarise the Director with all operations,

including those in showrooms, manufacturing sites, distribution centres and our Group Support Centre.

When any new Director is appointed, they undergo an induction process as outlined below.

Understand

their duties

One-to-onemeetingwiththeCompanySecretarytounderstandtheGovernanceissues

which apply to the business

One-to-onemeetingswiththerestoftheBoard,includingtheChairman,ExecutiveDirectors

andotherNon-ExecutiveDirectors

Review previous Board and Committee papers, Committee terms of reference and investor

presentations etc

Meeting with External Advisors, including the auditors, brokers and external legal advisors

Review the corporate governance materials available on Diligent Boards – including Committee

terms of reference and the schedule of matters reserved to the Board

Meet the

colleagues

One-to-onemeetingswiththemembersofGLTandthewiderworkforce

Presentations from key functions within the Group

Visit the

business

Visitingoperationallocationsincludingshowrooms,factories,supportofficesandcustomer

distribution centres and meeting with our colleagues from these areas

Directors and their interests

ThenamesoftheDirectorsinofficeduringtheyear,togetherwiththeirrelevantinterestsinthesharecapitalof

the Company at 26 June 2023 and 30 June 2024, and details of the Directors’ share options are set out in the

Directors’ Remuneration Report on page 83.

Directors’ indemnities and conflicts

As at the date of this report, indemnities are in force under which the Company has agreed to indemnify the

Directors, to the extent permitted by law, in respect of losses arising out of, or in connection with, the execution

of their duties, powers or responsibilities as Directors of the Company. The indemnities do not apply in situations

where the relevant Director has been guilty of fraud or wilful misconduct. Under the authority granted to them in

the Company’s Articles of Association, the Board has considered carefully any situation declared by any Director

pursuanttowhichtheyhaveormighthaveaconflictofinterestand,whereitconsidersitappropriatetodoso,

has authorised the continuation of that situation.

In exercising their authority, the Directors have had regard to their statutory and other duties to the Company.

ThedutiestoavoidpotentialconflictsandtodisclosesuchsituationsforauthorisationbytheBoardarethe

personal responsibility of each Director. All Directors are required to ensure that they keep these duties under

review and to inform the Company Secretary on an ongoing basis of any change in their respective positions.

TheCompanymaintainsarelatedpartyregistertorecordanyconflicts,whichisupdatedannually.Additionally,

theGrouphaspurchasedDirectors’andOfficers’liabilityinsurance.

UK Corporate Governance Code 2018

Compliance statement

This Corporate Governance report incorporates reports from the Audit and Risk and Nomination Committees on

pages 61 to 66 together with the Strategic report on pages 1 to 51, the Directors’ Remuneration report on pages 67

to 87 and the Directors’ report on pages 88 to 90. It explains how the Company has applied the relevant provisions

and principles of the Code, the Companies (Miscellaneous Reporting) Regulations 2018 (‘the Regulations’) and the

Financial Conduct Authority’s Listing Rules and Disclosure and Transparency Rules during the year ended 30 June

2024. A copy of the Code is available on the Financial Reporting Council’s website, www.frc.org.uk. The Board

confirmsthatallotherprovisionsoftheCodewerecompliedwiththroughouttheentireyear.

Board evaluation

The Board undertakes an annual evaluation of its activities and those of its committees. This year an externally

led(tri-annual)reviewofBoardeffectivenesswascarriedoutbyGouldConsulting.GouldConsultingcarriedout

the previous Board evaluation in 2021. The appointment of Gould Consulting was considered helpful to maintain

consistency of approach to help build on the work carried out over the previous three years.

Stages of our Board evaluation

Stage 1 Gould Consulting attended the March Board meeting to assess the Board dynamics

Stage 2 Formal online questionnaire provided by Gould Consulting and in person interviews with each

Director and the Company Secretary to provide an in depth understanding of Board dynamics

TheSeniorIndependentDirectormetwiththeExecutiveandNon-ExecutiveDirectorsinthe

absence of the Chair, in order to discuss the Chair’s performance

Stage 3 Gould Consulting’s report was presented to the Board, who requested that the Company

Secretary develop an action plan

The Senior Independent Director fed back to the Chair

Discussion around the key learnings

Stage 4 TheBoardapprovedtheactionplanforFY25

Results overview

GouldConsultingconcludedthattheBoardanditsCommitteeswereperformingwellandhadincreaseditseffectiveness

overthelastyear.Thecontinuityprovidedbylonger-standingBoardmembersandthefreshthinkingfromnewer

members had been particularly helpful. The report that was generated was considered at the Nomination Committee

whenitmetinMay2024,includingtheChairdiscussingthestrengthsandareasofimprovementidentified.Theview

wastheBoard,anditsCommittees,hadperformedeffectivelyandhadaddressedthoseareaspreviouslyidentified

as requiring further attention. The review found that whilst Board dynamics remain strong, given the changes to the

composition of the Board, renewed focus should be on developing the relationships between the Directors and how

theBoardoperatescollectively.TheconclusionoverallwasthattheBoardisoperatingeffectivelyandthatallBoard

members can contribute freely and play an active role in Board meetings.

DFS Furniture plc Annual Report & Accounts 2024

Governance

CORPORATE GOVERNANCE REPORT CONTINUED

Highlighted strengths

– TheBoardwasfelttobebalanced,collaborativeandhasdevelopedaneffectivewayofworkingtogether.

– Thequalityofdebateandchallengewasconsideredtobemoreconfidentandinsightfulthanthreeyearsago.

– Boardroom conversations were observed to be collegiate, constructive, and supportive.

– Increased focus on ESG (via formation of the RSC).

– The quality of reporting continues to improve, but more time needs to be spent on the longer term strategy.

– RelationshipsbetweentheBoardandseniormanagementareonthewholepositivebutwouldbenefitfrom

theNon-ExecutiveDirectorsspendingmoretimegettingundertheskinoftheorganisation.

– Each of the Directors were willing to engage fully in Board conversations. Any risk of ‘group think’ was low.

Board improvement plan for FY25

– Further enhance reporting of strategic initiatives.

– Review the schedule of Special Topics – to ensure a regular review of the key strategic initiatives.

– Non-ExecutiveDirectorstospendmoretimewithmanagementinonetoonesessionstoensureadeeper

understanding of key areas of the business.

– IncreaseNon-ExecutiveDirectorattendanceatVoiceForumsessions.

– ElevatedfocusonRiskandInternalAudit,reconfiguringhowthesetwofunctionsreportregularlyintotheBoard.

– Review how the Risk and Internal Audit teams can improve risk management and internal control processes.

– FocusonBoardsuccessionplanningtoaddresstheissueofBoardmembershavingsimilartenureprofiles.

TheBoardwillcontinuetoreviewitsprocedures,effectiveness,developmentandcompositionduringtheyear

ahead. The Chair will use the output of the Board evaluation to further develop the performance of the Board

during the year ahead.

Shareholder engagement

The Board actively seeks and encourages engagement with major institutional shareholders and other

stakeholders.TheChiefExecutiveOfficerandChiefFinancialOfficerregularlymeetwithanalystsandinstitutional

shareholderstokeeptheminformedofsignificantdevelopmentsandtodevelopanunderstandingoftheirviews

which are discussed with the Board.

In addition to the extensive engagement carried out by the CEO and CFO, the Chairman and Senior Independent

Non-ExecutiveDirectorsmakethemselvesavailabletoshareholderssothatanyissuesandconcernscanbe

communicated to the Board. All Directors are available to meet with shareholders at their request. During the

year Gill Barr, Chair of the Remuneration Committee met several major shareholders to seek their views on the

new Remuneration policy. The Remuneration policy is designed to support strategy and promote the long term

success of the Group. A summary of the new Remuneration Policy and the Remuneration strategy is contained in

the Remuneration Committee report at pages 67 to 87. To maintain a clear understanding of market perceptions

the Directors regularly review investor relations activity, comments by analysts, communication from major

shareholders and advice from the Group’s brokers.

Interaction with all shareholders

– Presentationsoffull-yearandinterimresultstoanalystsandshareholders;availableonthecorporatewebsite.

– TheAnnualReportdetailingtheGroup’sstrategy,businessmodelandperformanceoverthepastfinancialyear

and plans for future growth.

– The Annual General Meeting. All shareholders are encouraged to attend and put any questions to the Board.

– The Company’s corporate website (www.dfscorporate.co.uk), where investor information is regularly updated.

External auditor

OurexternalauditorisKPMGLLPandourengagementpartnerisGillHopwood-Bell.Wecontinuallyassessthe

independenceandexpertiseofKPMGLLP.Ournon-auditservicespolicycanbefoundonourwebsiteandfurther

details are on page 110.

Internal audit

Further details relating to the Internal Audit function are contained within the Audit and Risk Committee report

on pages 61 to 64.

DTR Disclosure

The disclosures required under DTR 7.2 of the Disclosure and Transparency Rules are contained in this report,

and the Audit and Risk Committee and Nomination Committee reports, except for information required under

DTR 7.2.6 which is contained in the Directors’ Report on pages 88 to 90.

Signed on behalf of the Board of Directors.

ELIZABETH MCDONALD

Group General Counsel and Company Secretary

25 September 2024

DFS Furniture plc Annual Report & Accounts 2024

Governance

This report is intended to provide shareholders with

an insight into key areas considered by the Committee

and an overview of how the Committee has discharged

its responsibilities during the year. The Committee

plays an important role in ensuring the integrity of

financialreporting,theeffectivenessoftheinternal

control environment and the operation of our risk

management processes.

TheCommitteecontinuestoensurethatthefinancial

reporting is aligned with the latest requirements and

guidance from regulators, that it is fair, balanced and

understandable and that all matters disclosed and

reported upon meet the needs of our stakeholders.

Whilenosignificantnewfinancialreportingmatters

aroseinFY24,viabilityreportingandgoodwill

impairment assessments have continued to be

important focus areas given the weak market growth,

Red Sea disruption and other pressures on the

macroeconomic environment.

In addition we have continued to formalise and monitor

our control environments across the business to

strengthen our existing arrangements and to ensure

we are well placed to meet the requirements of future

changes to the Corporate Governance Code.

At the start of the year the reporting lines for the Risk

Management team and Internal Audit were amended

toreflectupdatestomanagement’sownershipand

accountability for management of risk, and to provide

clarity over the independence of the audit function.

The Committee continues to conduct regular assessments

ofthequalityandeffectivenessoftheinternaland

external audit processes and we have considered a

variety of matters aligned with the Group’s principal risks.

I thank my fellow Committee members for their valuable

contribution and support during the year, and I welcome

any comments or questions from shareholders.

Composition

The members of the Committee are all independent

Non-ExecutiveDirectorswho,together,haveextensive

commercial,financialandoperationalexperienceand

skills relevant to the Group and are all independent in

character and judgement and free from any relationship

or circumstance which may, could or would be likely to,

orappearto,affecttheirjudgement.

The Committee continues to be chaired by Jo Boydell,

who was appointed to the role in April 2019. The Board

considers that, by virtue of her current and recent

executive roles, details of which are set out on page

53,Johasrecentandrelevantfinancialexperience

and the Company complies with the requirements of

the Code in this respect. Other Committee members

who served during the year are Alison Hutchinson,

Loraine Martins and Gill Barr. Loraine Martins stepped

down from the Committee on 31 July 2024 and we

welcomedBruceMarshasanewNon-Executive

Director on 1 August 2024.

BiographiesoftheIndependentNon-Executive

Directors are included on pages 52 and 53 and a

summary of their principal skills and experience is

shown on page 57.

Regular attendees at Committee meetings include

theChairoftheBoard,ChiefExecutiveOfficer,Chief

FinancialOfficer,HeadofInternalAudit,HeadofRisk,

Group Finance Director, Company Secretary and the

external auditor. The Committee held three scheduled

meetings in the year. Details of attendance at

scheduled Committee meetings can be found on page

58. The Committee Chair also meets with the CFO,

Group Finance Director, Head of Internal Audit, Head

of Risk and external auditor prior to each Committee

meeting and on an ad hoc basis.

AUDIT AND RISK COMMITTEE REPORT

On behalf of the Board I am pleased to present

this year’s Audit and Risk Committee report.

“The primary responsibilities of the Committee

remain the oversight of the Group’s external

financial reporting, oversight of internal

controls and risk management activities, and

ensuring the effectiveness of both the internal

audit function and the external audit.”

JO BOYDELL

Chair of the Audit and Risk Committee

Bioonpage 53

DFS Furniture plc Annual Report & Accounts 2024

Governance

Performance evaluation

The evaluation of the performance of the Audit and

Risk Committee was carried out as part of the wider

reviewofBoardeffectiveness,furtherdetailsofwhich

can be found in the Corporate Governance report on

page59.Therewerenosignificantconcernsraised

from this review and the Committee was deemed

tobeoperatingeffectively.

Roles and responsibilities

The Audit and Risk Committee assists the Board

in discharging its responsibilities with regard to the

oversightoffinancialreporting,internalcontrolsand

risk management, and internal and external audit.

Financial reporting

The ultimate responsibility for reviewing and approving

theAnnualReportandAccountsandthehalf-yearly

reports remains with the Board.

The Committee reviews the content of the Annual

Report and Accounts and advises the Board on

whether, taken as a whole, they are fair, balanced

and understandable and provide the information

necessary for shareholders to assess the Group’s and

Company’s position and performance, business model

and strategy. This review includes an assessment of

the adequacy of the disclosure with respect to going

concern and viability reporting and due consideration to

lawsandregulations,theTaskForceonClimate-related

Financial Disclosures (‘TCFD’), the provisions of the UK

Corporate Governance Code and the requirements of

the Listing Rules.

In reviewing the Annual Report for the 53 weeks

ended 30 June 2024, the Committee considered

the balance of the Strategic report with respect to

proportional focus on positive and negative results

and events, adequate disclosure of risks and the

consistencyofreportingoffinancialandother

measures. The Committee also considered the extent

and prominence of alternative performance measures

presented. This additional review by the Audit and Risk

Committee, supplemented by advice received from

external advisors during the drafting process, assisted

the Board in determining that the report was fair,

balanced and understandable at the time that it

was approved.

The Committee also reviews the content of the

Annual Report to ensure the impacts of climate related

risks and opportunities are explained and that, taken

as a whole, the Annual Report provides a coherent and

connected view of climate reporting. Further detail on

climate reporting is included in the Responsibility and

sustainability report and also outlined in the Risks and

uncertainties.

Significant items considered in relation

to the financial statements

During the year the Committee reviewed items relating

to going concern and viability, impairment, inventory,

pensions and provisions. The Committee considered

thesignificantmattersbelowinrelationtothefinancial

statements and how these were addressed. This

included reviewing papers prepared by management

detailing the basis of and rationale for the treatments

adopted. The Committee also received reports from

and held discussions with the external auditor to ensure

that a robust level of challenge had been made to

management’sassessmentsandtoconfirmthatthere

werenosignificantdifferencesofopinionbetween

management and auditors.

AUDIT AND RISK COMMITTEE REPORT CONTINUED

Area of Focus Action

Presentation of financial statements Pages 19 and 20

The Group uses Alternative Performance Measures

(APM’s) and includes additional disclosures, including

reconciliations to statutory measures.

The Committee considers it important to consider

statutory measures and the APMs when reviewing these

financialstatements.

In particular, items excluded from underlying results

werereviewedbytheCommitteeanditissatisfiedthat

the presentation of these items is clear and that there

isadequatedisclosureofthesematerialnon-recurring

items.Thenetnon-underlyingchargefortheyearwas

£10.8mandthemostsignificantitemsrelatetofeesfor

theGroup’srefinancingactivities,costsrelatedtoclosure

of the Group’s Berkeley Magna factory and woodmill site,

and provision for estimated costs to make good land

slippage damage at one of the Group’s sites.

Going concern and viability reporting Page 28

In addition to the going concern statement, the Group

is required to make an assessment of its longer term

viability. This requires the application of a number

of judgements and estimates, particularly given the

continuing macroeconomic uncertainty.

The Committee, along with the Group’s external

auditor, has reviewed management’s assessment of the

financialliquidityprospectsoftheGroupforthethree

years from 30 June 2024, being a reasonable period for

the assessment of key risks for a retail business given

continuing political and economic uncertainties. This

review included challenging the base case assumptions

and reviewing the downside scenarios and stress tests.

The Committee reviewed and challenged management’s

assessment of expected compliance with the banking

covenants and the extension of terms agreed with the

banks and concluded that the going concern assumption

remains appropriate and that the Board is able to make

the viability statement on page 28 of the Strategic Report.

Impairment of goodwill and other intangible assets Note 10 to the consolidated financial statements

As a result of business acquisitions, the Group has

recognisedsignificantbalancesforgoodwill.Goodwill

must be tested annually for impairment; other

intangible assets are tested when there are indicators

that they may be impaired.

The assessment of potential impairment requires a

number of judgements and estimates to be made in

determiningtherelevantfuturecashflowsandthe

discount rate to be applied.

The Committee reviewed and challenged the approach

taken by management to impairment testing, and

assessed the reasonableness of the underlying

assumptionsandfinancialforecastsused.The

Committee considered the appropriateness of the

conclusions reached, and also reviewed the external

auditor’s report and discussed their observations and

findingsinthisarea.

The Committee will continue to review the carrying value

of intangible assets at least annually, or in the event of any

significantchangestothestructureorcircumstancesof

the Group.

DFS Furniture plc Annual Report & Accounts 2024

Governance

Area of Focus Action

Parent company investments Note 2 to the Company financial statements

The ultimate parent company of the Group,

DFSFurnitureplc,holdsasignificantvalueof

investments in subsidiary companies in the Group.

The carrying value of these investments and related

intragroup borrowings is supported by the estimated

value in use of the underlying trading entities.

Assessment of the estimated value in use requires a

number of judgements and estimates to be applied.

The Committee reviewed management’s assessment

of the recoverability of the parent company investments,

including the underlying judgements and estimates,

and considered the consistency of these with the

assessment of the impairment of intangible assets

as noted above. The Committee considered the

appropriateness of the conclusions reached, and also

reviewed the external auditor’s report and discussed their

observationsandfindingsinthisarea.

The Committee will continue to review the carrying value

of the parent company investments at least annually, or

intheeventofanysignificantchangestothestructureor

circumstances of the Group.

AUDIT AND RISK COMMITTEE REPORT CONTINUED

InrespectoftheGroup’sfinancialreporting,the

Finance department is responsible for preparing the

Groupfinancialstatementsusingawell-established

process and ensuring that accounting policies are

in accordance with International Financial Reporting

Standards.Allfinancialinformationpublishedbythe

Group is subject to the approval of the Audit and Risk

Committee and the Board.

There have been no failings in the operation of the

Group’sinternalcontrolsduringthefinancialyear

underreviewthathavemateriallyaffectedtheGroup’s

controloverfinancialreporting.TheCommitteehas

maintained oversight of key processes and controls

developmentintheGroup.DuringFY24significant

progress has been made on inventory processes and

valuation and the Committee received regular updates

to support appropriate action.

As highlighted in the previous annual report, to

further formalise alignment to the existing corporate

governance requirements, and to ensure we meet

upcoming changes to the corporate governance

code, a project to enhance the structure, monitoring

and reporting of the Group Internal Controls over

Financial Reporting commenced during the year,

and will align with a wider internal controls project

designed to formalise, enhance and monitor the

control environment underpinning future disclosures

on material controls. This project gives us a structured

framework to document, enhance and remediate

controlgapsthatalthougharenotsignificanttothe

financialstatementsareanopportunitytomature

our control environment. The Group’s goal remains a

thorough and orderly approach to compliance.

The Board, with advice from the Audit and Risk

Committee,issatisfiedthataneffectivesystemof

internal controls and risk management is in place which

enables the Group to identify, evaluate and manage key

risks and which accords with the guidance published by

the FRC. These processes have been in place since the

startofthefinancialyearanduptothedateofapproval

oftheaccounts.Furtherdetailsofspecificmaterialrisks

and uncertainties facing the business can be found on

pages 21 to 28.

Oversight of Internal Audit

The Committee considers the resources and plans of

the Internal Audit function at each meeting. The role of

Internal Audit, its reporting line and key responsibilities

are contained within an Internal Audit Charter which

is approved annually by the Committee, and was last

approved at the July 2024 meeting.

Historicallythein-houseInternalAuditfunction

has provided detailed coverage of the operations

of the retail and distribution operations of the

business,highlightingtrendsandsignificantissues

to management through operational audits, which

hascoveredthemajorityofsitesonatwo-year

cycle.Thein-houseauditteamissupplementedby

specialist assurance providers to give coverage on

other areas including cyber risk and IT. Following a

change in reporting line and separation from the Risk

ManagementfunctionduringFY24,internalaudit

undertookanadditionalseriesofrisk-basedaudits

under a plan of work approved by the Committee,

to provide greater coverage across key risk areas.

A detailed assurance mapping exercise was

commencedduringtheyeartosupportthisrisk-based

planning, and the Committee considers the work of

Internal Audit alongside a variety of other assurance

sources including internal and externally sourced

reviews and the use of specialists as required.

Aproportionofthein-houseInternalAuditresourceis

retained to allow the function to respond to changing

business needs or emerging issues which sit outside

the agreed audit plan. All work of Internal Audit,

in-houseandexternallysourced,plannedorotherwise,

is summarised and reported to the Audit and Risk

Committee.

Summarised reporting of internal audit results is

provided to the Governance, Risk and Compliance

Committee on a monthly basis and also at each Audit

and Risk Committee meeting. In addition, the status of

all agreed management actions arising from internal

audit work is monitored and reported to the Committee,

eitherthroughtheperformanceofdetailedfollow-up

reviews for operational audits, or by tracking, reporting

and following up individual actions from other audits.

In addition to existing requirements, the Committee

monitors and considers future corporate reporting

developments in order to develop the Group’s

approach to meet any new requirements. During

the year the Group has continued to monitor

developments and to work towards anticipated

requirements on UK corporate governance reform

andthiswillbeanongoingareaoffocusforFY25.

Internal control and risk management

Alongside our risk management processes, key

components of the Group’s internal controls

environment include:

– ClearlydefinedlinesofaccountabilityviaaGroup

delegation of authority and underlying business

area delegations.

– The Group’s Code of Conduct and suite of policies,

settingthefloorofminimumcommitmentsforour

business conduct. These commitments are linked

to the Group’s principal risks and uncertainties

and ensure we act in line with relevant legal and

regulatory requirements, as well as industry

standards and stakeholder expectations.

– Procedures, operating standards and colleague

training for each of our business and key functional

areas as appropriate, to support the management

of key risks and establishing ways of working within

the Board’s approved risk appetite. These cover

areasrangingfromfinancialreporting,corporate

compliance, information security, interest free

creditcompliance,modernslavery,anti-briberyand

ethical sourcing.

– Relevant business areas and functions own these

underlying components of our internal controls

environment, and are responsible for ensuring

control processes and activities are maintained and

operateeffectively.

– Functional assurance activity also takes place

across the business to target key risk areas,

overseen by relevant business experts or specialist

functional teams, including our Financial Controls,

Cyber Security and Financial Conduct Authority

Compliance teams.

The GLT conducts a quarterly risk review and a

Governance, Risk and Compliance Committee

comprising senior management meets monthly to

review changes in the regulatory/legal landscape,

with key points forming the basis of the Audit and

Risk Committee discussion. The risk team regularly

assesses and highlights new and emerging risks,

changes in rating of principal risks and developments

on risk management to the GLT.

The framework of internal controls is designed to

manage rather than eliminate the risk of failure to

achieve business objectives and can only provide

reasonable and not absolute assurance against

material misstatement or loss, or fraud.

DFS Furniture plc Annual Report & Accounts 2024

Governance

AUDIT AND RISK COMMITTEE REPORT CONTINUED

Whistleblowing

The Group is committed to the highest standards of

openness, honesty, integrity and accountability and,

as a result, has a whistleblowing policy in place. This

policy is intended to make employees or third parties

aware that they should report any serious concerns or

suspicions about any wrongdoing or malpractice on

the part of any employee of the Group. The process

isconfidentialandreportscanbemadeanonymously

and without fear of being treated unfairly after making

a report. Examples include fraud, breakdown in internal

controls, misleading customers, bribery, modern

slavery, dishonesty, money laundering, corruption and

breaches of data protection or health and safety.

DuringFY24theGrouphascontinuedtoreportand

analyse whistleblowing incidents, including outcomes

of investigations, trends and highlights are reviewed at

the monthly Group Governance, Risk and Compliance

Committee and shared with the Audit and Risk

Committee.

Duringtheyear,therewere24(FY23:29)reports

received through the whistleblowing process, all of

which were fully addressed in accordance with the policy.

Fraud risk

The Committee considered the fraud risk assessment

report from Internal Audit and noted that no frauds

havebeenidentifiedduringtheyearthatwouldhave

amaterialimpactontheGroup’sfinancialresults.

The responsibilities of the Directors and external

auditor are set out on pages 91 and 98. As set out

in the Directors’ report, the Directors consider the

Group’s business to be a going concern. The Group’s

viability statement can be found on page 28.

JO BOYDELL

Chair of the Audit and Risk Committee

25 September 2024

The status of management actions is shared with the

GLT monthly, prior to presentation to the Committee.

Common themes emerging from internal audit work are

also fed back to operational leadership teams to support

controls and process improvements.

Oversight of external audit

Assessment of effectiveness and quality of the

external audit process

The Audit and Risk Committee oversees the

relationship with the external auditor and considers

there-appointmentoftheGroup’sauditor,before

making a recommendation to the Board to be put

to shareholders.

Aspartofthisresponsibilitytoassesstheeffectiveness

of the external auditors, the Committee approved the

auditplanforthefinancialreportingperiodof53weeks

ending30June24andreviewedtheauditor’sfindings

and management representation letters.

In addition to consideration of the audit process,

responses to questions from the Committee and

theauditfindingsreportedtotheCommittee,a

structured feedback exercise was again undertaken

during the year. This exercise collated feedback on a

widerangeoffactorsfromNon-ExecutiveDirectors,

senior managers and relevant colleagues from the

Finance, Internal Audit and Risk, Legal and Compliance

teams.Theresultsofthisfeedbackidentified

strengths in the audit scoping, governance, quality

control and judgement. Relative opportunities remain

in communication and fees, although progress was

achievedsinceFY23.Theseresultssupportedthe

Committee in its conclusion that KPMG LLP continues

tobeeffective,objectiveandindependentinitsroleas

external auditor.

Appointment of the external auditor

TheGroup’sexternalauditorswerere-appointed

inFY22followingatenderprocessasdetailedin

previous annual reports. Under current UK corporate

governance requirements the external audit provision

will be subject to another tender no more than ten

yearslater,aheadofthestartoftheFY32audit.

The Committee has recommended to the Board

the reappointment of KPMG LLP as auditor for

theFY25audit.

Independence and objectivity

The external auditor is required periodically to assess

whether, in its professional opinion, it is independent

and those views are shared with the Audit and Risk

Committee. The Committee has authority to take

independent advice as it deems appropriate in order

to resolve issues on auditor independence. No such

advice has been required to date. There are no

contractual obligations in place that restrict the choice

of statutory auditor.

In line with regulation, the previous external Audit

PartnerrotatedofftheauditattheendoftheFY23

audit.TheCommitteewelcomedGillHopwood-Bell

asthenewexternalauditpartnerforFY24.

Non-audit services and fees

The Committee regularly reviews the Group’s policy on

non-auditservices,whichgovernstheprovisionofnon-

audit services provided by the auditor and, in summary,

categorisesthetypesofnon-auditservicesas:

– Prohibited – services that have the potential to

impair or appear to impair the independence of

their audit role;

– Permissible (subject to approval limits) –

services which primarily relate to work that is

outside the required scope of the statutory audit,

but is consistent with the role of the external

statutory auditor; and

– Services to be considered on a case-by-case

basis – all other services of an advisory or other

nature that do not compromise the independence

of the external auditor.

In any event, within each of the Group’s legal entities,

thecumulativetotalofnon-auditfeespaidtothe

externalauditorswithineachfinancialyearmustnot

exceed 70% of the average audit fee for the last three

financialyears.Theabovepolicyhasbeenadheredto

throughoutthefinancialyear,duringwhichtheonly

non-auditservicesprovidedbytheGroup’sexternal

auditor were an interim review, which is closely related

to the audit and is permissible assurance work under

the policy. The audit and interim review fees for the year

inrespectoftheGroupanditssubsidiarieswere£0.8m.

DFS Furniture plc Annual Report & Accounts 2024

Governance

The primary focus this year has been on; reviewing

the talent across the Group to ensure that both

the Board and the Group Leadership Team has the

necessary skills, experience, and diversity of thinking to

support the strategy of the Group going forward, the

appointmentofanadditionalNon-ExecutiveDirector

andonthetri-annualexternalBoardEvaluation.

Appointments to the Board, as with other positions

within the Group, are made on merit according to the

balance of skills, experience, diversity, and inclusion

offeredbyprospectivecandidates.TheCommittee

adopts a formal and transparent procedure for the

appointment of new Directors to the Board.

Non-Executive Director appointment

Bruce Marsh joined the Board in August 2024 as a

newIndependentNon-ExecutiveDirector,bringing

significantadditionalretailandfinanceexpertise.

Following the decision by Loraine Martins to step

downfromherroleasaNon-ExecutiveDirector,the

Committee is currently reviewing how we continue to

ensure that the colleague voice is heard at Board level.

AdecisionontheroleofDesignatedNon-Executive

Director for workforce engagement will be announced

in due course. New Board members are always

welcomed into the business through a comprehensive

induction, coordinated by the Company Secretary.

Composition

The Code recommends that the majority of the

NominationCommitteeconsistsofNon-Executive

Directors, independent in character and judgement

and free from any relationship or circumstance which

may,couldorwouldbelikelyto,orappearto,affecttheir

judgement.EachoftheNon-ExecutiveDirectorsisa

member of the Nomination Committee. The Board

considersthateachoftheNon-ExecutiveDirectors

are independent. The Chair was independent upon

appointment and as such, the Company complies

with the Code. The Committee’s terms of reference

are available on the Company’s corporate website at

www.dfscorporate.co.uk. Although only members of

the Committee have the right to attend Committee

meetings,theChiefExecutiveOfficerandtheChief

FinancialOfficerareinvitedtoattendmeetingswhere

appropriate. The Nomination Committee will meet as

often as it deems necessary but, in accordance with its

terms of reference, at least twice a year.

Principal duties

The purpose of the Committee is: (i) to assist the

Board by keeping the composition of the Board under

review; (ii) to make recommendations within agreed

terms of reference (to the Board) on the appointment

ofExecutiveandNon-ExecutiveDirectorsensuring

theBoardissufficientlydiverseandhasthecorrect

blend of skills, knowledge and experience required to

support the Company; (iii) to oversee the succession

plans for the Board and senior management; and (iv)

to ensure that there are processes in place to secure a

diverse pipeline of potential candidates for succession

to key management positions and to the Board. The

Nomination Committee regularly updates a matrix of

the skills brought to the Board by all Directors; both

ExecutiveandNon-Executive.Detailsoftheskillsand

experience of the Directors are shown on page 57.

NOMINATION COMMITTEE REPORT

Welcome to the report from the Nomination Committee.

“This year, the Nomination Committee has

focused on ensuring that the Board has the

necessary skills, experience and diversity

of thinking to support the strategy of the

Group going forward.”

STEVE JOHNSON

Chair of the Nomination Committee

Bioonpage 52

Key activities during FY24

– Continuing to assess the composition of

the Board to ensure it remains well placed

to discharge its responsibilities

– Conducting the search for and the

appointment of a new Non-Executive

Director

– Reviewing the pipeline of talent within the

Group Leadership Team and assessing

their development needs

– Conducting the external Board evaluation

by Gould Consulting

– Reviewing the Board Equity, Diversity &

Inclusion Policy in May 2024

DFS Furniture plc Annual Report & Accounts 2024

Governance

NOMINATION COMMITTEE REPORT CONTINUED

‘Everyone Welcome’

DFS is a Group that lives its values and is committed

to having a diverse and inclusive workforce and culture

throughout the organisation. Our objective of driving

thebenefitsofadiverseBoard,seniormanagement

team and wider workforce is underpinned by our

Board Equity Diversity & Inclusion Policy, which can

be viewed on our corporate website. The Board and

GLT believe a diverse and inclusive workforce and a

culture where everyone is welcome, is crucial to the

long-termsuccessoftheGroup.Icanreportthatwe

currently have three female Directors out of our Board

of seven directors. The biographies of the Board of

Directors can be found at page 52 and 53 of the report.

The Committee takes an active interest in the quality

and development of talent and capabilities of the GLT

ensuring that appropriate opportunities are in place

todevelophigh-performingindividualsacrossGroup.

This year 12 of our senior leaders undertook our

12 month long Leader Development programme.

The programme was developed with a range of external

partnerstodevelopanin-depthunderstandingof

culture, corporate governance leadership and key

strategic challenges and opportunities. The team were

challenged to develop a new approach to improving

the sustainability of our products and how we can meet

the challenge of Net Zero. Having joined the cohort

for a session on corporate governance and the role

ofaNon-ExecutiveDirector,Iwasimpressedbythe

commitment and enthusiasm of everyone involved.

Board evaluation

As required by the Code, the Board undertakes

an annual evaluation of its activities and those of its

Committees. This year facilitated by Gould Consulting,

the Board conducted an externally led review of its

effectiveness.BetweenMarchandMay2024,a

three-stageprocesswasfollowed.Moreinformation

on the process and outcomes is detailed on page 59 of

this Corporate Governance report. The performance of

the Nomination Committee was reviewed as part of the

evaluation process, and I am pleased to report that the

evaluation concluded that the Committee continues

tooperateeffectively.

What we will do in 2025

– Continue to assess the Board skills and composition

of the Board.

– Look to further strengthen the Board through

theappointmentofanadditionalNon-Executive

Director to ensure that we have the right blend of

skills for the current environment and that we have

the right experience and tenure to deliver continuity

and succession in the fullness of time.

– Conduct an internally led review of the Board’s

performance with greater focus on the risk and

control environment as we prepare for the new

UK Corporate Governance Code 2024.

– Review the frequency of meetings and terms

of reference of the Committee.

– Review the Group Leadership Team succession

planning and talent management strategy

STEVE JOHNSON

Chair of the Nomination Committee

25 September 2024

DFS Furniture plc Annual Report & Accounts 2024

Governance

Contents of this report

67 Part A: Annual statement by the Remuneration

Committee Chair

70 Part B: Remuneration at a glance

71 Part C: Our remuneration philosophy and workforce

reward

73 Part D: Remuneration policy

81 Part E: Annual Report on Remuneration

Committee members during FY24

– Gill Barr (Chair)

– Alison Hutchinson

– Jo Boydell

– Loraine Martins

Part A: Annual statement by the

Remuneration Committee Chair

The Remuneration Report provides a comprehensive

overview of our remuneration framework (including

the rationale behind the changes to the Directors’

Remuneration Policy), its implementation and its

alignment with the business strategy.

Remuneration in context

Against a backdrop of very challenging market

conditions, this past year has seen continued and

sustained improvements in the capabilities of the

Group, evidenced by the fact that we have maintained

our market leading position whilst improving gross

margin rate and delivering high levels of customer

conversion and satisfaction.

However, with market demand levels falling to record

lows, continuing supply chain disruption in the Red Sea

andthebusinesshavingtoabsorbsignificantlyhigher

costs as a result of high levels of international freight

rates and continued elevated interest rates, this has

inevitablyresultedindisappointingfinancialresults.

Given these challenges, the Board concluded that it

would not be in the best long term interests of the

Groupandourshareholderstoproposeafinaldividend.

The business has responded to these challenges by

taking decisive action to accelerate a number of cost

cutting initiatives while being resolute in protecting and

improving our customer facing resources to deliver

good outcomes for our customers.

The medium term prospects for upholstered furniture

remainstrongandweareconfidentthattheourleading

market position and strategy will ensure that the

business is well positioned to take advantage of the

market rebound.

The Remuneration Committee carefully considered

the experiences of all key stakeholders, as well as

overall Group performance, when making decisions

on executive remuneration. We have outlined below

the key drivers of our decisions.

DIRECTORS’ REMUNERATION REPORT

On behalf of the Board, I am pleased to present the Remuneration

Committee report for the financial year ended 30 June 2024.

“It is critical that we can effectively incentivise

our senior leaders to make the best long term

decisions that successfully deliver our strategy.”

GILL BARR

Chair of the Remuneration Committee

Bioonpage 53

Key activities during FY24

– Review of the Directors’ Remuneration

Policy and the introduction of the new

DFS Group Share Plan

– Consultation with shareholders in relation

to the Directors’ Remuneration Policy

– Determining outturns for incentives in

respect of FY24, taking into consideration the

experience of key stakeholders over the period

– Assessing the competitiveness of

executive director and executive

committee remuneration arrangements

– Setting performance targets for the FY25

annual bonus and performance underpins

for the FY25 DFS Group Share Plan awards

– Consideration of market trends and

governance updates

– Review of Committee’s terms of reference

– Consideration of pay and conditions across

the wider workforce

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Remuneration Policy Review

Our existing remuneration policy was approved by

shareholders at the 2021 AGM. In line with the normal

three-yearcycle,wewillbeseekingshareholder

approval for a new remuneration policy (as set out

on pages 73 to 80) at the 2024 AGM.

During the year, the Committee conducted a thorough

review of our remuneration framework to ensure it

continues to be aligned to our strategy. As part of

this review, we consulted extensively with our major

shareholders (who together hold around 90% of

the Issued Share Capital) and the main shareholder

representative bodies (IA, ISS and Glass Lewis).

Following this review, and taking into account feedback

received from our shareholders, the primary change

being proposed is to introduce a restricted share

scheme – the DFS Group Share Plan (“DSP”) to replace

thecurrentperformancebasedLTIPasourlong-term

incentive plan. Further details around this change are

outlined below.

Introduction of the DSP

As highlighted previously, DFS continues to operate

in a very challenging market, facing high levels of cost

inflationalongsidesignificantincreasesininterestrates,

which places demand in the UK upholstery market

undersignificantpressureandcreatesavolatile

market environment.

Against this backdrop, it is critical that we can

effectivelyincentiviseourseniorleaderstomakethe

bestlong-termdecisionsthatwillsuccessfullydeliver

DFS’ strategy. This requires them to be able to have

theflexibilitytorespondinanagilewaytothedynamic

economic context and the Committee considers that

thecurrentLTIP,wheretargetsarefixedforthreeyears,

limitsthedegreeofflexibilityrequiredinthisrapidly

changing environment. The current market dynamics

alsomakeitdifficulttosetsufficientlyrobustand

motivationalthree-yeartargetsforaperformance

based LTIP.

The Remuneration Committee considers that in

thecurrentmarkettheDSPismoreeffectivethan

aperformancebasedlong-termincentiveplanfor

the following key reasons:

– TheDSPisamoreflexiblerewardframework.

The Committee believes that restricted shares will

encouragemanagementtomakethebestlong-

term decisions for the business while allowing for

agility of decision making, enabling management

toquicklyrespondtotheever-changing

macroeconomic and consumer environments.

– We believe in the principle that our Executive

Directors should be directly aligned with our

shareholders. The DSP provides a simple and

transparent reward framework which can support

thecreationofsignificantlong-termequity

ownership and through this, alignment with the

shareholder experience.

– DSP awards will support the Executive Directors in

buildingalong-termshareholdinginthebusiness,

which supports retention and motivation of key

executives in a challenging talent market.

– We already use restricted shares as a form of long

term-rewardwithinthebusiness,andtherefore

adopting the DSP for our Executive Directors will

deliver alignment across the Group.

In developing the new remuneration policy, the

Committee carefully considered the purpose of each

element of the remuneration package in incentivising

our Executive Directors to deliver on the DFS strategy

and to provide sustainable shareholder returns. The

Committee believes that introducing the DSP alongside

our current Annual Bonus, which drives short term

performanceagainstDFS’keyfinancialandstrategic

objectives each year, and shareholding guidelines is the

best combination to incentivise our Executive Directors

to make the right decisions for the business that will

ultimately lead to shareholder value creation.

DSP – design parameters

The proposed DSP is fully aligned with established

best practice guidance in the UK listed market, as

summarised below:

– Maximum awards under the DSP are based on

a “haircut” of 50% from current LTIP award levels,

resulting in maximum awards of 87.5% of salary for

theCEOand70%ofsalaryfortheCFO.ForFY25we

will be further discounting the DSP awards granted

to 80% of salary for the CEO and 65% of salary

fortheCFOtoreflecttheshareholderexperience

during the year. Further details are provided below.

– Awards are earned over a vesting period of three

years,followedbyatwo-yearpost-vestingholding

period.

– Awards are subject to robust underpins that are

focused on ensuring that DFS continues to deliver

on its strategy, maintains robust governance

and provides an appropriate safeguard for our

shareholders, in line with guidance and best practice.

TheunderpinsforFY25awardsareasfollows:

• Performance against DFS’ key strategic

priorities being at an appropriate level, including

those related to our sustainability objectives

over the vesting period.

• Whether there is a material weakness in the

underlyingfinancialhealthorsustainabilityof

the business. Factors such as (but not limited to)

revenue,underlyingprofit,freecashflowand

ROCE would be considered.

• Whether there has been a materially serious

reputational event which could have been

reasonably foreseen.

At the end of the vesting period the Committee will

consider whether or not the underpin has been met.

If it is judged that the underpins have not been met,

then the Committee will determine what level of scale

back to the level of vesting would be appropriate.

In direct response to investor feedback, the Committee

has developed an internal dashboard to support the

Committee in its assessment of the underpins. This

dashboard will allow the Committee to assess how the

Company and individuals have performed against a set

ofkeyfinancialandnon-financialmetricsacrossthe

vesting period, further supporting a holistic assessment

of performance and adding additional robustness to the

process. Detail around the assessment of the underpins

will be provided in the relevant Directors’ Remuneration

Report at the time of vesting.

The views of our shareholders are important to the

Committee and we were pleased that on consultation,

the majority of our shareholders were supportive of

our proposals and understood the rationale behind

the proposed introduction of the DSP for DFS at the

current time. We thank our shareholders for the time

they took to provide their feedback, which helped

shapethefinalproposals.

Pay outcomes in FY24

Group performance summary

– Reflectingchallengingmacroeconomicconditions,

Group loss before tax from continuing operations

fortheyearwas£1.7m(FY23:profitof£29.7m)

– Group Revenue from continuing operations for

FY24of£987.1m(FY23:£1,088.9m)

– Deliveryof£27.5mofoperatingcostreductions,

growing our full year gross margin rate by +140bps

year on year

– Achieved record high post purchase and post

delivery customer NPS scores.

Annual Bonus in FY24

ThebonusforFY24wasbased50%onprofitbefore

tax,20%oncashflow,10%onenvironmentaltargets,

10% on social targets and 10% on customer NPS.

Despitestrongperformanceagainstthenon-financial

measures, threshold PBT was not achieved and

therefore no bonuses were payable to the Executive

Directors.

LTIP vesting in respect of FY24

The 2021 LTIP award was based 50% on Adjusted EPS,

15% on relative TSR growth against the FTSE 250 Index

(excluding investment trusts) and 35% on the FTSE

350 General Retailers Index. Adjusted EPS was 1.5p

versus a threshold level of 24.8p and so this element

did not vest. The relative TSR performance against

both peer groups was also below the threshold and

therefore the 2021 LTIP award lapsed in full.

The Committee considered that a nil outcome of the

annual bonus and LTIP outcome was appropriate in light

of overarching business performance and the broader

experience of shareholders and therefore no discretion

was exercised in relation to these awards.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Implementation for FY25

Base salary for FY25

The base salaries for Executive Directors were

increasedby2%,effective1July2024,inlinewith

the average increase applied to the majority of our

wider workforce.

Annual Bonus for FY25

The bonus opportunity for the Chief Executive

Officerwillremainat120%ofsalaryandfortheChief

FinanceOfficer110%ofsalary.TheFY24bonuswill

thereforecontinuetohavea70%weightingonfinancial

measures(50%ProfitBeforeTaxand20%Cash

Flow)anda30%weightingonstrategicnon-financial

measures. In recognition of the strategic priorities for

the Group over the next year, 15% of the bonus will be

based on the delivery of ‘Business Critical’ objectives,

which are linked to the leadership team’s successful

deliveryofspecificprojectsandobjectivesaimingto

facilitate the Group’s transformation and enhance

itsmarketpositioning,financialhealth,employee

engagementandoperationaleffectiveness.The

strategicnon-financialmeasureswillthereforebe

based on 5% environment, 15% business critical

objectives and 10% customer.

DFS Group Share Plan awards for FY25

Subject to shareholder approval at the 2024 AGM,

the intention is to grant awards under the new DFS

GroupsharePlantotheCEOandCFOforFY25.As

noted above, the intention is to grant reduced awards

of 80% of salary and 65% of salary to the CEO and

CFO respectively. This represents a c.55% reduction

from the original LTIP award level. The Committee

determined that it was appropriate to make this further

reduction to align with the shareholder experience,

takingintoaccountthewithdrawalofthefinaldividend

forFY24.

In line with the new remuneration policy, the award will

vest after three years subject to the achievement of

robustunderpins,asoutlinedabove.Atwo-yearpost

vesting holding period will also apply.

The intention is that awards will revert to their normal

award levels of 87.5% and 70% of base salary for the

CEOandCFOforFY26.

Our colleagues

Our colleagues are vital to the success of the Group.

I am grateful for all the passion, commitment and hard

work shown by all our colleagues across the Group,

which is fundamental to our ability to deliver fantastic

products and service to our customers.

The Committee continues to be mindful of the wider

colleague experience, which is a key consideration in

determining the approach to take for our Executive

Directors, including as part of the review of the

directors’ remuneration policy.

A summary of our remuneration philosophy and

principles that applies across the Group is set out

on page 71.

Resolutions proposed at the 2024 AGM

The new remuneration policy will be presented to

shareholders for a binding vote, while the Annual Report

on Remuneration will be presented for an advisory vote

at the 2024 AGM.

In addition, the new DFS Group Share Plan rules will be

presented to shareholders for approval.

I hope that our shareholders will continue to support

the decisions we have made.

GILL BARR

Chair of the Remuneration Committee

25 September 2024

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Part B: Remuneration at a glance

Base Salary

TimStaceyreceived:£496k

JohnFallonreceived:£397k

Base Salary

TimStacey:£510,000(increaseof2%)

JohnFallon:£405,050(increaseof2%)

Salary increases in line with the majority of the

wider workforce

Pension and benefits

– Pension aligned to wider workforce rate at

4% of salary

– Nochangetotaxablebenefits

Bonus opportunity (% of salary)

Tim Stacey: 120% John Fallon: 110%

Key structural features

– 25% of any bonus earned will be deferred

into shares for two years

– Committee retains discretion to adjust

bonusoutcomestoreflectunderlying

performance of business

– Malus and clawback provisions apply

Pension and benefits

– Pension aligned to wider workforce rate at 4% of salary

– Taxablebenefitsremainunchangedfromprioryearandinclude

a company car and private medical insurance (including cover

for spouses and dependents)

Implementation of Remuneration Policy in FY24 Implementation of Remuneration Policy in FY25

Annual Bonus

Total bonus payout (% of maximum)

Tim Stacey: 0% John Fallon: 0%

Performance measure Weighting Outcome (% of max)

Groupprofitbeforetax 50% 0%

Groupfreecashflow 20% 0%

Environmental 10% 100%

Social (Inclusion) 10% 96%

Customer 10% 100%

Total 0%

Profit underpin not met

PaymentoftheFY24bonuswassubjecttoachievementofathresholdGroupPBT,whichwasnotmet.

No annual bonus was therefore paid.

Annual Bonus

Performance measure* Weighting

Groupprofitbeforetax 50%

Groupfreecashflow 20%

Business critical 15%

Established customer NPS 10%

Environmental 5%

* Targets are deemed commercially sensitive and will be

disclosed retrospectively

DFS Group Share Plan

FY25 DSP opportunity (% of salary)

Tim Stacey: 80% John Fallon: 65%

Underpins for 2024 DSP

1. Performance against DFS’ key strategic

priorities being at an appropriate level, including

those related to our sustainability objectives

over the vesting period.

2. Whether there is a material weakness in the

underlyingfinancialhealthorsustainabilityof

the business. Factors such as, but not limited to,

revenue,underlyingprofit,freecashflowand

ROCE would be considered.

3. Whether there has been a materially serious

reputational event which could have been

reasonably foreseen.

2021 Long-Term Incentive Plan

Total LTIP payout (% of maximum)

Tim Stacey: 0% John Fallon: N/A

Performance

measure Weighting

Outcome

(% of max)

EPS 50% 0%

TSR (FTSE 250) 15% 0%

TSR (FTSE

350 General

Retailers)

35% 0%

Total 0%

Single figures

Element of pay Tim Stacey John Fallon

Salary £496k £397k

Pension,

benefitsand

other

£27k £25k

Annual bonus – –

LTIP – –

Total £523k £422k

£523k

£422k

Tim Stacey

John Fallon

Details on the Committee’s assessment of the

underpins will be disclosed in the relevant DRR

at the time of vesting.

To support the Committee’s assessment of

the underpins, an internal dashboard has been

developed to provide a clear framework covering

keyfinancialandnon-financialmeasuresrelated

to the underpins for the 2024 DSP award.

Key structural features

– Shares vesting under the DSP will be subject

to a two year holding period

– Committee retains discretion to adjust DSP

outcomestoreflectunderlyingperformance

of the business as well as the experience of

shareholders and other stakeholders

– Malus and clawback provisions apply

0 523

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Part C: Our remuneration philosophy and workforce reward

Our remuneration philosophy

and principles

Our Group values (pictured below) underpin our pay

and recognition policies across the organisation and

the remuneration principles which are supported in

our Directors’ remuneration policy.

We believe that our ability to deliver fantastic products

and service to our customers comes from the passion

and commitment shown by all our people across

all parts of the Group. It is hence imperative that we

attract, retain and develop the best people, who do

what they love, and in return for them to be rewarded

fairly. Further detail on how these principles shape our

employee value proposition is provided to the right.

DFS Values

Remuneration principles ‘Your Deal’ proposition

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Remuneration framework

Our reward framework aims to foster alignment across the group and is informed by our remuneration philosophy and values outlined on the previous page.

Element of reward Base salary PensionandBenefits Annual bonus and recognition awards DFSGroupSharePlanandSAYE

Group Leadership Team (5 colleagues)

Set at market

competitive levels.

Comprehensivebenefits

offeringalignedto

market practice.

Average employer pension

contribution is 4% of salary.

Basedonacombinationoffinancialandnon-financial

objectives, aiming to reward and incentivise strategic

delivery and strong individual performance.

ParticipationintheDFSGroupSharePlanofferedtoourtop

leadership and key talent, aligning their interests with those

of our shareholders in the long term.

Heads of divisions and functions

(86 colleagues)

Managers (109 colleagues) Colleagues in operational areas across the Group (in retail

showrooms, manufacturing sites and in the Sofa Delivery

Company) have access to variable pay and bonuses based

on a combination of individual and team performance.

All employees in the UK may participate in the Group’s

Sharesaveplanwhichoffersemployeesthechanceto

become ‘owners’ of the Group.

All employees (4,522 colleagues)

Spotlight on inclusivity and diversity

Weremaincommittedtoourlonger-termambitiontobecomerepresentativeofthecustomersweserveandthe

communities we live and work in. We continue to make progress within our cultural transformation work, building a

workplace where everyone feels truly welcome. The conversation around equality, diversity and inclusion is strong,

and colleagues are truly engaged in understanding the part they play.

On an organisational level, we are addressing the gender pay gap and preparing to report similarly in both the

areas of Disability and Ethnicity, with a focus on gathering sensitive colleague information to enable us to provide

necessary data and insights. To further our work in all these areas, we:

– Undertake regular colleague surveystounderstandhowpeoplearefeeling,withspecificresearch done via

our 364 Women’s network to discover how our female colleagues feel about working for us.

– Have a task team focused on revising our Recruitment Policy and training our Hiring Managers to remove

any bias from the process and ensure fair consideration of candidates from underrepresented groups.

– Use attrition rates to calculate opportunity, have set longer term targets to achieve a 50/50 gender

representation in showroom management.

– Have partnered with Diversity in Retail toofferwomenandpeoplefromethnicminoritybackgroundsplaces

on external development programmes.

– Built strong and effective governance around our Inclusion Steering Committee and Colleague Networks

to drive action and momentum.

Gender pay gap reporting

In line with UK legislation, we published our Gender Pay Gap Report for 2023, demonstrating further

progress overall across the Group, and the report is available online at dfscorporate.co.uk.

Weareconfidentthatwepayourcolleaguesequallyforequivalentroles,regardlessofgender.However,

the majority male representation in our leadership population results in a remaining gender pay gap that

we continue to address.

Ouranalysisfor2023showsGrouplevelreductionsinboththemeanandmediangenderpaygapfigures.

Themeangenderpaygapwas4.1%,afallofafurther2.7%againstlastyear’sfigure;themedianfigure

was4.4%,falling0.7%incomparisontothe2022analysis.Thisreflectstheworkdonetoincreasefemale

representation in leadership.

As a Group, our workforce is 35% female, largely due to our manufacturing and logistics populations which

systemicallyattractsamaleaudienceduetothenatureoftheroles.However,wehavemadesignificant

improvementsinfemalemanagementinthesebusinessareas,withaconsciouseffortmadetopromote

and develop women internally, and to shortlist more women for consideration when recruiting.

Our ongoing Diversity and Inclusion agenda places focus on building a workplace where women can thrive,

with initiatives such as policy reviews, leadership development programmes and activities that help us to

progress with a more modern and inclusive culture. Further information on our plans can be found within

our Gender Pay Report on page 37.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Part D: Remuneration policy

The following section sets out the 2024 directors’ remuneration policy (“2024 Policy”) which is to be subject to a

bindingshareholdervoteattheAGMinNovember2024.The2024Policywilltakeeffectfromthedateofapproval

and is intended to apply for up to three years from the date of approval.

The2024PolicyhasbeenpreparedinaccordancewithSchedule8totheLargeandMedium-sizedCompanies

and Groups (Accounts and Reports) Regulations 2008 as amended in 2013, the provisions of the current Code

and the Listing Rules.

Remuneration Principles

As outlined in the Remuneration Committee Chair’s statement, during the year the Committee undertook a

detailed review of the directors’ remuneration policy, including remuneration principles. The Committee concluded

that the Group’s remuneration principles remain appropriate, and that the revised 2024 Policy continues to be in

line with these principles. The remuneration principles are set out below:

– Attract, motivate and retain Executives and senior management in order to deliver the Group’s strategic goals

and business outputs.

– Encourageandsupportahigh-performancesalesandservicecultureensuringgoodcustomeroutcomes.

– Reward delivery of the Group’s business plan and key strategic goals.

– Adhere to the principles of good corporate governance and appropriate risk management.

– Align employees with the interests of shareholders and other external stakeholders and encourage widespread

equity ownership amongst the Group.

Overview of key changes

The primary change proposed under the 2024 Policy is the introduction of restricted shares under the DFS Group

Share Plan (“DSP”) to replace the existing LTIP. The context in which the changes have been made and associated

rationale are set out in the Remuneration Committee Chair’s letter on pages 67 to 69. Other minor changes have

been made to improve the operation of the 2024 Policy, to increase clarity and to align with market practice.

Executive remuneration policy table

Element Purpose Operation

Maximum

Opportunity

Performance measures/

assessment and

recovery provisions

Base salary To provide competitive

fixed remuneration

that will attract and

retain key employees

and reflect their

experience and

position in the Group

Salaries are normally

reviewed annually, and any

change will generally take

effect from 1 April.

When determining the

salary of the Executives,

the Committee takes into

consideration:

– the performance of

the individual Executive

Director;

– the individual Executive

Director’s experience

and responsibilities

as well as progression

within the role;

– pay and conditions

throughout the Group,

including the level of

salary increases awarded

to other employees; and

– the levels of base salary

for similar positions

with comparable status,

responsibility and skills,

in organisations of

broadly similar size and

complexity.

Increases as a percentage

of salary are generally

consistent with the range

awarded across the Group.

Increases in salary above

this level may be made in

certain circumstances,

such as a change in

responsibility, a significant

increase in the role’s scale

or the Group’s size and

complexity or if there is a

material misalignment to

market practice. Where

increases are awarded

above the range across the

Group, the Committee will

provide an explanation in

the relevant Annual Report

on Remuneration.

Individuals who are recruited

or promoted to the Board

may have their salaries set

deliberately below market

levels initially. In such cases,

subsequent increases in

salary may be higher than

the general increase for

employees until the target

positioning is achieved.

A broad assessment of

individual and business

performance is used as

part of the salary review.

No recovery provisions

apply.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Element Purpose Operation

Maximum

Opportunity

Performance measures/

assessment and

recovery provisions

Benefits To provide competitive

benefits to attract

and retain high calibre

employees.

Reviewed periodically to

ensure benefits remain

market competitive.

Benefits currently include

but are not limited to:

– Car, car allowance and

fuel allowance;

– Life insurance;

– Directors’ & Officers’

liability insurance;

– Private medical

insurance (including

cover for spouses and

dependents);

– Professional

subscriptions;

– Critical illness cover; and

– Staff discounts.

Other minor benefits may

be provided from time to

time, including seasonal

gifts.

The Company may settle

any tax incurred on benefits

provided or expenses

reimbursed.

Where an Executive

Director is required to

relocate to perform their

role, appropriate one-off

or ongoing benefits may

be provided (e.g. housing,

schooling etc).

Benefit values vary

year-on-year depending

on premiums and the

maximum potential value

is the cost of the provision

of these benefits.

No performance or

recovery provisions apply.

Element Purpose Operation

Maximum

Opportunity

Performance measures/

assessment and

recovery provisions

Pension To provide a

competitive Company

contribution that

enables effective

retirement planning.

Pension is provided by

way of a contribution to a

personal pension scheme

and/or cash allowance in lieu

of pension benefits.

Pension contributions for

Executive Directors are

aligned to the pension

provision available for the

wider workforce, which is

currently 4% of base salary.

Where pension contribution

is taken as a salary

supplement the amount

will normally be reduced by

the associated Employer’s

National Insurance

contribution such that there

is no cost to the Company

from this alternative.

o performance or

recovery provisions apply.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Element Purpose Operation

Maximum

Opportunity

Performance measures/

assessment and

recovery provisions

Annual bonus Incentivises the

achievement of

annual objectives

which support the

Group’sshort-term

performance goals.

Bonuses are normally

determined following the

year end.

Normally, 25% of any bonus

earned is deferred into

Company shares for two

years under the Deferred

Bonus Plan, with the

balance paid in cash.

The Committee may

award dividend equivalents,

ordinarily paid in shares, on

deferred shares that vest.

The maximum Annual

Bonus opportunity in

respect of a financial year is

120% of salary.

Normally, no payment will

be made for threshold

performance and up to

65% of maximum will be

paid for achievement of

on-targetperformancefor

the financial performance

measures.

Other vesting schedules

maybeappliedfornon-

financial targets.

The performance period

is normally one financial

year,withpay-outs

determined by the

Committee following

the year end, based on

achievement against

targets which would

normally include a range

offinancialandnon-

financial targets.

Performance measures

will be selected by the

Committee annually and

may include financial,

strategic and personal

objectives. Financial

targets will normally

account for no less than

50% of the weighting.

The Committee will

normally determine the

performance targets

and measurement

weightings annually to

ensure that they support

the business strategy

and objectives for the

relevant year.

At the end of the year,

the Committee reviews

the appropriateness of

the formulaic outcome

and retains the discretion

to adjust the outcome if

considered appropriate

taking into account

factors including, but not

limited to, the underlying

performance of the

business and shareholder

and stakeholder

experience.

Malus and clawback

provisions apply to

Annual Bonus awards

at the discretion of the

Committee. See notes

below table for further

details.

Element Purpose Operation

Maximum

Opportunity

Performance measures/

assessment and

recovery provisions

DFS Group

Share Plan

The DFS Group

Share Plan (“DSP”)

provides a simple

long-termincentive

that incentivises

Executive Directors

to deliver sustainable

long-termreturnsto

shareholders, execute

theCompany’slong-

term strategy, retain

key individuals and

align their interests

with shareholders.

Under the DSP the

Committee may award

annual grants of restricted

share awards in the form

ofnil-costoptionsor

conditional shares or in

such other form that the

Committee determines has

a similar economic effect.

DSP awards under the plan

will ordinarily vest three

years from the date of grant

of the award, subject to

performance underpins.

Atwo-yearholdingperiod

will normally apply following

thethree-yearvesting

period for DSP awards

granted to the Executive

Directors. Upon vesting,

sufficient shares can be sold

to pay tax.

Participants may be entitled

to dividend equivalents,

ordinarily paid in shares,

representing the dividends

paid on DSP awards that

have vested.

The Committee will

determine the grant level

each year.

The maximum value of

award that may normally

be granted in respect of a

financial year is 87.5% of

base salary.

The performance

underpins that apply to

the DSP may be based

around a combination of

key financial, strategic and

sustainability measures.

Performance underpins

will be set taking into

account the business

strategy and to ensure

failure is not rewarded.

Performance against the

underpins will normally be

assessed over the three

year vesting period.

If the Company does not

meet one or more of the

performance underpins

at the date of vesting,

then the Committee

would consider whether

it was appropriate to

scale back the number

of shares that vest under

the award.

At the end of the

vesting period, the

Committee reviews the

appropriateness of the

vesting outcome and

retains the discretion to

adjust the outcome if

considered appropriate

taking into account

factors including, but not

limited to, the underlying

performance of the

business and shareholder

and stakeholder

experience.

In accordance with the

rules of the DSP, malus

and clawback provisions

apply at the discretion

of the Committee. See

notes below table for

further details.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Element Purpose Operation

Maximum

Opportunity

Performance measures/

assessment and

recovery provisions

Minimum

shareholding

guidelines

To ensure that

Executive Directors’

interests are aligned

with those of

shareholders over a

longer time horizon.

Executive Directors are

expected to build or

maintain (as relevant) a

minimum shareholding of

200% of base salary in the

Company.

Executive Directors are not

required to purchase shares

to satisfy this requirement.

Executive Directors are

normally expected to

maintain a shareholding

equivalenttothein-

employment shareholding

requirement immediately

prior to departure (or the

actualshare-andaward-

holding on departure, if

lower) for two years following

ceasing to be an Executive

Director. The Committee

has the discretion to

operate the shareholding

policy flexibly, including

waiving requirements in

certain circumstances

(e.g. compassionate

circumstances).

Not applicable. No performance

measures or recovery

provisions apply.

All-employee

incentives

Encourages all

employees to become

shareholders and

thereby align interests

with shareholders.

Eligible employees may

participateintheSAYEand

Share Incentive Plan or local

country equivalents.

Executive Directors are

entitled to participate

on the same terms as all

employees.

In the event DFS were

to introduce another

all employee plan, the

Committee retains the

discretion to allow Executive

Directors to participate on

the same basis as other

employees.

Maximum participation

levels would be in line with

those for other staff and

where relevant, are set

in line with relevant UK

legislation or other relevant

legislation.

Not applicable.

NOTES TO THE REMUNERATION POLICY TABLE

Pre-existing remuneration arrangements

TheCommitteereservestherighttomakeanyremunerationpaymentsandpaymentsforlossofoffice(including

exercising any discretions available to it in connection with such payments) notwithstanding that they are not in line

with the 2024 Policy set out above where the terms of the payment were agreed: (i) Before the 2024 Policy set out

abovecameintoeffect,providedthatthetermsofthepaymentwereconsistentwiththeshareholderapproved

directors’ remuneration policy in force at the time they were agreed; or (ii) At a time where the relevant individual

was not a Director of the Company and, in the opinion of the Committee, the payment was not in consideration

for the individual becoming a Director of the Company.

Decision making process

As outlined in the Remuneration Committee Chair’s statement, during the year, the Committee undertook a

thorough review of the directors’ remuneration policy and its implementation, to ensure it continues to incentivise

theexecutionofstrategyandthedeliveryofsustainablelong-termshareholdervalue.Insettingthe2024Policy,

the Committee followed a robust process, which included engagement and consultation with investors and proxy

advisers regarding the content of the 2024 Policy, taking into account the needs of the business, alongside evolving

market and best practice. The Committee considered input from both management and our independent advisers

whileensuringthatconflictsofinterestwereappropriatelymanaged.

Performance measures and targets

When selecting performance measures and underpins, as relevant, for our incentive plans, our primary reference

is the business strategy and Key Performance Indicators. We also consider market practice both in our sector

and general industry. We seek to choose measures that create balanced incentives and that promote sustained,

responsible growth and motivate the right behaviours.

The annual bonus plan targets are set primarily in reference to the latest business plan and budget. We also take

into consideration market and economic forecasts, analyst consensus and practice in our sector and general

industry.Ourannualbonusplantargetsaresetatachallenginglevelwhichreflectthescaleandthechallenge

implicitinourfinancialbudgets.

Weseektoensurethatpay-outlevelsarecommensuratewithoverallgroupandindividualperformance.

TheperformanceunderpinsfortheFY25DSPawardswerechosentoensureDFScontinuestodeliveronits

strategy, maintains robust governance and provides an appropriate safeguard for our shareholders, in line with

guidance and best practice.

Performance measures and underpins for annual bonus and DSP awards respectively are generally disclosed in

advance in the annual report. Annual bonus targets and outcomes will be disclosed in the annual report for the

following year.

The Committee’s assessment of performance against the DSP underpins will be set out in the annual report

at the time of vesting.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Discretion

The Committee has discretion in several areas of the 2024 Policy as set out in this report. The Committee may

also exercise operational and administrative discretions under relevant plan rules approved by shareholders as

set out in those rules.

In line with common market practice, the Committee retains the discretion as to the operation and administration

of these incentive plans, including with respect to:

– who participates;

– the timing of grant and/or payment;

– the size of an award and/or payment (within the plan limits approved by shareholders);

– the manner in which awards are settled;

– discretion to adjust the performance conditions and/or underpins/targets applying to an incentive and/or set

differentmeasuresandalterweightingsforincentivesifeventsoccur(e.g.materialdivestmentofaGroup

business or changes to accounting standards) which cause the Committee to determine that an adjustment

or amendment is appropriate so that the conditions achieve their original purpose; and

– discretion relating to the measurement of performance in certain circumstances (e.g. a variation of share

capital,changeofcontrol,specialdividend,distributionoranyothercorporateeventwhichmayaffectthe

currentorfuturevalueofanaward);determinationofagoodleaver(inadditiontoanyspecifiedcategories)for

incentive plan purposes, based on the plan rules and the appropriate treatment under the plan rules.

All discretions available under share plan rules will be available under this 2024 Policy, except where explicitly limited

under this 2024 Policy.

In the event of a temporary base salary reduction, the Committee retains the discretion to apply the limits in

the 2024 Policy table relating to pension, Annual Bonus and share incentives to the base salary prior to any such

reduction. Where such temporary base salary or fee reductions are made, the Committee reserves the ability

(either in part or in full) to reimburse at a later date taking into account all factors deemed relevant (e.g. underlying

financialhealthoftheGroup).

Malus and clawback

Malus and clawback provisions apply to all variable incentive schemes, including the annual bonus and DSP.

Malus may apply before the determination of the bonus, before the vesting of any deferred component under the

bonus and before the vesting of any LTIP or DSP award. Clawback may apply up until three years after the date of

any cash bonus payment and up until three years after the date of vesting of the LTIP and DSP awards. Malus and

clawback will continue to apply following cessation of employment.

Circumstances where malus and/or clawback could apply include, but are not limited to:

– material underperformance by the Participant;

– material brand and/or reputational damage to the Company or business unit;

– materialmisstatementoftheCompany’saccountsorfinancialresults;

– gross misconduct by the Participant (as determined by the Board);

– fraud;

– an event, act or omission that the Board determines constitutes, or is reasonably anticipated to result in,

corporate failure;

– the Board determining that:

• anyfinancialresultsorothermeasuresofperformanceusedwithintheBoard’sassessmentofperformance

were misstated, misleading or incorrect; or

• an error was made in determining the extent to which an Award Vested;

– a failure of risk management; or

– any other reason as determined by the Committee.

Illustrations of application of policy

The charts below seek to demonstrate how pay varies with performance for the Executive Directors based on

the 2024 Policy. The charts show an estimate of the remuneration that could be received by Executives Directors

under the 2024 Policy set out in this report. Each of the bars is broken down to show how the total under each

scenarioismadeupoffixedelementsofremuneration,theannualbonusandtheDSP.

Remuneration scenarios

£0

£0.5m

£1.0m

£1.5m

£2.0m

100%

£540,400

42%

24%

35%

£1,292,650

34%

38%

28%

£1,598,650

30%

34%

24%

12%

£1,821,775

100%

£426,252

46%

24%

30%

£932,565

37%

39%

25%

£1,155,342

33%

34%

22%

11%

£1, 297,110

Minimum On-target Maximum Maximum

with share

price growth

Tim Stacey (CEO)

Minimum On-target Maximum Maximum

with share

price growth

John Fallon (CFO)

Fixed remuneration

Annual Bonus

DSP

Share price appreciation

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Assumptionsusedindeterminingthelevelofpay-outundergivenscenariosareasfollows:

Element Minimum On-target Maximum

Maximum plus 50% share

price growth

Basepay(fixed) CEO:£510,000

CFO: £405,050

Pension(fixed) 4% of salary

Benefits(fixed) EstimatedbasedonFY24figures

Annual bonus Nil 50% of maximum CEO: 120% of salary

CFO: 110% of salary

100% of maximum

DSP Nil 100% of maximum CEO: 87.5% of salary

CFO: 70% of salary

100% of maximum

plus 50% share price

growth

Approach to Recruitment and Promotions

The Committee aims to pay no more than is necessary to attract appropriately skilled and experienced individuals.

The ongoing remuneration package for any new Executive Director would normally be in line with that set out in

the 2024 Policy table.

For a new Executive Director who is an internal appointment, the Company may also continue to honour contractual

commitments made prior to appointment to the Board even if those commitments are otherwise inconsistent

withthedirectors’remunerationpolicyinforcewhenthecommitmentsaresatisfied.Anyrelevantincentiveplan

participation may either continue its original terms or the performance targets and/or measures may be amended

toreflecttheindividual’snewrole,astheCommitteeconsidersappropriate.

Element Description

Base salary and benefits – The salary level will be set taking into account a number of factors including market

factors, the individual’s experience and responsibilities, the individual’s previous

salary and remuneration package, the salary policy for the wider Group, the salary

for the previous incumbent and for existing Executive Directors.

– This may mean that the Executive Director is recruited on a salary below the

market rate with a view that it would be increased (potentially by above workforce

level increases) over a number of years, subject to performance.

– BenefitsmaybeprovidedinlinewithDFS’benefitspolicyassetoutinthe

executive remuneration policy table.

Pension – An Executive Director will be able to receive either a contribution to a personal

pensionschemeand/orcashallowanceinlieuofpensionbenefitsinlinewith

DFS’ policy as set out in the executive remuneration policy table.

Annual bonus – An Executive Director will be eligible to participate in the Annual Bonus as set out

in the executive remuneration policy table.

DSP – An Executive Director will be eligible to participate in the DSP as set out in the

executive remuneration policy table.

Maximum variable

remuneration

– TheCommitteehasdiscretiontoofferanyotherremunerationcomponentor

awardwhichitfeelsisappropriatetakingintoaccountthespecificcircumstances

of the recruitment, subject to the limit on variable remuneration set out below.

– The maximum normal annual variable remuneration level (excluding any awards

granted as compensation for forfeited remuneration) for an Executive Director is

207.5% of salary (i.e., in line with the aggregate of the Annual Bonus and DSP limit)

Share buy-outs/

replacement awards

– Where an individual forfeits outstanding variable pay opportunities or contractual

rights, or forfeits the opportunity to earn a bonus, at a previous employer as a

resultofappointment,theCommitteemayoffercompensatorypaymentsor

awards, in such form as the Committee considers appropriate, taking into account

all relevant factors including the form of awards, expected value and vesting

timeframe of forfeited opportunities.

– Whendetermininganysuchbuy-out,theguidingprinciplewouldbethatawards

wouldgenerallybeonalike-for-likebasisunlessthisisconsideredbythe

Committee not to be practical or appropriate.

– Tofacilitateanybuy-outawardsoutlinedabove,intheeventofrecruitment,the

Committee may grant awards to a new Executive Director relying on the exemption

in the Listing Rules which allows for the grant of awards to facilitate, in unusual

circumstances, the recruitment of an Executive Director without seeking prior

shareholder approval or under any other appropriate Company incentive plan.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Executive Director Service Contracts

When setting notice periods, the Committee has regard to market practice and corporate governance best

practice. The table below summarises the service contracts for our Executive Directors.

Date of contract Notice period

Tim Stacey 24 May 2022 12 months (Executive) or 12 months (Company)

John Fallon 14 November 2022 12 months (Executive) or 12 months (Company)

AllservicecontractsareavailableforviewingattheCompany’sregisteredofficeandattheAGM.TheExecutive

Directors may accept outside appointments subject to approval of the Board and provided that such appointments

do not in any way prejudice their ability to perform their duties as Executive Directors of the Company. The

Executive Directors concerned may retain fees paid for these services.

Payments for Loss of Office

WhendetermininganylossofofficepaymentforadepartingdirectortheCommitteewillseektominimisecost

totheCompanywhilstcomplyingwiththecontractualtermsandseekingtoreflectthecircumstancesinplaceat

the time. The Committee reserves the right to make additional payments where such 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orcompromiseofanyclaimarisinginconnectionwiththeterminationofanExecutiveDirector’soffice

oremployment.TheCommitteemayalsoprovidebenefitsinconnectionwithorforareasonableperiodpost

termination, for example relocation costs for a director who had relocated for the role or outplacement support.

Executivesmayreceivebasesalary,pensioncontributionandbenefitsforthedurationoftheircontractualnotice

period, or may receive a payment in respect of these amounts in lieu of notice, except for certain circumstances

such as termination for gross misconduct.

ExecutiveDirectorsmayattheCommittee’sdiscretionbeeligibleforanannualbonusforthefinancialyearof

cessation. Any annual bonus awarded would normally be based on performance during the year as determined by

theCommitteeandpro-rated.Anyannualbonusawardedwillnormallybedeferredinlinewiththeapproachsetout

in the executive remuneration policy table, however, the Committee retains discretion to disapply the deferral and

pay the annual bonus in cash.

Forgoodleavers(inaccordancewiththedefinitionintheplanrules),outstandingDeferredBonusPlanawards

willgenerallycontinueandvestatthenormaldate.Awardswouldnormallyvestinfullbutmaybepro-ratedatthe

Committee’s discretion. If a participant ceases employment for any other reason, their awards will lapse in full on

the date of such cessation.

Forgoodleavers(inaccordancewiththedefinitionintheplanrules),outstandingLTIPandDSPawardswillgenerally

continue and vest at the normal vesting date, subject to the Committee’s assessment of performance against

theunderpins,withawardspro-rated.However,theCommitteeretainsdiscretiontoallowvestingoncessation

andtonotpro-rateawardsfortimeifitconsidersthecircumstanceswarrantthisaction.Ifaparticipantceases

employment for any other reason, awards will lapse in full on the date of cessation. Unless otherwise determined

bytheCommitteeandexceptintheeventoftheparticipant’sdeath,anyapplicablepost-vestingholdingperiod

will continue to apply post cessation of employment.

In a change of control unless otherwise determined by the Board, outstanding Deferred Bonus Plan awards,

LTIP awards and DSP awards will vest. Unless otherwise determined by the Board, LTIP and DSP awards vesting will

be subject to an assessment of achievement of the performance against the relevant performance conditions/

underpinstodateandsubjecttotimepro-rating.However,theCommitteeretainsdiscretiontonotpro-rateawards

for time or consider performance conditions/underpins if it considers the circumstances warrant this action.

Consideration of Employee Remuneration and Shareholders

Consideration of shareholder views

The Committee takes the views of the shareholders seriously and these views are considered in shaping the 2024

Policy and practice. Shareholder views are considered when evaluating and setting remuneration strategy and the

Committee welcomes an open dialogue with its shareholders on all aspects of remuneration. The Committee

consulted its major shareholders (who together hold around 90% of the Issued Share Capital) and the main

shareholder representative bodies (IA, ISS and Glass Lewis) on the proposed 2024 Policy for which we are seeking

shareholder approval at the 2024 AGM.

The Committee will continue to maintain an open and constructive dialogue with its major shareholders and the

representative bodies and where appropriate, will always seek to consult with them where appropriate.

Consideration of employee views and employment conditions elsewhere in the Group

In setting the 2024 Policy for directors, the pay and conditions of other employees of the Group are taken into

account, including any base salary increases awarded. The Committee is provided with data on the remuneration

structure for management level tiers below the Executive Directors and uses this information to ensure

consistency and fairness of approach throughout the Company.

Formal consultation on the remuneration of Executive Directors is not undertaken with employees. However,

currently a survey on employee engagement is undertaken annually and includes discussion on parts of the

Group’sremunerationapproachandtheDesignatedNon-ExecutiveDirectorhasdiscussedExecutiveDirector

Remuneration with the Group wide Employee Voice Forum.

ThePolicydescribedaboveappliesspecificallytoExecutiveDirectorsoftheCompany.TheCommitteebelievesthat

the structure of management and employee reward should be linked to the Group’s strategy and performance.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Non-Executive Director Remuneration Policy Table

The Chair and the Executive Directors of the Board are responsible for setting the remuneration of the

Non-ExecutiveDirectors,otherthantheChairwhoseremunerationisdeterminedbytheCommitteeand

recommended to the Board.

ThetablebelowsetsoutthekeyelementsoftheremunerationpolicyforNon-ExecutiveDirectors:

Purpose

– Toprovidecompetitivefixedremunerationthatwillattractandretainkeyemployeesandreflecttheir

experience and position in the Group

Operation

– Fee levels are reviewed at appropriate intervals considering independent advice, the time commitment required

ofNon-ExecutiveDirectorsandfeespaidatothercompaniesofcomparablesizeandcomplexity.

– ThefeespaidtotheChairandthefeesoftheotherNon-ExecutiveDirectorsaimtobecompetitivewith

other fully listed companies which the Committee (in the case of the Chair) and the Board (in respect of the

Non-ExecutiveDirectors)considertobeofequivalentsizeandcomplexity.

– Non-ExecutiveDirectorsmayreceiveabasefeeandadditionalfeestoreflectadditionalBoardresponsibilities

such as for the role of Senior Independent Director or membership and/or Chairmanship of certain committees

and may also receive additional fees in respect of additional time commitments incurred.

– Non-ExecutiveDirectorsalsoreceivereimbursementofreasonableexpenses(andanytaxthereon)incurred

undertaking their duties and or Company business.

– Non-ExecutiveDirectorsdonotreceiveanyvariableremunerationelement.

– Non-ExecutiveDirectorsareentitledtostaffdiscountonGroupmerchandiseonthesamebasisasother

employeesandmayalsoreceiveseasonalgiftsandotherbenefitsifconsideredappropriateandtheCompany

maysettletaxonbenefitsprovided.

Maximum opportunity

– AnyincreaseinNon-ExecutiveDirectorfeesmaybeabovethelevelawardedtootheremployees,given

thattheymaybereviewedperiodicallyandmayneedtoreflectanychangestotimecommitmentsor

responsibilities.

– TheCompanywillpayreasonableexpensesincurredbytheChairmanandNon-ExecutiveDirectors.

Performance measures/assessment and recovery provisions

– Non-ExecutiveDirectorfeesarenotperformancerelated.

TheCompany’spolicywhensettingfeesfortheappointmentofnewNon-ExecutiveDirectorsistoapplythepolicy

whichappliestocurrentNon-ExecutiveDirectors.

Non-ExecutiveDirectorfeeswillbekeptunderreviewandtotheextentthereareanyincreasestofeesthesewill

generallybeinlinewiththoseawardedtothewiderworkforce.Feesforthenon-ExecutiveDirectorsarepaidvia

payrollandaresubjecttoPAYE.

Letters of appointment

TheNon-ExecutiveDirectorsdonothaveservicecontractsbutareappointedunderlettersofappointmentwhich

provideforareviewafteraninitialthree-yeartermandareterminablebyeithertheNon-ExecutiveDirectororthe

Companywiththreemonth’spriorwrittennotice.EachNon-ExecutiveDirectorissubjecttoannualre-electionat

the Company’s AGM.

ThetablebelowsetsoutthedatesthateachNon-ExecutiveDirectorseekingelection/re-electionatthe2024

AGMwasfirstappointedasaGroupDirector.

Date of appointment

Alison Hutchinson 1 May 2018

Jo Boydell 6 December 2018

Steve Johnson 6 December 2018

Gill Barr 1 March 2023

Bruce Marsh 1 August 2024

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Part E: Annual Report on Remuneration for the Financial Year ended 30 June 2024

Single total figure of remuneration for Executive Directors – audited

The remuneration of Executive Directors showing the breakdown between components, with comparative

figuresforthepriorfinancialyear,isshownbelow.Figuresprovidedhavebeencalculatedinaccordancewiththe

Regulations.

Name Year

Base

salary

£’000

Taxable

Benefits

£’000

Bonus

£’000

LTIP

£’000

Pension

£’000

Other

£’000

Total

Fixed

£’000

Total

Variable

£’000

Total

£’000

Tim Stacey 2024 496 10 – – 17 – 523 – 523

2023 453 11 170 – 30 1 495 170 665

John Fallon 2024 397 5 – – 14 6 422 – 422

2023 240 – 80 – 8 38 286 80 366

1. OtherbenefitsforTimStaceyinFY23representedafuelcardpayment.ForJohnFallon,theFY24amountrepresentedacarallowance

supplement,andtheFY23amountrepresentedapaymentwhichwastheequivalentof26daysofemploymentathisprevious

employer(£27,000)whichwasagreedaspartofhisjoiningarrangements,andacarallowancesupplementof£11,000.

Taxable benefits

Taxablebenefitscomprisecar,privatemedicalinsurance(includingcoverforspousesanddependents),relevant

professional subscriptions, seasonal gifts and reimbursement of home telephone line and telephone expenses –

thevalueofwhichhasbeenincludedintheTaxableBenefitscolumn.

Pension

Pension contributions for Executive Directors are aligned to the pension provision for the wider workforce, which is

currently 4% of base salary. Where pension contribution is taken as a salary supplement the amount is reduced by the

associated Employer’s National Insurance contribution such that there is no cost to the company from this alternative.

Annual Bonus outturn for FY24 – Audited

Asdisclosedinlastyear’sreport,theFY24bonuswasbased70%onfinancialmeasures(50%Profitbeforetax,

20%FreeCashFlow)and30%onStrategicnon-financial‘ESC’measures(Environmental10%,Social–Inclusion

10%,Customer–AverageNPS10%).PaymentoftheFY24bonuswassubjecttotheachievementofathreshold

Group PBT, which was not met. As a result, no bonus was awarded to Tim Stacey or John Fallon. No discretion was

exercised in respect of the bonus outcome.

Performance against objectives

Performance measure Weighting Threshold (0%) Target

Maximum

(100%) Actual

Outcome

(% of max)

Groupunderlyingprofit

before tax and brand

amortisation

50% £27.2m £32.0m £36.8m £10.5m 0%

Groupfreecashflow 20% £16.0m £18.8m £21.6m (£10.0m) 0%

Environmental – supplier

commitments to achieve

Net Zero by June 2029

10% Commitments

from suppliers

covering 15%

of total Scope 3

emissions

Commitments

from suppliers

covering 20%

of total Scope 3

emissions

Commitments

from suppliers

covering 25%

of total Scope 3

emissions

59% 100%

Performance measure Weighting Threshold (0%) Target

Maximum

(100%) Actual

Outcome

(% of max)

Social (inclusion) –

Engagement score:

I can bring my whole self

to work

5% 75% 80% 85% 83% 92%

Social (inclusion) –

Engagement score:

My manager is supportive

of creating a place where

everyone is welcome

5% 76% 81% 86% 86% 100%

Customer – Average

Established Net Promoter

Score (DFS)

5% 23 24 25 26.5 100%

Customer – Average

Established Net Promoter

Score (Sofology)

5% 11 12 13 29.0 100%

Bonus outcome

(% maximum)

Tim Stacey 0%

John Fallon 0%

LTIP awards vesting in relation to performance in FY24 – audited

The 2021 award was granted on 11 October 2021 and was assessed against the performance targets at the end

ofFY24.The2021LTIPawardwasbased50%onEPSand50%basedonTSR(comparedtoboththeFTSE250

and FTSE 350 General Retailers). The performance targets for these measures were not met and therefore this

award will lapse.

LTIP award

Performance

conditions

Weighting

(% award) Detail

Threshold

performance

Stretch

performance

Max

performance

Actual

performance

Vesting

2021 LTIP EPS 50% Reported

underlying

EPS

24.8p 26.1p 28.7p 1.5p 0%

TSR 15% TSR (FTSE

250 Index)

Index – Index +

10% p.a.

Below

Index

35% TSR

(FTSE 350

General

Retailers)

Index – Index +

10% p.a.

Below

Index

Total vesting 0%

For threshold performance 20% of awards vest. For maximum performance 100% of awards vest. For stretch

performanceontheEPSperformancecondition,60%ofawardsvest.Vestingisonastraight-linebasisbetween

these points.

Thefinallevelofvestingoftheseawardswas0%.Nodiscretionwasexercisedinrespectofawardvestinglevels.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Scheme interests awarded in FY24 (2023 awards) – audited

DetailsofLTIPawardsandDeferredBonusAwardsgrantedduringFY24aresetoutinthetablebelow.TheDeferred

BonusAwardsrelatedtotheannualbonusearnedinrespectofFY23.

Director Scheme Type of award

Number of shares

awarded

Value of award at

dateofgrant(£)

Value of award as

% of salary

CEO – Tim Stacey LTIP

Nil cost option 860,120 877,322 175%

Deferred Bonus Award

Nil cost option 41,606 42,022 8%

CFO – John Fallon LTIP

Nil cost option 546,486 557,416 140%

Deferred Bonus Award

Nil cost option 19,538 19,733 5%

1. Thenumberofsharesgrantedwasbasedonasharepriceof£1.02.Thiswastheaverageoftheclosingsharepriceonthethreedays

prior to the date of grant (16 October 2023). The award will vest, subject to the achievement of performance conditions which are set

outbelowandassessedovertheperiodofthreefinancialyearsendingwithFY26,on20October2026.

2. GrantofdeferredsharesinrelationtotheFY23bonus.Thenumberofsharesgrantedwasbasedonasharepriceof£1.02(whichwas

the closing share price on the day immediately prior to the grant on 20 October 2023).

Performance conditions for FY24 (2023 award) LTIP

The performance conditions for the 2023 LTIP award are set out below. Vesting for performance between the

targetsiscalculatedonastraight-linebasis.

Adjusted EPS (45%)

Percentage of this portion of the Award vesting

Nil 20% 60% 100%

Less than 17.9p 19.2p 22.2p 26.7p or more

Relative TSR (45%)

Percentage of this portion of the Award vesting

Weighting Nil 20% 100%

13.5% (FTSE 250 Index Excluding Investment Trusts) Below FTSE 250

Index

Equal to

FTSE 250 Index

10% p.a. above

the FTSE 250

Index

31.5% (FTSE 350 General Retailers Index) Below FTSE 350

General Retailers

Index

Equal to FTSE

350 General

Retailers Index

10% p.a.

above the

FTSE 350

General

Retailers Index

ESG (10%)

Percentage of this portion of the Award vesting

Weighting Nil 20% 100%

5% (Scope 1 Carbon intensity reduction, aligned to the

NetZeroRoadmap–intensityper£mGrossSales)

More than 7.5 7.5 7 or less

5% (Reduction in use of virgin content in plastic packaging –

supplier engagement)

Less than 30% 30% 50%

SAYE awards – audited

NoDirectorsweregrantedSAYEoptionsduringFY24.

Dilution

The Company monitors the levels of share grants and the impact of these on the ongoing requirement for shares.

In accordance with guidelines set out by the Investment Association (‘IA’) the Company can issue a maximum of

10%ofitsissuedsharecapitalinarolling10-yearperiodtoemployeesunderallitsshareplans.

Payment to past directors – audited

There were no payments to past Directors.

Payment for loss of office – audited

Therewerenopaymentforlossofoffice.

Single figure remuneration table for Non-Executive Directors – audited

TheremunerationofNon-ExecutiveDirectorsshowingthebreakdownbetweencomponents,withcomparative

figuresfortheprioryear,isshownbelow.FiguresprovidedhavebeencalculatedinaccordancewiththeRegulations.

Director Fees Other Total

Gill Barr

2024 66 – 66

2023 21 – 21

Alison Hutchinson 2024 77 – 77

2023 74 – 74

Jo Boydell 2024 66 – 66

2023 64 – 64

Steve Johnson

2024 202 – 202

2023 148 – 148

Loraine Martins 2024 56 – 46

2023 54 – 54

1. Gill Barr was appointed to the Board on 1 March 2023.

2. Steve Johnson was appointed as Chair of the Board on 4 November 2022.

Non-Executive Director fees in FY25

Non-ExecutiveDirectors’fees,includingtheChairfee,wereincreasedby2%inJuly2024whichisinlinewiththe

averagebasesalaryincreaseforthewiderworkforce.ThefeestructureandlevelsapplyingforFY25aresetoutbelow:

Chair fee £205,500

Senior Independent Director and Chair of the Responsibility and Sustainability Committee fee £77,840

Chair of Audit/Remuneration Committee fee £67,120

BasicNon-ExecutiveDirectorfee £57,120

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Shareholding and other interests at 30 June 2024 – audited

Directors’ share interests and, where applicable, achievement of shareholding requirements are set out below. In order that their interests are aligned with those of

shareholders,ExecutiveDirectorsareexpectedtobuildupandmaintain(asrelevant)apersonalshareholdingwhichforFY24wasequalto200%oftheirbasesalary

intheCompanyoverafive-yearperiodfromappointment.

Shares no longer subject to performance conditions (e.g. deferred bonus awards, LTIP shares within the holding period and DSP awards) will count towards the requirement

on a net of tax basis.

Director

Number of

beneficiallyowned

Number of shares

under the Deferred

Bonus Plan

% of

salary held

Shareholding

requirement met

Subject to

conditions

Not subject

to conditions

Vested but

unexercised

Unvested

SAYEawards

Total at

30 June 2024

Tim Stacey 684,173 101,817 160% No 1,593,566 – – – 2,379,556

John Fallon 72,383 19,538 22% No 895,175 – – – 987,096

Steve Johnson 70,666 – – – – – – – 70,666

Gill Barr 15,557 – – – – – – – 15,557

Jo Boydell 21,926 – – – – – – – 21,926

Alison Hutchinson 69,833 – – – – – – – 69,833

Loraine Martins 16,911 – – – – – – – 16,911

Total 951,449 121,355 – – 2,488,741 – – – 3,561,545

1. Beneficialinterestsincludeshareshelddirectlyorindirectlybyconnectedpersons.

At 20 September 2024 there had been no movement in Directors’ shareholdings and share interests from 30 June 2024.

Outstanding share awards

The following share awards remain outstanding as at 30 June 2024 for the Executive Directors:

Director Type of award Date of grant Number of awards Award vested Awards lapsed

Outstanding

awards

Market price on

date of grant

Normal

vesting date

Tim Stacey 2021 LTIP 11/10/21 251,908 – 251,908 – £2.62 11/10/24

2021 LTIP 12/11/21 39,169 – 39,169 – £2.81 12/11/24

2022 LTIP

12/10/22 733,446 – – 733,446 £1.08 12/10/25

2023 LTIP 16/10/23 860,120 – – 860,120 £1.02 16/10/26

2021 DBP 21/10/21 31,911 – – 31,911 £2.69 21/10/24

2021 DBP 20/12/21 28,300 – – 28,300 £2.69 21/12/24

2023 DBP 20/10/23 41,606 – – 41,606 £1.02 20/10/26

John Fallon 2022 LTIP

14/12/22 348,689 – – 348,689 £1.48 12/10/25

2023 LTIP 16/10/23 546,486 – – 546,486 £1.02 16/10/26

2023 DBP 20/10/23 19,538 – – 19,538 £1.02 20/10/26

1. The share price for calculation is the average of the closing share price on the three days prior to the grant for any LTIP awards, and the closing share price on the day prior to the grant for any DBP awards.

2. The performance conditions applicable to the 2022 LTIP awards are set out on page 92 of the 2023 Annual Report.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Total Shareholder Return

ThechartillustratestheGroup’sTotalShareholderReturnperformanceagainsttheFTSE250Indexsince5March2015,thedateofIPO,totheendofFY24(30June2024).

This peer group represents the Company’s key market for investment capital.

160

150

140

130

120

110

100

Mar

2015

Jun

2015

Jun

2016

Jun

2017

Jun

2018

Jun

2019

Jun

2024

Jun

2023

Jun

2022

Jun

2021

Jun

2020

DFS Furniture plc

FTSE 250 Index

Chief Executive’s Remuneration For the Last Ten Years

ThetablebelowindicatesthetotalsinglefigureofremunerationfortheCEOsinceIPO,alongwiththeannualbonuspayoutandLTIPvestinglevelasapercentageofthe

maximum opportunity.

FY24 FY23 FY22 FY21 FY20 FY19 FY18 FY17 FY16 FY15

CEO Tim Stacey Tim Stacey Tim Stacey Tim Stacey Tim Stacey Tim Stacey

Ian Filby Ian Filby Ian Filby Ian Filby Ian Filby

SingleFigure(£’000) 523 665 496 1,999 568

464 374 673 666 804 790

Annual Bonus (% of max) 0% 31.1% 0% 100% 0%

26.2% 32.2% 36% 37.5% 71.9% 85.2%

LTIP vesting (% of max) 0% 0% 0% 100% 0% 28.6% 28.6% 0% 0% n/a n/a

1. Tim Stacey became CEO and Executive Director on 1 November 2018.

2. TheCommitteeapplieddownwarddiscretiontooverridetheformulaicoutcomeoftheFY20annualbonustozero.

3. TimStacey’ssinglefigureforFY20includesanawardundertheDFSRestrictedSharePlanwhichwasmadetotheCEOpriortohisappointmentasanExecutiveDirector.Theawardhadavalueof£97.7kand

vested on 16 November 2019.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Percentage change in the Directors’ remuneration

The table below compares the percentage increase in Directors’ pay with the wider employee population. The Company considers DFS employees other than those whose

remuneration includes piecework or commission, and excluding the Executive Directors, to be an appropriate comparator group.

FY19–FY20 FY20–FY21 FY21–FY22 FY22–FY23 FY23–FY24

Annual % change

Base

salary Benefits

Annual

bonus

Base

salary Benefits

Annual

bonus

Base

salary Benefits

Annual

bonus

Base

salary Benefits

Annual

bonus

Base

salary Benefits

Annual

bonus

CEO Tim Stacey 2% 41% -100% 10% -6% 100% 3% -82% -100% 0% 61% 100% 10.3% -9% -100%

CFO John Fallon n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 4.5% n/a -100%

Non-Executive

Directors

Gill Barr n/a n/a n/a n/a n/a n/a n/a n/a n/a 0% n/a n/a 4.5% n/a n/a

Alison

Hutchinson

17% n/a n/a 2% n/a n/a 3% n/a n/a 0% n/a n/a 4.5% n/a n/a

Jo Boydell 81% n/a n/a 2% n/a n/a 3% n/a n/a 0% n/a n/a 4.5% n/a n/a

Steve Johnson 79% n/a n/a 2% n/a n/a 3% n/a n/a 0% n/a n/a 4.5% n/a n/a

Jane Bednall n/a n/a n/a 2% n/a n/a 3% n/a n/a 0% n/a n/a 4.5% n/a n/a

Loraine Martins n/a n/a n/a n/a n/a n/a 3% n/a n/a 0% n/a n/a 4.5% n/a n/a

Employee pay 0% n/a n/a 2% n/a n/a 3% n/a -100% 0% n /a 100% 5.0% n/a -66%

Inlinewiththeregulations,thisanalysisisextendeduptoafiveyearperiod.Notesonthepercentagechangeinremunerationforpreviousyearsareprovidedinprioryears’

annual reports.

1. AnnualbonuswaspaidtothewideremployeepopulationforFY24.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

Relative Importance of spend on pay

The table below sets out the overall spend on pay for all employees compared with the returns distributed to

shareholders.

Significantdistributions FY24 FY23 % change

Employee remuneration £200.0m £202.5m -1%

Distributions to shareholders (dividends and share buybacks) £9.4m £43.0m -78%

Theabovefiguresaretakenfromnotes4,21and22tothefinancialstatements.

CEO pay ratio

ThisisthefifthyearthatwehavedisclosedtheGroup’sCEOpayratio.

As in prior years, the Company has adopted Option B: Gender Pay Gap data, as this approach was considered to

remain appropriate due to data availability and to allow consistency with prior year comparison. The Committee will

continue to determine the most appropriate methodology (Option A, B or C) to be used each year, by considering

the robustness of the calculation methodology as well as the availability of data and operational time constraints.

TherelevantemployeesateachquartileforeachyearwereidentifiedinApril(2024and2023)usingour

GenderPayGapdata.Thepayandbenefitsdatafortherelevant25th,50thand75thpercentileemployeesis

takenfromthe12-monthperiodendinginJune2023(financialyearFY23)andJune2024(financialyearFY24).

Thepayandbenefitsfigureincludes:

– all earnings paid through the payroll, e.g. salary, bonus, long term incentives

– the value of the employer pension contributions

– anyothertaxablebenefits,e.g.privatemedical,companycaretc

– noelementsofpaywereomittedandtherewasnodeparturefromthesinglefiguremethodology.

Payandbenefitsfortherelevantemployeeshavebeencalculatedonafull-timeequivalentbasisandtherewas

no reliance on estimates.

Thelowerquartile,medianandupperquartileemployeeswereidentifiedfromthegenderpaygapdatawhere

thehourlypayforemployeeswasranked.Asampleof10employees’payandbenefitseithersideoftheinitially

identifiedemployeeswasreviewedtoensurethattheappropriaterepresentativeemployeesareselected.

ThetablebelowcomparesthesingletotalfigureofremunerationfortheCEOwiththatofemployeeswhoarepaid

at the 25th, 50th and 75th percentile of the employee population.

CEO Pay Ratio Data

Year Method 25th percentile 50th percentile 75th percentile

2024 Option B 22:1 16:1 12:1

2023 Option B 27:1 18:1 18:1

2022 Option B 20:1 15:1 12:1

2021 Option B 76:1 66:1 61:1

2020 Option B 24:1 20:1 16:1

2024 25th percentile 50th percentile 75th percentile

Salary £23,319 £32,130 £37,148

Total pay and benefits £24,097 £33,559 £42,368

Theyear-on-yearchangeinpayratioreflectstheincentiveoutturnsfortheCEOin2024beinglowerthanthe

incentive outturns in 2023.

In line with the regulations, this analysis will be extended up to ten years in the future. The Committee considers pay

ratios as one of many reference points when considering remuneration. Throughout DFS, pay is positioned to be

fair and market competitive in the context of the relevant talent market for each role.

Internal and external support for the Committee

The Chairman, the CEO and the CFO attend meetings at the invitation of the committee but are not present

when their own remuneration is being discussed. The Company Secretary acts as Secretary to the Committee.

The Committee is supported by the Group People Director, Finance and Company Secretarial functions.

Willis Towers Watson was retained as advisers to the Committee to 10 November 2023. During the year,

theCommitteeundertookacompetitivetenderprocessandappointedDeloitteLLPasitsadviser,effective

11 November 2023.

Deloitte LLP is a founding member of the Remuneration Consultants Group and a signatory to the Code of

Conduct for Remuneration Consultants. The Committee is comfortable that Deloitte LLP provides objective and

independentremunerationadviceandhasnoconflictsofinterestwiththeGroupthatmayimpairitsindependence.

TheCommitteeissatisfiedthattheDeloitteengagementteamwhichprovideremunerationadvicetothe

Committee do not have connections with DFS Furniture plc or its Directors that may impair their independence.

TheCommitteereviewedthepotentialforconflictsofinterestandjudgedthattherewereappropriatesafeguards

againstsuchconflicts.

The total fees paid to Willis Towers Watson in respect of services to the Committee during the year amounted to

£42,650.TotalfeespayabletoDeloitteLLPinrespectofservicestotheCommitteeduringtheyearamountedto

£104,950.DeloitteLLPalsoprovidedtaxandfinancialadvisoryservicesintheperiod.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REMUNERATION REPORT CONTINUED

UK Corporate Governance Code: Provision 40

When determining the Executive Directors’ Remuneration Policy and practices, the Committee considered the

following factors as set out in the Code:

Clarity The Committee seeks to maintain an open dialogue with shareholders in order to

communicate our approach to remuneration.

As part of the Remuneration Policy review, the Committee consulted its major

shareholders (who together hold around 90% of the Issued Share Capital).

Our Policy is set out in a transparent manner and we are committed to simple and concise

disclosure of our Remuneration Policy and practices.

Simplicity Our remuneration arrangements aim to be simple in nature, with our Policy retaining

transparency, alignment with strategy and simplicity to aid in understanding by participants.

Risk The Committee seeks to structure our incentive arrangements in a manner that does not

encourage inappropriate risk taking, with a strong focus on the long term success and

sustainability of the business.

Discretion can be applied to the vesting outcomes of the Annual Bonus, LTIP and DSP

toreflectCompanyand/orindividualperformance.

Structural features of our Policy such as the deferral of any annual bonus paid, the post

vesting holding period under the LTIP and DSP, and our shareholding requirement

(includingpost-cessationshareholdingrequirements)provideaclearlinktothewider

shareholder experience.

Malus and clawback provisions apply to the Annual Bonus, LTIP and DSP, to allow for

adjustment in the event of risk management failures.

Predictability Our Remuneration Policy contains details of the maximum opportunity levels under the

Annual Bonus and DSP, with actual outcomes dependent on performance against the

predetermined measures and targets applying to the Annual Bonus, and the underpins

as applicable to the DSP.

Theremunerationoutcomesunderthedifferentperformancescenarios(on-targetand

maximum) are clearly set out alongside an estimate of potential maximum outcome if the

share price increased by 50%. See Charts on page 77.

Proportionality The remuneration policy is designed to create a strong link between our strategy and

performance.

Our holding periods and bonus deferral, alongside the Committee’s ability to apply

discretion to incentive outcomes ensures an appropriate alignment between incentive

outcomes and long term Company performance.

Alignment to culture Ourincentiveplansarealignedwithourstrategicfocusonlong-termsustainable

performance.Ourfocusonvaluesandbehaviourshasbeenreflectedinthedesign

of our remuneration policy.

The Committee is mindful of the pay and conditions of our workforce when considering

executive pay.

Statement of voting

The table below sets out the outcome of the advisory vote on the resolution for approval of the Annual report on

remuneration at the 2023 AGM and the binding vote on the resolution for approval of the Directors’ Remuneration

Policy at the 2021 AGM:

Resolution Votes For % Votes Against % Total votes

% of issued

capital voted

Votes

withheld

Annual report on

remuneration

(2023)

150,434,822 70.50% 62,961,819 29.50% 213,396,641 91.14% 1,800

Remuneration Policy

(2021)

232,954,298 98.12% 4,469,570 1.88% 237,423,868 91.89% 274

At the AGM held on 10 November 2023, Resolution 3 seeking approval for the Directors’ Remuneration Report was

supported by a clear majority of shareholders with 70.50% of votes cast in favour and 29.50% of votes cast against,

resulting in less than 80% support overall.

In advance of the meeting, the Chair of Remuneration Committee and other members of the Board, communicated

withholdersof80%ofoursharesandofferedthemanopportunitytoengageaheadoftheAGM.

The Committee acknowledges that whilst the majority of shareholders were supportive of the Directors’

Remuneration Report, a small number of shareholders were not supportive of the resolution due to the increase

in the CEO’s base salary by an amount greater than the workforce average increase. While the Committee is

aware of and recognises sensitivities around salary increases, we believe the adjustment was in the interests of

DFS and its shareholders and was necessary to motivate and retain the CEO, who is critical to delivering DFS’

transformational agenda.

Following the 2023 AGM, the Committee commenced a review of its remuneration strategy in preparation

for putting a Remuneration Policy to shareholders at the forthcoming AGM in November. As part of this the

Committee Chair consulted extensively with shareholders and the main proxy bodies and incorporated feedback

receivedintothefinalproposals.

GILL BARR

Chair of the Remuneration Committee

25 September 2024

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REPORT

The Directors’ Report includes

information required to be disclosed

under the Companies Act 2006

(‘the Act’), the UK Corporate

Governance Code (‘the Code’),

the Financial Conduct Authority’s

Listing Rules (‘Listing Rules’) and the

Disclosure and Transparency Rules

(‘DTRs’).

DFS Furniture PLC (‘the Company’) is the holding

company of the DFS Group of companies (‘the Group’).

The Company has no overseas subsidiaries but

operates branches in the Republic of Ireland.

The Directors present their Annual Report and audited

financialstatementsforthe53weeksended30June

2024, in accordance with section 415 of the Companies

Act 2006. Both the Strategic report and the Directors’

report have been drawn up and presented in accordance

with and in reliance upon applicable English company

law, and the liabilities of the Directors in connection

with those reports shall be subject to the limitations

and restrictions provided by such law. The Strategic

report and this Directors’ report together with sections

of the Corporate governance report incorporated by

reference, together form the Management report

for the purpose of DTR 4.1.8R. The Directors’ report

fulfilstherequirementsofthecorporategovernance

statement for the purposes of DTR 7.2.3R.

The relevant sections of the Annual Report:

Disclosure Page

Audit and Risk Committee report 61

Colleague Engagement 35

Conclusion and Outlook 8

Corporate governance report 54

Directors’ interests 83

Directors’ remuneration report 67

Executive Share Plans 81

Health, Safety & Wellbeing 36

Human rights and Modern Slavery 50

Inclusivity and Diversity 37

Independent auditors’ report 92

Internal Controls/Risk Management 21

Nomination Committee report 65

Our Communities & Charities 38

Section 172 statement 29

Task Force on Climate Related

Financial Disclosures

Directors

The membership of the Board and biographical details

of the Directors are provided on pages 52 and 53.

DetailsofDirectors’beneficialandnon-beneficial

interests in the shares of the Company are shown

on page 83.

Director Position

Service in the

year ended

30 June 2024

Steve Johnson

Chair Served

throughout

the year

Tim Stacey Chief Executive

Officer

Served

throughout

the year

John Fallon Chief Financial

Officer

Served

throughout

the year

Alison Hutchinson Senior Independent

Non-Executive

Director

Served

throughout

the year

Gill Barr IndependentNon-

Executive Director

Served

throughout

the year

Jo Boydell IndependentNon-

Executive Director

Served

throughout

the year

Loraine Martins IndependentNon-

Executive Director

Served

throughout

the year.

Resigned

31 July 2024

Bruce Marsh

IndependentNon-

Executive Director

Appointed

1 August 2024

1. Bruce Marsh was appointed to the Board of Directors post year

end

Board

All of the Directors are appointed or replaced in

accordance with the Company’s Articles of Association

(the ‘Articles’), the Act and the Code. The Board is

permittedtoappointnewdirectorstofillavacancy.

Any director appointed by the Board must stand for

election at the following annual general meeting,

in compliance with the Code. All directors submit

themselvesforre-electiononanannualbasis.

The Executive Directors serve under rolling contracts,

details of which are set out on page 79 of the Directors’

remunerationreport.TheNon-ExecutiveDirectorsare

appointed under letters of appointment, for an initial

three-yeartermwhichmaybeextendedbymutual

agreementandareterminablebyeithertheNon-

Executive Director or the Company with three month’s

prior written notice or six months’ notice from either

partyinthecaseoftheChair.EachNon-Executive

Directorissubjecttoannualre-electionatthe

Company’s AGM.

The table below sets out the dates that each

Non-ExecutiveDirectorseekingelection/re-election

atthe2024AGMwasfirstappointed.

Non-ExecutiveDirector Date of appointment

Alison Hutchinson 1 May 2018

Jo Boydell 6 December 2018

Steve Johnson 6 December 2018

Gill Barr 1 March 2023

Bruce Marsh 1 August 2024

The Directors’ service contracts and the letters

of appointment are available for inspection by

shareholdersattheCompany’sregisteredofficeand

will be available for inspection at the Company’s AGM.

Following recommendations from the Nomination

Committee, the Board considers that all Directors

continuetobeeffective,committedtotheirroles

andabletodevotesufficienttimetodischargetheir

responsibilities.

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REPORT CONTINUED

All of the directors proposed by the Board for election

orre-electionarebeingunanimouslyrecommended

for their skills, experience and the contribution they

bring to Board deliberations. During the year, no director

hadanymaterialinterestinanycontractofsignificance

to the Group’s business. Their interests in the shares

of the Company, including those of any connected

persons, are outlined in the Directors’ Remuneration

Report on page 83. The Board exercise all the powers

of the Company subject to the Articles, the Act and

shareholder resolutions.

A formal schedule of matters reserved for the Board

has been approved by the Board.

Directors’ responsibilities

Thedirectors’responsibilitiesforthefinancial

statements contained within this Annual Report and

Accountsandthedirectors’confirmationsasrequired

under DTR 4.1.12 are set out on page 91.

Directors’ indemnities and insurance

TheCompanyhasmadequalifyingthird-partyindemnity

provisions(asdefinedintheAct)forthebenefitofits

directors during the year; these provisions remain in

force at the date of this Directors’ Report. In accordance

with the Articles, and to the extent permitted by law,

the Company may indemnify its directors out of its

own funds to cover liabilities incurred as a result of their

office.TheGroupholdsdirectors’andofficers’liability

insurance cover for any claim brought against directors

orofficersforallegedwrongfulactsinconnectionwith

their positions, to the point where any culpability for

wrongdoing is established. The insurance provided does

not extend to claims arising from fraud or dishonesty.

Annual General Meeting (‘AGM’)

The Company’s next AGM will take place on

22 November 2024 at the DFS Group Support Centre,

1 Rockingham Way, Redhouse Interchange,

Adwick-le-Street,Doncaster,DN67NAat2.30pm.The

Annual Report and Accounts and Notice of the AGM,

including the resolutions to be proposed, will be sent

to shareholders at least 21 clear days prior to the date

of the meeting. Shareholders are invited to submit

questions prior to the meeting by emailing the Company

Secretary Liz McDonald liz.mcdonald@dfs.co.uk.

Shareholder and voting rights

All members who hold ordinary shares are entitled to

attend and vote at the AGM. Voting on all resolutions

at the 2024 AGM will be by way of a poll. On a poll, every

member present in person or by proxy has one vote for

every ordinary share held or represented. The Notice

ofMeetingspecifiesthedeadlinesforexercisingvoting

rights. To encourage shareholders to participate in the

AGMprocess,theCompanyofferselectronicproxy

voting through the CREST service and all resolutions

will be proposed and voted on at the meeting on an

individual basis by shareholders or their proxies. The

Company is not aware of any agreements between

shareholders that may result in restrictions on the

transfer of securities and voting rights. 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 laws and

market requirements relating to closed periods) and

requirements of internal rules and procedures whereby

directors and certain employees of the Company

require prior approval to deal in the Company’s

securities. The Company’s Articles may only be

amended by a special resolution at a General Meeting.

Dividends

On19March2024theBoardannounceditsFY24

interim results and an interim dividend of 1.1p The

Boardhasnotproposedafinaldividendfortheyear

ended30June2024.Detailsofthefinalandinterim

dividends for the year are included in the below table.

1.1p interim dividend (FY23:1.5pershare)

0.0p proposed

finaldividend

(FY23:3.0ppershare)

Total dividend of 1.1p

pershareforFY24

(FY23:4.5ppershare)

Substantial Shareholders

As at 18 September 2024, the Company has been

notifiedofthefollowingholdingsofvotingrightsinits

shares under DTR Rule 5. 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.

Investor

Number of

Ordinary

voting

rights

Date of

notification

J O Hambro Capital

Management

Limited

23,348,196 9.97 6 Aug

2024

Adriana S.A. 21,960,922 9.02 15 Sep

2022

Cobas Asset

Management

14,048,830 6.00 21 Jun

2024

Janus Henderson

Group plc

13,579,229 5.80 9 Dec

2022

Aviva Investors 14,723,644 6.29 1 Dec

2023

Abrdn plc 12,184,099 5.20 2 Nov

2023

Takeover directive information

Following the implementation of the European

Directive on Takeover Bids by certain provisions of

the Companies Act 2006, the Company is required to

disclose certain additional information in the Directors’

Report. This information is set out below:

Capital Structure

The Company has only one class of shares, being

OrdinarySharesof£0.10penceeach.Thesharesof

the Company have been traded on the main market

of the London Stock Exchange throughout the 53

weeks ended 30 June 2024. The Company has an

issued share capital of 236,000,000 ordinary shares of

£0.10peach(2023:240,678,120).Thevotingrightsof

the Company’s shares are identical, with each share

carrying the right to one vote. Holders of Ordinary

Shares of the Company are entitled to participate

in authorised dividends and to receive notice and to

attend and speak at general meetings. On 30 June

2024, the Company held 1,855,580 Ordinary Shares in

treasury (2023: 6,533,700). As at 18 September 2024

the Company held 1,855,580 shares in Treasury and

therefore the total number of ordinary shares with

voting rights in the Company is 234,144,420.

Details of the movements in issued share capital during

theyearareprovidedinnote22totheGroupfinancial

statements.

Under the Company’s Share Dealing code, senior

executives may be restricted as to when they can trade

in the Company’s shares. The Directors are not aware

of any agreements between holders of the Company’s

shares that may result in the restriction of the transfer

of securities or on voting rights. No shareholder holds

securities carrying any special rights or control over the

Company’s share capital.

Details of employee share schemes are provided in

note25totheGroupfinancialstatements.

As at 30 June 2024, the EBT held 3,456,074 shares.

Information required by Listing Rule 9.8.4R

Detailsoflong-termincentiveschemesasrequired

by Listing Rule 9.4.3R are located in the Directors’

Remuneration Report on pages 67 to 87. There is no

further information required to be disclosed under

Listing Rule 9.8.4R.

Authority to purchase own shares

At the AGM on 10 November 2023, the Company

was authorised to purchase a maximum of 10% of

the Company’s issued share capital. This authority will

expire at the close of the next AGM on 22 November

2024 unless revoked, varied, or renewed prior to that

meeting.. The Company will seek the usual renewal of

this authority to purchase its own shares at the AGM

in November 2024

Authority to allot shares

At the AGM on 10 November 2023, the Company

was granted a general authority by its shareholders

to allot shares up to an aggregate nominal amount of

£7,804,814(orupto£15,609,628inconnectionwith

anofferbywayofarightsissue).TheCompanydidnot

allot any further shares during the year. (2023: nil).

The Company will seek the usual renewal of this

authority at the AGM 2024.

Change of control

All of the Company’s share incentive scheme rules,

contain provisions, which may cause options and awards

granted under these schemes to vest and become

exercisable in the event of a change of control. The

Companyisnotapartytoanysignificantagreements

whichtakeeffect,alter,orterminate,solelyuponthe

DFS Furniture plc Annual Report & Accounts 2024

Governance

DIRECTORS’ REPORT CONTINUED

event of a change of control in the Company following a

takeover bid. However, in the event of a change of control

of the Company, the Company is obliged to give written

notice to its lenders. Each individual lender then has the

right to give written notice to the Company to demand

early repayment of its outstanding loans to that lender

and to cancel that lender’s commitments in full.

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.

Significant agreements

The Company does not have any contractual or other

relationships with any single party which are essential

to the business of the Group and, therefore, no such

relationships have been disclosed.

Colleague involvement – Everyone’s Welcome

The DFS Group strategy is “Everyone’s Welcome”.

It is embedded in the Group values that all colleagues

are able to be themselves at work, whatever their

background, preferences or views.

The Group has a communication programme in place

to provide colleagues with information on matters of

concern to them. This includes regular updates from

the Group Leadership team via the Workplace system

and regular meetings with line managers. There is a

colleague Voice forum in place in UK & Republic of

Ireland. The Voice forum forms the basis of the colleague

listening network and enables colleague feedback to be

receivedeffectivelyandconsistentlyacrosstheGroup.

The Voice forums make valuable contributions to

business development programmes and provide

input on a wide range of business and people topics.

Whilst our approach is designed around all colleagues,

from all backgrounds, all levels and all business areas,

we have particular focus on the experience and

representation of women and colleagues from ethnic

minority backgrounds.

Details of colleagues’ involvement in the Group’s share

plans are disclosed in the Remuneration Report on

pages 67 to 87.

Employment of disabled people

In the event that colleagues need adjustments to

be made to support their employment then every

effortwillbemadetodoso.TheGroupiscommitted

to providing equal opportunities in recruitment,

training, development and promotion. We encourage

applications from individuals with all forms of disabilities.

Alleffortsaremadetoretaindisabledcolleaguesin

our employment, including making any reasonable

adjustments to their roles. Every endeavour is made

tofindsuitablealternativeemploymentandtoretrain

and support the career development of any employee

who becomes disabled whilst serving the Group.

Research and development

Research and innovation remain key to our product

offering,enablingthedevelopmentofbetterproducts

for our customer base. Further details are provided in

the Chair’s statement on page 5.

Donations

The Group does not make donations to political

organisations or independent election candidates.

Public Policy

We do not take part in any direct lobbying or public

policy activity.

Treasury and risk management

TheCompany’sapproachtotreasuryandfinancialrisk

management, including its use of hedging instruments,

is explained in the Risks and Uncertainties section on

page23andnote24totheannualfinancialstatements.

Independent auditors

In accordance with section 489 of the Companies Act

2006,(“the Act”) the Audit and Risk Committee has

recommended that a resolution is to be proposed

at the AGM for the reappointment of KPMG LLP as

auditoroftheGroup.TheDirectorswhoheldoffice

atthedateofthisreportconfirmthat,sofarasthey

are each aware, there is no relevant audit information

of which the Company’s auditor is unaware; and each

such Director has taken the reasonable steps that they

ought to have taken as a director to make themselves

aware of any relevant audit information and to establish

that the Company’s auditor is aware of the information.

Theconfirmationisgivenandshouldbeinterpretedin

accordance with the provisions of section 418 of the Act.

Subsequent events

Between 30 June and the date of this report Loraine

Martins stepped down from the Board of Directors

and on 1 August 2024 Bruce Marsh was appointed

to the Board of Directors.

Whilst the Group expects to stay within its existing

borrowing facility covenants, in September 2024 the

Group agreed a widening of covenants with its lenders,

which provides additional headroom in the event of

unanticipated downside scenarios that result in a further

decline in market volumes and lower EBITDA. Further

details are provided in the Financial review on page 18.

Information on greenhouse gas emissions

The information on greenhouse gas emissions that

the Company is required to disclose is set out in the

Responsibility and Sustainability Report on pages 42 to

43. This information is incorporated into this Directors’

report by reference and is deemed to form part of this

Directors’ report.

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 DFS Furniture

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 or the Strategic report

orinthe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.

Going concern

In adopting the going concern basis for preparing the

financialstatements,thedirectorshaveconsidered

the business activities as set out on pages 1 to 51,

thefinancialpositionoftheGroup,itscashflows,

liquidity position and borrowing facilities as set out in

the Financial Review on pages 16 to 18, the Group’s

financialriskmanagementobjectivesandexposures

toliquidityandfinancialrisksassetoutinnote24to

thefinancialstatements,aswellastheGroup’srisks

and uncertainties as set out on pages 21 to 28.

BasedontheGroup’scashflowforecasts,theBoard

expects the Group to have adequate resources to

continue in operation, meet its liabilities as they fall

due,retainsufficientavailablecashandnotbreach

the covenant applicable to its borrowing facilities for

the foreseeable future, being a period of at least 12

monthsfromtheapprovalofthefinancialstatements.

The Board therefore considers it appropriate for the

Group to adopt the going concern basis in preparing its

financialstatements.At18September2024,£63.0m

of the revolving credit facility remained undrawn, in

additiontocashinhand,atbankof£5.7m.

Long term viability statement

The directors have assessed the prospects of the

Companyoverathree-yearperiodtoJune2027.This

has taken into account the business model, strategic

aims, risk appetite, and principal risks and uncertainties,

alongwiththeCompany’scurrentfinancialposition.

Based on this assessment, the directors have a

reasonable expectation that the Company will be able

to continue in operation and meet its liabilities as they

falldueoverthethree-yearperiodunderreview.Seeour

approach to assessing long term viability on page 28.

The Directors’ report was approved by the Board of

Directors on 25 September 2024 and signed on its

behalf by:

ELIZABETH MCDONALD

Group General Counsel & Company Secretary

25 September 2024

DFS Furniture plc Annual Report & Accounts 2024

Governance

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT

AND THE FINANCIAL STATEMENTS

The directors are responsible for preparing the Annual

ReportandtheGroupandparentCompanyfinancial

statements in accordance with applicable law and

regulations.

Company law requires the directors to prepare Group

andparentCompanyfinancialstatementsforeach

financialyear.Underthatlawtheyarerequiredto

preparetheGroupfinancialstatementsinaccordance

withUK-adoptedinternationalaccountingstandards

and applicable law and have elected to prepare the

parentCompanyfinancialstatementsinaccordance

with UK accounting standards and applicable law,

including FRS 101 Reduced Disclosure Framework.

Under company law the 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Group’sprofit

or loss for that period. In preparing each of the Group

andparentCompanyfinancialstatements,the

directors are required to:

– select suitable accounting policies and then apply

them consistently;

– make judgements and estimates that are

reasonable, relevant, reliable and prudent;

– fortheGroupfinancialstatements,statewhether

they have been prepared in accordance with

UK-adoptedinternationalaccountingstandards;

– fortheparentCompanyfinancialstatements,state

whether applicable UK accounting standards have

been followed, subject to any material departures

disclosed and explained in the parent Company

financialstatements;

– assess the Group and parent Company’s ability

to continue as a going concern, disclosing, as

applicable, matters related to going concern; and

– use the going concern basis of accounting unless

they either intend to liquidate the Group or the

parent Company or to cease operations, or have

no realistic alternative but to do so.

The directors are responsible for keeping adequate

accountingrecordsthataresufficienttoshowand

explain the parent Company’s transactions and

disclose with reasonable accuracy at any time the

financialpositionoftheparentCompanyandenable

themtoensurethatitsfinancialstatementscomply

with the Companies Act 2006. They are 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, and have general responsibility for taking such

steps as are reasonably open to them to safeguard the

assets of the Group and to prevent and detect fraud

and other irregularities.

Under applicable law and regulations, the directors

are also responsible for preparing a Strategic Report,

Directors’ Report, Directors’ Remuneration Report

and Corporate Governance Statement that complies

with that law and those regulations.

The directors are responsible for the maintenance

andintegrityofthecorporateandfinancialinformation

included on the company’s website. Legislation in

the UK governing the preparation and dissemination

offinancialstatementsmaydifferfromlegislationin

other jurisdictions.

In accordance with Disclosure Guidance and

TransparencyRule(“DTR”)4.1.16R,thefinancial

statementswillformpartoftheannualfinancialreport

prepared under DTR 4.1.17R and 4.1.18R. The auditor’s

reportonthesefinancialstatementsprovidesno

assuranceoverwhethertheannualfinancialreporthas

been prepared in accordance with those requirements.

Responsibility statement of the directors in

respect of the annual financial report

Weconfirmthattothebestofourknowledge:

– thefinancialstatements,preparedinaccordance

with the applicable set of accounting standards,

give a true and fair view of the assets, liabilities,

financialpositionandprofitorlossofthecompany

and the undertakings included in the consolidation

taken as a whole; and

– the strategic report/directors’ report includes a

fair review of the development and performance of

the business and the position of the issuer and the

undertakings included in the consolidation taken as

a whole, together with a description of the principal

risks and uncertainties that they face.

We consider the annual report and accounts, taken

as a whole, is fair, balanced and understandable and

provides the information necessary for shareholders

to assess the Group’s position and performance,

business model and strategy.

TIM STACEY

Chief Executive Officer

JOHN FALLON

Chief Financial Officer

DFS Furniture plc Annual Report & Accounts 2024

Governance

INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF DFS FURNITURE PLC

1. Our opinion is unmodified

Wehaveauditedthefinancialstatementsof

DFS Furniture plc (“the Company’’) for the period

ended 30 June 2024 which comprise the Consolidated

Income Statement, Consolidated Statement of

Comprehensive Income, Consolidated Balance

Sheet, Consolidated Statement of Changes in Equity,

Consolidated Cash Flow Statement, the Company

Balance Sheet, Company Statement of Changes in

Equity, and the related notes, including the accounting

policies in Note 1 to both the Group and parent

Companyfinancialstatements

In our opinion:

– 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30June2024andof

the Group’s loss for the period then ended;

– theGroupfinancialstatementshavebeen

properlypreparedinaccordancewithUK-adopted

international accounting standards;

– theparentCompanyfinancialstatementshave

been properly prepared in accordance with UK

accounting standards, including FRS 101

Reduced Disclosure Framework; and

– thefinancialstatementshavebeenprepared

in accordance with the requirements of the

Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with

International Standards on Auditing (UK) (“ISAs (UK)”)

and applicable law. Our responsibilities are described

below. We believe that the audit evidence we have

obtainedisasufficientandappropriatebasisforour

opinion. Our audit opinion is consistent with our report

to the Audit and Risk Committee.

Wewerefirstappointedasauditorbythedirectors

on 27 April 2010, prior to the Company becoming a

public interest entity. The period of total uninterrupted

engagementisforthe10financialperiodsended

30 June 2024 as a public interest entity and 14

financialperiodsintotal.Wehavefulfilledourethical

responsibilities under, and we remain independent of

the Group in accordance with, UK ethical requirements

including the FRC Ethical Standard as applied to

listedpublicinterestentities.Nonon-auditservices

prohibited by that standard were provided.

Overview

Materiality:

groupfinancial

statements as

a whole

£2.5m(2023:£2.5m)

0.25% of Group revenue

(2023:3.8%ofprofitbefore

tax from continuing operations

normalisedtoexcludenon-

underlying items and averaged

over a period of three years)

Coverage 100% of Group revenue (2023:

98%ofGroupprofitbeforetax

from continuing operations

excludingnon-underlyingitems)

Key audit matters vs 2023

Recurring risks Going Concern

Impairment of

Goodwil

Recoverability of

parent company’s

investment in

subsidiaries and

amounts due from

group companies

DFS Furniture plc Annual Report & Accounts 2024

Governance

INDEPENDENT AUDITOR’S REPORT CONTINUED

2. Key audit matters: our assessment of risks of material misstatement

Keyauditmattersarethosemattersthat,inourprofessionaljudgement,wereofmostsignificanceintheauditofthefinancialstatementsandincludethemostsignificantassessedrisksofmaterialmisstatement(whetherornot

duetofraud)identifiedbyus,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.Wesummarisebelowthekeyaudit

matters,whichareunchangedfrom2023,indecreasingorderofauditsignificance,inarrivingatourauditopinionabove,togetherwithourkeyauditprocedurestoaddressthosemattersand,asrequiredforpublicinterestentities,

ourresultsfromthoseprocedures.Thesematterswereaddressed,andourresultsarebasedonproceduresundertaken,inthecontextof,andsolelyforthepurposeof,ourauditofthefinancialstatementsasawhole,andinforming

our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.

The risk Our response

Going Concern Disclosure Quality:

Refer to page 22 (Principle Risks),

page 28 (Viability Reporting), page 62

(Audit and Risk Committee Report),

page 90 (Director’s report) and page

104 (accounting policies).

ThefinancialstatementsexplainhowtheBoard

has formed a judgement that it is appropriate to

adopt the going concern basis of preparation for

the Group and parent Company.

The judgement is based on evaluation of the

inherent risks to the Group’s and the parent

Company’s business model and how those risks

mightaffecttheGroup’sandparentCompany’s

financialresourcesorabilitytocontinuetooperate

over a period of at least a year from the date of the

approvalofthefinancialstatements.

TherisksmostlikelytoadverselyaffecttheGroup’s

andparentCompany’savailablefinancialresources

and metrics relevant to debt covenants over this

period are:

– Thecurrentgeopoliticalandmacro-economic

climate impacting the demand for the Group’s

products, including reduced customer demand

for furniture, current UK housing market status,

increasesinthecostoflivingandrisinginflation.

– The recent Red Sea related shipping disruption

and increased freight costs.

The risk for our audit was whether or not those

risks were such that they amounted to a material

uncertaintythatmayhavecastsignificantdoubt

about the ability to continue as a going concern.

Had there been a material uncertainty, then the

fact would have been required to be disclosed.

Weconsideredwhethertheseriskscouldplausiblyaffecttheliquidityorcovenantcomplianceinthegoingconcernperiodbyassessingthe

directors’sensitivitiesoverthelevelofavailablefinancialresourcesandcovenantthresholdsindicatedbytheGroup’sfinancialforecasts

takingaccountofsevere,butplausible,adverseeffectsthatcouldarisefromtheserisksindividuallyandcollectively.

Our procedures included:

– Funding assessment: Weassessedthecommittedleveloffinance,anditsexpirythroughinspectionoffinancingdocumentation,to

determinetheleveloffinanceavailabletotheGroupanditsassociatedcovenants;

– Covenant compliance:Weconsideredcovenantcompliancebothinthefinancialperiod,throughvalidationoftheperiodendcovenant

certificate,andinthegoingconcernforecastperiodtakingintoaccounttheextensionofcovenantsgrantedbythelendersinlinewiththe

viability reporting on page 28;

– Historical comparisons: Wecomparedhistoricalforecastresultsagainstactualcashflowsachievedinthepreviousandcurrentfinancial

periods in order to assess the directors’ track record of forecast accuracy;

– Benchmarking assumptions: We benchmarked the key assumptions, including bookings growth, freight costs and cost saving

initiativesbehindthecashflowforecaststothirdpartyevidence,includinganalystreportsandmarketdatawhereavailable;

– Sensitivity analysis:Weconsideredthesensitivitiesoverthelevelofavailablefinancialresources,includingassociatedcovenant

compliance,indicatedbytheGroup’sfinancialforecaststakingaccountofreasonablypossible(butnotunrealistic)adverseeffectsthat

couldarisefromtheserisksindividuallyandcollectively,consideringadditionalbeneficialcontractualarrangementsmadesubsequent

to the year end. This included evaluating the Directors’ plausible downside scenarios, a combination of those scenarios and stress tests

following the covenant extension;

– Evaluation of directors’ intent: We evaluated the achievability of the actions the directors consider they would take to improve the

positionshouldtherisksmaterialise,includingreductionsinnon-essentialcapitalexpenditureandreductionsindividendsbytakinginto

account the extent to which the directors can control the timing and outcome of these; and

– Assessing transparency: Weconsideredwhetherthegoingconcerndisclosureinnote1totheconsolidatedfinancialstatementsand

note1totheparentCompanyfinancialstatementsgivesafullandaccuratedescriptionofthedirectors’assessmentofgoingconcern,

includingtheidentifiedrisks,dependencies,andrelatedsensitivitiesthroughourspecificentityunderstandingandindustryandmarket

analysis.

Our results

– Wefoundthegoingconcerndisclosureinnote1totheconsolidatedfinancialstatementsandnote1totheparentCompanyfinancial

statements without any material uncertainty to be acceptable (2023: acceptable).

DFS Furniture plc Annual Report & Accounts 2024

Governance

INDEPENDENT AUDITOR’S REPORT CONTINUED

The risk Our response

Impairment of Goodwill Forecast-based assessment:

(£508.3million;2023:£508.3million)

Refer to page 62 (Audit and Risk

Committee Report), page 106

(accounting policy) and pages 119

and120(financialdisclosures).

There is a risk that the business may not meet

expected growth projections in order to support

the carrying value of goodwill held relating to the

DFS Trading and Sofology cash generating units

(‘CGUs’). This risk has increased in the period in

lightofthecurrenteconomicclimateandfinancial

performance of the Group.

Goodwillissignificantandatriskofirrecoverability

due to continuing weak demand in the furniture

retail market. The directors considered the

recoverability of the goodwill balance through

a value in use calculation that had underlying

assumptions of varying sensitivities. The estimated

recoverable amount is subjective due to the

inherent uncertainty involved in forecasting and

discountingfuturecashflows.

Theeffectofthesemattersisthat,aspartofour

risk assessment, we determined that the value

in use of DFS Trading and Sofology CGUs have

a high degree of estimation uncertainty, with a

potential range of reasonable outcomes greater

thanourmaterialityforthefinancialstatementsas

a whole, and possibly many times that amount. In

conductingourfinalauditwork,weconcludedthat

reasonably possible changes to the value in use of

the Sofology CGU would not be expected to result

inamaterialimpairment.Thefinancialstatements

(note 10) disclose the sensitivity estimated by the

Group for the DFS Trading CGU.

We performed the tests below rather than seeking to rely on any of the Group’s controls because the nature of the balance is such that we

would expect to obtain audit evidence primarily through the detailed procedures described.

Our procedures included:

– Historical comparisons: We compared the previous forecasts for each CGU against actual outcomes to assess the historical reliability

of the Group’s forecasting;

– Benchmarking assumptions: We compared each CGU’s trading forecasts against current trading performance and anticipated growth in

the furniture retail sector, comparing to industry analyst reports and our own internal economic outlook analysis, and applied our knowledge

oftheGroupandretailsectorininvestigatinganysignificantdeviationsinordertochallengeassumptionsincludedintheforecasts;

– Sensitivity analysis: We performed sensitivity analysis on individual key assumptions and in combined scenarios over order intake,

profitmargins,terminalgrowthrateanddiscountfactorinordertoassessthelevelofsensitivityofthevalueinusetotheseassumptions;

– Our sector experience: We assessed and challenged the discount rate by obtaining the inputs used in the discount rate calculations,

benchmarking against our own expectations, and comparing the overall rate to an expected range based on our own benchmarks;

– Comparing valuations:WecomparedthesumofthediscountedcashflowsforallCGUstotheGroup’smarketcapitalisation,adjusted

fordebtandsurplusassets,toassessthereasonablenessofthosecashflowsandthereasonablenessofthecarryingvalueofthose

CGUs; and

– Assessing transparency: We considered the adequacy of the Group’s disclosures about the sensitivity of the outcome of the

impairmentassessmenttochangesinkeyassumptions,andspecificallythesensitivityestimatedbytheGroupfortheDFSTradingCGU,

assessingwhethertheyreflectedtherisksinherentintherecoverableamountofgoodwill.

Our results

– We found the Group’s conclusion that there is no impairment of goodwill to be acceptable (2023 result: acceptable).

DFS Furniture plc Annual Report & Accounts 2024

Governance

INDEPENDENT AUDITOR’S REPORT CONTINUED

The risk Our response

Recoverability of parent Company’s

investment in subsidiaries and

receivables from other group

companies

Parent Company’s investment

insubsidiaries:£237.8million;

(2023£254.5million)

Amounts due from group companies:

£275.0million;(2023£275.0million)

Refer to page 63 (Audit and Risk

Committee Report), page 137

(accounting policy) and page 138

(financialdisclosures).

Low risk, high value:

The carrying amount of the parent Company’s

investments in subsidiaries and the amounts

due from group companies balance represents

46% (2023: 48%) and 54% (2023: 52%) of the

parent Company’s total assets respectively. Their

recoverabilityisnotatahighriskofsignificant

misstatementorsubjecttosignificantjudgement.

However, due to their materiality in the context of

theparentCompanyfinancialstatements,thisis

considered to be the area that had the greatest

effectonouroverallparentCompanyaudit.

We performed the tests below rather than seeking to rely on any of the Company’s controls because the nature of the balance is such that

we would expect to obtain audit evidence primarily through the detailed procedures described.

Our procedures included:

– Tests of detail: We compared the carrying amount of 100% of investments with the relevant subsidiaries’ draft balance sheet to

identify whether their net assets, being an approximation of their minimum recoverable amount, were in excess of their carrying

amountandassessedwhetherthosesubsidiarieshavehistoricallybeenprofit-making;

– Wecomparedthedebtadjustedmarketcapitalisationtotheinvestmentandintra-groupreceivablesbalancetoassessimpairment

indicators.

– We assessed 100% of the total amounts due from group companies balance to identify, with reference to the relevant debtors’ draft

balance sheet, whether they have a positive net asset value and therefore coverage of the debt owed, as well as assessing whether

thosedebtorcompanieshavehistoricallybeenprofit-making;

– Assessing subsidiary audits:Consideringtheresultsofourworkonallscopedinsubsidiaries’profitsandnetassets,weassessed

the liquidity of the assets and therefore the ability of the subsidiary to fund the repayment of the amount due from group companies.

Our results

– We found the Company’s conclusion that there is no impairment of the investments in subsidiaries and the amounts due from group

companies to be acceptable (2023: acceptable).

DFS Furniture plc Annual Report & Accounts 2024

Governance

INDEPENDENT AUDITOR’S REPORT CONTINUED

3. Our application of materiality and an overview

of the scope of our audit

MaterialityfortheGroupfinancialstatementsasa

wholewassetat£2.5m(2023:£2.5m),determinedwith

reference to a benchmark of Group revenue of which it

represents 0.25%. The benchmark in the previous year

wasGroupprofitbeforetaxfromcontinuingoperations

normalisedtoexcludenon-underlyingitems(“PBTCO”)

and averaged over a period of three years of which

it represented 3.8%. We selected Group revenue as

the benchmark in the current period because of the

current pressure on PBTCO, driven by the challenging

macro-economicenvironment.TheGroup’sstrategic

transformation programme is aimed at adapting to this

newenvironmentandworkingtowardsimprovingprofits.

MaterialityfortheparentCompanyfinancialstatements

asawholewassetat£1.6m(2023:£1.6m),determined

with reference to a benchmark of Company total assets,

of which it represents 0.3% (2023: 0.3%).

In line with our audit methodology, our procedures

on individual account balances and disclosures

were performed to a lower threshold, performance

materiality, so as to reduce to an acceptable level

the risk that individually immaterial misstatements

in individual account balances add up to a material

amountacrossthefinancialstatementsasawhole.

Performance materiality for the group was set at 65%

(2023:75%)ofmaterialityforthefinancialstatements

asawhole,whichequatesto£1.62m(2023:£1.88m).

We applied this percentage in our determination of

performancematerialitybasedonthelevelofidentified

misstatementsandcontroldeficienciesduringthe

prior period as well as the level of turnover of senior

managementandkeyfinancialreportingpersonnel.

Performance materiality for the parent company was

setat75%(2023:75%)ofmaterialityforthefinancial

statementsasawhole,whichequatesto£1.2m(2023:

£1.2m).Weappliedthispercentageinourdetermination

of performance materiality because we did not identify

any factors indicating an elevated level of risk.

We agreed to report to the Audit and Risk Committee

anycorrectedoruncorrectedidentifiedmisstatements

exceeding£0.125m(2023:£0.125m),inaddition

tootheridentifiedmisstatementsthatwarranted

reporting on qualitative grounds.

Of the Group’s 9 (2023: 9) reporting components,

we subjected 4 (2023: 4) to full scope audits for

grouppurposes.Weconductedreviewsoffinancial

information(includingenquiry)atafurther5(2023:5)

non-significantcomponentsas,whilethesewere

notindividuallyfinanciallysignificanttothegroup,

we considered the impact of these in aggregate.

The components within the scope of our work

accounted for the percentages illustrated opposite.

Theworkonallscoped-incomponents(2023:all

scoped-incomponents),includingtheauditofthe

parent company, was performed by the Group team.

The Group team set the component materialities,

whichrangedfrom£1.0mto£2.0m(2023:£0.7mto

£2.0m),havingregardtothemixofsizeandriskprofile

of the Group across the components.

The remaining 1% (2023: 2%) of Group loss before

tax(2023:profitbeforetax)and9%(2023:9%)oftotal

Group assets is represented by 5 (2023: 5) reporting

components, none of which individually represented

more than 5% (2023: 4%) of any of total Group

revenue,Grouplossbeforetax(2023:profitbeforetax)

or Group total assets. For the residual components,

we performed analysis at an aggregated group level

tore-examineourassessmentthattherewereno

significantrisksofmaterialmisstatementwithinthese.

The scope of the audit work performed was

predominately substantive as we placed limited reliance

upontheGroup’sinternalcontroloverfinancialreporting.

4. Going concern

Thedirectorshavepreparedthefinancialstatements

on the going concern basis as they do not intend to

liquidate the Group or the parent Company or to cease

their operations, and as they have concluded that the

Group’sandtheparentCompany’sfinancialposition

means that this is realistic. They have also concluded

that there are no material uncertainties that could have

castsignificantdoubtovertheirabilitytocontinueas

a going concern for at least 12 months from the date

ofapprovalofthefinancialstatements(“thegoing

concern period”).

An explanation of how we evaluated management’s

assessment of going concern is set out in the related

key audit matter in section 2 of this report.

Normalised Group profit before tax

£9.1m(2023:£29.2m)

■

Normalised PBT

■

Group materiality

£2.5m

Group ﬁnancial statements materiality (2023: £2.5m)

£1.62m

Whole ﬁnancial statements performance materiality (2023: £1.85m)

£2m

Range of materiality at 4 components (£1m-£2m) (2023: £0.7m to £2.0m)

£0.125m

Misstatements reported to the audit committee (2023: £0.125m)

100%

(2023: 99%)

91%

(2023: 91%)

■ Full scope for group audit purposes 2024

■ Full scope for group audit purposes 2023

■

Residual components

Group revenue

99%

(2023: 98%)

Group pro�t before tax from

continuing operations excluding

non-underlying items

Group total assets

from continuing operations

Group materiality

£2.5m(2022:£2.5m)

DFS Furniture plc Annual Report & Accounts 2024

Governance

INDEPENDENT AUDITOR’S REPORT CONTINUED

Our conclusions based on this work:

– we consider that the directors’ use of the going

concern basis of accounting in the preparation of

thefinancialstatementsisappropriate;

– wehavenotidentified,andconcurwiththedirectors’

assessment that there is not, a material uncertainty

related to events or conditions that, individually

orcollectively,maycastsignificantdoubtonthe

Group’s or parent Company’s ability to continue as

a going concern for the going concern period;

– we have nothing material to add or draw attention

to in relation to the directors’ statement in note 1 to

theconsolidatedfinancialstatementsandnote1to

theparentCompany’sfinancialstatementsonthe

use of the going concern basis of accounting with

nomaterialuncertaintiesthatmaycastsignificant

doubt over the Group and parent Company’s use of

that basis for the going concern period. We found

the Group going concern disclosures in note 1 of

theconsolidatedfinancialstatementsandnote1

totheparentCompany’sfinancialstatementsto

be acceptable; and

– the related statement under the Listing Rules set

out on page 90 is materially consistent with the

financialstatementsandourauditknowledge.

However, as we cannot predict all future events or

conditions and as subsequent events may result in

outcomes that are inconsistent with judgements that

were reasonable at the time they were made, the above

conclusions are not a guarantee that the Group or the

parent Company will continue in operation.

5. Fraud and breaches of laws and regulations –

ability to detect

Identifying and responding to risks of material

misstatement due to fraud

To identify risks of material misstatement due to fraud

(“fraud risks”) we assessed events or conditions that

could indicate an incentive or pressure to commit fraud

or provide an opportunity to commit fraud. Our risk

assessment procedures included:

– Enquiring of Directors, the Audit and Risk Committee,

Internal Audit, general counsel and Company

SecretaryastotheGroup’shigh-levelpoliciesand

procedures to prevent and detect fraud, including

the internal audit function, and the Group’s channel

for “whistleblowing”, as well as whether they have

knowledge of any actual, suspected or alleged fraud.

– Reading Board of Directors, Audit and Risk

Committee, Responsible and Sustainable Business

Committee, Remuneration Committee and

Nomination Committee minutes.

– Considering the Long Term Incentive Plan, Deferred

Bonus Scheme, Restricted Share Plan and Save

AsYouEarnremunerationincentiveschemesand

performance targets for management.

– Using analytical procedures to identify any unusual

or unexpected relationships.

– Consultation with our own forensic professionals

regardingtheidentifiedfraudriskandthedesignof

the audit procedures planned in response to these.

This involved the forensic professionals attending

the Risk Assessment and Planning Discussion

and discussion between the engagement partner,

engagement quality control reviewer and the

forensic professional.

Wecommunicatedidentifiedfraudrisksthroughout

the audit team and remained alert to any indications

of fraud throughout the audit.

As required by auditing standards, and taking into

accountpossiblepressurestomeetprofittargetsand

our overall knowledge of the control environment, we

perform procedures to address the risk of management

override of controls, in particular the risk that Group and

component management may be in a position to make

inappropriate accounting entries and the risk of bias in

accounting estimates such as impairment and provisions

assumptions. On this audit we do not believe there is a

fraud risk related to revenue recognition because there

is little opportunity to fraudulently misstate revenue

based on the high volume of low value transactions.

Furthermore,thereisnotsufficientincentiveor

motivation to create a fraud risk in relation to cash

sales as the level of cash paid at stores is immaterial.

We did not identify any additional fraud risks.

In determining the audit procedures we took into

account the results of our evaluation and testing of the

operatingeffectivenessofsomeoftheGroup-wide

fraud risk management controls set out on page 63

within the Audit and Risk Committee report.

We also performed procedures including:

– Identifying journal entries to test for all full scope

components based on risk criteria and comparing

theidentifiedentriestosupportingdocumentation.

These included unusual postings to revenue;

unusual cash journals; manual journal entries

postedbyuserswithlessthanfivepostingsinthe

period; manual entries posted in period thirteen;

unusual postings to borrowings; postings made by

orreferencingspecificemployees.

– Assessing whether the judgements made in making

accounting estimates are indicative of a potential bias.

Identifying and responding to risks of material

misstatement due to non-compliance with laws

and regulations

Weidentifiedareasoflawsandregulationsthatcould

reasonablybeexpectedtohaveamaterialeffecton

thefinancialstatementsfromourgeneralcommercial

and sector experience, through discussion with the

directors and other management (as required by

auditing standards), and from inspection of the Group’s

regulatory and legal correspondence and discussed

with the directors and other management the policies

and procedures regarding compliance with laws and

regulations.

As the Group is regulated, our assessment of risks

involved gaining an understanding of the control

environment including the entity’s procedures for

complying with regulatory requirements, in particular

the current regulatory focus on Consumer Duty with

regardstotheprovisionofinterest-freecreditand

product aftercare insurance.

Wecommunicatedidentifiedlawsandregulations

throughout our team and remained alert to any

indicationsofnon-compliancethroughouttheaudit.

Thepotentialeffectoftheselawsandregulations

onthefinancialstatementsvariesconsiderably.

Firstly, the Group is subject to laws and regulations

thatdirectlyaffectthefinancialstatementsincluding

financialreportinglegislation(includingrelated

companieslegislation),distributableprofitslegislation

and taxation legislation and we assessed the extent of

compliance with these laws and regulations as part of

ourproceduresontherelatedfinancialstatementitems.

Secondly, the Group is subject to many other laws

andregulationswheretheconsequencesofnon-

compliancecouldhaveamaterialeffectonamounts

ordisclosuresinthefinancialstatements,forinstance

throughtheimpositionoffinesorlitigation.Weidentified

the following areas as those most likely to have such

aneffect:healthandsafety,dataprotectionlaws,anti-

bribery, employment law, pension regulations, regulatory

capital and liquidity and certain aspects of company

legislationrecognisingthefinancialandregulatednature

of the Group’s activities and its legal form. Auditing

standards limit the required audit procedures to identify

non-compliancewiththeselawsandregulationsto

enquiry of the directors and other management and

inspection of regulatory and legal correspondence, if any.

Therefore, if a breach of operational regulations

is not disclosed to us or evident from relevant

correspondence, an audit will not detect that breach.

Context of the ability of the audit to detect fraud

or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an

unavoidable risk that we may not have detected some

materialmisstatementsinthefinancialstatements,

even though we have properly planned and performed

our audit in accordance with auditing standards.

Forexample,thefurtherremovednon-compliance

with laws and regulations is from the events and

transactionsreflectedinthefinancialstatements,

the less likely the inherently limited procedures required

by auditing standards would identify it.

In addition, as with any audit, there remained a

higherriskofnon-detectionoffraud,asthesemay

involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal controls.

Our audit procedures are designed to detect material

misstatement. We are not responsible for preventing

non-complianceorfraudandcannotbeexpectedto

detectnon-compliancewithalllawsandregulations.

6. We have nothing to report on the other

information in the Annual Report

The directors are responsible for the other information

presented in the Annual Report together with the

financialstatements.Ouropiniononthefinancial

statements does not cover the other information and,

DFS Furniture plc Annual Report & Accounts 2024

Governance

INDEPENDENT AUDITOR’S REPORT CONTINUED

accordingly, we do not express an audit opinion or,

except as explicitly stated below, any form of assurance

conclusion thereon.

Our responsibility is to read the other information

and, in doing so, consider whether, based on our

financialstatementsauditwork,theinformation

therein is materially misstated or inconsistent with the

financialstatementsorourauditknowledge.Based

solelyonthatworkwehavenotidentifiedmaterial

misstatements in the other information.

Strategic report and directors’ report

Based solely on our work on the other information:

– wehavenotidentifiedmaterialmisstatements

in the strategic report and the directors’ report;

– in our opinion the information given in those reports

forthefinancialyearisconsistentwiththefinancial

statements; and

– in our opinion those reports have been prepared

in accordance with the Companies Act 2006.

Directors’ remuneration report

In our opinion the part of the Directors’ Remuneration

Report to be audited has been properly prepared in

accordance with the Companies Act 2006.

Disclosures of emerging and principal risks

and longer-term viability

We are required to perform procedures to identify

whether there is a material inconsistency between

the directors’ disclosures in respect of emerging and

principal risks and the viability statement, and the

financialstatementsandourauditknowledge.

Based on those procedures, we have nothing material

to add or draw attention to in relation to:

– thedirectors’confirmationwithintheViability

Reporting on page 28 that they have carried out a

robust assessment of the emerging and principal

risks facing the Group, including those that would

threaten its business model, future performance,

solvency and liquidity;

– the Risks and Uncertainties disclosures describing

theserisksandhowemergingrisksareidentified,

and explaining how they are being managed and

mitigated; and

– the directors’ explanation in the Viability Reporting

of how they have assessed the prospects of the

Group, over what period they have done so and

why they considered that period to be appropriate,

and their statement as to whether they have a

reasonable expectation that the Group will be able

to continue in operation and meet its liabilities as

they fall due over the period of their assessment,

including any related disclosures drawing attention

toanynecessaryqualificationsorassumptions.

We are also required to review the Viability Reporting,

set out on page 28 under the Listing Rules. Based on

the above procedures, we have concluded that the

above disclosures are materially consistent with the

financialstatementsandourauditknowledge.

Our work is limited to assessing these matters in the

context of only the knowledge acquired during our

financialstatementsaudit.Aswecannotpredictall

future events or conditions and as subsequent events

may result in outcomes that are inconsistent with

judgements that were reasonable at the time they

were made, the absence of anything to report on these

statements is not a guarantee as to the Group’s and

parentCompany’slonger-termviability.

Corporate governance disclosures

We are required to perform procedures to identify

whether there is a material inconsistency between

the directors’ corporate governance disclosures and

thefinancialstatementsandourauditknowledge.

Based on those procedures, we have concluded that

each of the following is materially consistent with the

financialstatementsandourauditknowledge:

– the directors’ statement that they consider that

theannualreportandfinancialstatementstaken

as a whole is fair, balanced and understandable,

and provides the information necessary for

shareholders to assess the Group’s position

and performance, business model and strategy;

– the section of the annual report describing the work

of the Audit and Risk Committee, including the

significantissuesthattheAuditandRiskCommittee

consideredinrelationtothefinancialstatements,

and how these issues were addressed; and

– the section of the annual report that describes

thereviewoftheeffectivenessoftheGroup’srisk

management and internal control systems.

We are required to review the part of the Corporate

Governance Statement relating to the Group’s

compliance with the provisions of the UK Corporate

GovernanceCodespecifiedbytheListingRulesfor

our review. We have nothing to report in this respect.

7. We have nothing to report on the other

matters on which we are required to report

by exception

Under the Companies Act 2006, we are required to

report to you if, in our opinion:

– 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

– theparentCompanyfinancialstatementsandthe

part of the Directors’ Remuneration Report to be

audited are not in agreement with the accounting

records and returns; or

– certain disclosures of directors’ remuneration

specifiedbylawarenotmade;or

– we have not received all the information and

explanations we require for our audit.

We have nothing to report in these respects.

8. Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out

on page 91, the directors are responsible for: the

preparationofthefinancialstatementsincludingbeing

satisfiedthattheygiveatrueandfairview;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;

assessing the Group and 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 they either intend to

liquidate the Group or the parent Company or to cease

operations, or have no realistic alternative but to do so.

Auditor’s responsibilities

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 our opinion in an auditor’s report.

Reasonable assurance is a high level of assurance,

but does not 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 aggregate, they could reasonably

beexpectedtoinfluencetheeconomicdecisionsof

userstakenonthebasisofthefinancialstatements.

A fuller description of our responsibilities is

provided on the FRC’s website at www.frc.org.uk/

auditorsresponsibilities.

TheCompanyisrequiredtoincludethesefinancial

statementsinanannualfinancialreportprepared

under Disclosure Guidance and Transparency Rule

4.1.17R and 4.1.18R. This auditor’s report provides no

assuranceoverwhethertheannualfinancialreporthas

been prepared in accordance with those requirements.

9. The purpose of our audit work and to whom

we owe our responsibilities

This report is made solely to the Company’s members,

as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been

undertaken so that we might state to the Company’s

members those matters we are required to state to

them in an auditor’s report and for no other purpose.

To the fullest extent permitted by law, we do not accept

or assume responsibility to anyone other than the

Company and the Company’s members, as a body,

for our audit work, for this report, or for the opinions

we have formed.

GILL HOPWOOD-BELL

(Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

1 St Peter’s Square

Manchester

M2 3AE

25 September 2024

DFS Furniture plc Annual Report & Accounts 2024

Financial Statements

Financial

Statements

Contents

99 Consolidated

income statement

100 Consolidated statement

of comprehensive income

101 Consolidated balance sheet

102 Consolidated statement

of changes in equity

103 Consolidated

cashflowstatement

104 Notes to the consolidated

financialstatements

135 Company balance sheet

136 Company statement of

changes in equity

137 Notes to the Company

financialstatements

		53 weeks to 30 June 2024			52 weeks to 25 June 2023
		Underlying	Non-underlying	Total	Underlying	Non-underlying	Total
	Note	£m	£m	£m	£m	£m	£m
Gross sales 1	1, 2	1,311.8	–	1,311.8	1,423.6	–	1,423.6
Revenue	2	987.1	–	987.1	1,088.9	–	1,088.9
Cost of sales		(436.3)	–	(436.3)	(496.7)	–	(496.7)
Gross profit		550.8	–	550.8	592.2	–	592.2
Selling and distribution costs		(342.9)	–	(342.9)	(364.6)	–	(364.6)
Administrative expenses		(65.9)	(8.9)	(74.8)	(70.2)	0.5	(69.7)
Operating profit/(loss) before depreciation, amortisation and impairment	3	142.0	(8.9)	133.1	157.4	0.5	157.9
Depreciation		(77.8)	–	(77.8)	(80.5)	–	(80.5)
Amortisation		(13.7)	–	(13.7)	(11.6)	–	(11.6)
Impairment		(0.3)	–	(0.3)	(2.0)	–	(2.0)
Operating profit/(loss)	2, 3	50.2	(8.9)	41.3	63.3	0.5	63.8
Finance income	5	0.4	–	0.4	0.2	–	0.2
Finance expenses	5	(41.5)	(1.9)	(43.4)	(34.3)	–	(34.3)
Profit/(loss) before tax		9.1	(10.8)	(1.7)	29.2	0.5	29.7
Taxation	6	(5.7)	2.7	(3.0)	(6.6)	(0.1)	(6.7)
Profit/(loss) for the period from continuing operations		3.4	(8.1)	(4.7)	22.6	0.4	23.0
Profit/(loss)fortheperiodfromdiscontinuedoperations	29	–	0.3	0.3	(0.3)	3.5	3.2
Profit/(loss) for the period		3.4	(7.8)	(4.4)	22.3	3.9	26.2
Earnings per share
Basic	7
– from continuing operations		1.5p	(3.5)p	(2.0)p	9.6p	0.2p	9.8p
– from discontinued operations		–	0.1p	0.1p	(0.2)p	1.5p	1.3p
Total		1.5p	(3.4)p	(1.9)p	9.4p	1.7p	11.1p
Diluted	7
– from continuing operations		1.5p	(3.5)p	(2.0)p	9.5p	0.2p	9.7p
– from discontinued operations		–	0.1p	0.1p	(0.2)p	1.5p	1.3p
Total		1.5p	(3.4)p	(1.9)p	9.3p	1.7p	11.0p

1. Refertopages19and20forAPMdefinitions.

CONSOLIDATED INCOME STATEMENT FOR 53 WEEKS ENDED 30 JUNE 2024

(52 WEEKS ENDED 25 JUNE 2023)

100

DFS Furniture plc Annual Report & Accounts 2024

Financial Statements

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR 53 WEEKS ENDED 30 JUNE 2024

(52 WEEKS ENDED 25 JUNE 2023)

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
(Loss)/profit for the period	(4.4)	26.2
Other comprehensive income
Itemsthatareormaybereclassifiedsubsequentlytoprofitorloss:
Effectiveportionofchangesinfairvalueofcashflowhedges	5.1	(8.7)
Netchangeinfairvalueofcashflowhedgesreclassifiedtoprofitorloss
Recognised in cost of sales	(1.3)	(13.7)
Incometaxonitemsthatareormaybereclassifiedsubsequentlytoprofitorloss	(1.3)	5.9
Other comprehensive income for the period, net of income tax	2.5	(16.5)
Total comprehensive income for the period	(1.9)	9.7
Total comprehensive income for the period attributable to owners of the parent
– from continuing operations	(2.2)	6.5
– from discontinued operations	0.3	3.2
	(1.9)	9.7

101

DFS Furniture plc Annual Report & Accounts 2024

Financial Statements

CONSOLIDATED BALANCE SHEET

AT 30 JUNE 2024 (25 JUNE 2023)

		30 June 2024	25 June 2023
	Note	£m	£m
Non-current assets
Property, plant and equipment	8	83.8	97.4
Right of use assets	8, 9	315.0	312.6
Intangible assets	10	532.9	536.7
Deferred tax assets	13	10.8	15.5
		942.5	962.2
Current assets
Inventories	14	59.0	55.8
Otherfinancialassets	12	0.1	0.7
Trade and other receivables	15	12.0	11.1
Current tax assets		6.1	2.7
Cash and cash equivalents (excluding bank overdrafts)		26.8	26.7
		104.0	97.0
Total assets		1,046.5	1,059.2
Current liabilities
Bank overdraft		(2.6)	–
Trade payables and other liabilities	16	(209.3)	(224.9)
Lease liabilities	9	(75.1)	(84.1)
Provisions	20	(9.7)	(6.2)
Otherfinancialliabilities	17	(1.2)	(6.7)
		(297.9)	(321.9)
Non-current liabilities
Interest bearing loans and borrowings	18	(187.4)	(165.8)
Lease liabilities	9	(326.6)	(327.3)
Provisions	20	(5.6)	(6.9)
Otherfinancialliabilities	17	–	(0.2)
		(519.6)	(500.2)
Total liabilities		(817.5)	(822.1)
Net assets		229.0	237.1
Equity attributable to owners of the Company
Share capital	22	23.6	24.1
Share premium	22	40.4	40.4
Merger reserve	22	18.6	18.6
Capital redemption reserve	22	360.1	359.6
Treasury shares	22	(2.9)	(10.1)
EmployeeBenefitTrustshares	22	(5.9)	(6.6)
Cashflowhedgingreserve	22	(1.1)	(4.9)
Retained earnings		(203.8)	(184.0)
Total equity		229.0	237.1

These financial statements were approved by

the board of directors on 25 September 2024

and were signed on its behalf by:

TIM STACEY

Chief Executive Officer

JOHN FALLON

Chief Financial Officer

Company registered number: 07236769

102

DFS Furniture plc Annual Report & Accounts 2024

Financial Statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

				Capital redemption		EmployeeBenefit	Cashflowhedging
	Share capital	Share premium	Merger reserve	reserve	Treasury shares	Trust shares	reserve	Retained earnings	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
Balance at 26 June 2022	25.9	40.4	18.6	357.8	(4.9)	(6.9)	17.5	(179.5)	268.9
Profitfortheyear	–	–	–	–	–	–	–	26.2	26.2
Other comprehensive income/(expense)	–	–	–	–	–	–	(22.4)	5.9	(16.5)
Total comprehensive income for the year	–	–	–	–	–	–	(22.4)	32.1	9.7
Dividends	–	–	–	–	–	–	–	(12.1)	(12.1)
Purchase of own shares	–	–	–	–	(30.9)	–	–	–	(30.9)
EmployeeBenefitTrustsharesissued	–	–	–	–	–	0.3	–	(0.3)	–
Settlement of share based payments	–	–	–	–	–	–	–	(0.3)	(0.3)
Share based payments	–	–	–	–	–	–	–	1.8	1.8
Cancellation of treasury shares	(1.8)	–	–	1.8	25.7	–	–	(25.7)	–
Balance at 25 June 2023	24.1	40.4	18.6	359.6	(10.1)	(6.6)	(4.9)	(184.0)	237.1
Profitfortheyear	–	–	–	–	–	–	–	(4.4)	(4.4)
Other comprehensive income/(expense)	–	–	–	–	–	–	3.8	(1.3)	2.5
Total comprehensive income for the year	–	–	–	–	–	–	3.8	(5.7)	(1.9)
Dividends	–	–	–	–	–	–	–	(9.4)	(9.4)
EmployeeBenefitTrustsharesissued	–	–	–	–	–	0.7	–	(0.7)	–
Share based payments	–	–	–	–	–	–	–	3.2	3.2
Cancellation of treasury shares	(0.5)	–	–	0.5	7.2	–	–	(7.2)	–
Balance at 30 June 2024	23.6	40.4	18.6	360.1	(2.9)	(5.9)	(1.1)	(203.8)	229.0

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Financial Statements

CONSOLIDATED CASH FLOW STATEMENT FOR 53 WEEKS ENDED 30 JUNE 2024

(52 WEEKS ENDED 25 JUNE 2023)

		53 weeks to	52 weeks to
		30 June 2024	25 June 2023
	Note	£m	£m
Net cash from operating activities	26	115.9	121.7
Investing activities
Proceeds from sale of property, plant and equipment		1.4	1.3
Interest received		0.4	0.2
Acquisition of property, plant and equipment	8	(11.6)	(20.4)
Acquisition of other intangible assets	10	(10.0)	(14.5)
Net cash used in investing activities		(19.8)	(33.4)
Financing activities
Interest paid		(18.8)	(10.5)
Interest paid on lease liabilities	9	(24.8)	(23.5)
Payment of lease liabilities	9	(67.6)	(61.6)
Net (repayment)/drawdown of senior revolving credit facility	27	(28.0)	72.0
Drawdown of senior secured notes	27	50.0	–
Purchase of treasury shares		–	(30.9)
Ordinary dividends paid		(9.4)	(12.1)
Net cash used in financing activities		(98.6)	(66.6)
Net (decrease)/increase in cash and cash equivalents	27	(2.5)	21.7
Cash and cash equivalents at beginning of period	27	26.7	5.0
Cash and cash equivalents (including bank overdraft) at end of period	27	24.2	26.7

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1 Accounting policies

DFS Furniture plc (‘the Company’) is a company

incorporated and domiciled in England, in the

United Kingdom (Company number: 07236769). The

address of the registered office is 1 Rockingham Way,

Redhouse Interchange, Adwick-Le-Street, Doncaster,

South Yorkshire, DN6 7NA .

The consolidated financial statements consolidate

those of the Company and its subsidiaries (together

referred to as ‘the Group’). The parent company

financial statements present information about the

Company as a separate entity and not about its group.

The accounting policies set out below have, unless

otherwise stated, been applied consistently to all

periods presented in these consolidated financial

statements. Judgements made by the directors, in

the application of these accounting policies that have

a material effect on the financial statements and

estimates with a significant risk of material adjustment

in the next year are discussed in note 1.20.

1.1 Basis of preparation

The consolidated financial statements have been

prepared and approved by the directors in accordance

with international accounting standards in accordance

with UK-adopted international accounting standards

(‘UK-adopted IFRS’). The financial statements are

prepared on the historical cost basis except for certain

financial instruments and share based payment

charges which are measured at their fair value.

The financial statements are for the 53 weeks to

30 June 2024 (last year 52 weeks to 25 June 2023).

The Company has elected to prepare its parent company

financial statements in accordance with Financial

Reporting Standard 101 Reduced Disclosure Framework

(‘FRS 101’); these are presented on pages 135 to 139.

Going concern

The financial statements are prepared on a going

concern basis, which the directors believe to be

appropriate for the following reasons.

The Company heads a group which has a £200.0m

revolving credit facility with a consortium of lending

banks maturing in September 2027 with a further

16 month extension option for £175.0m of the facility,

and £50.0m of private placement debt, £25.0m of

which matures in September 2028 and £25.0m in

September 2030. At 18 September 2024, £63.0m

of the revolving credit facility remained undrawn,

in addition to cash in hand, at bank of £5.7m.

Covenants applicable to both the revolving credit facility

and the private placement debt are: 3.0x net debt/

EBITDA and 1.5x fixed charge cover, and are assessed

on a six-monthly basis at June and December. Recent

discussions with the consortium of lending banks have

resulted in a modification to the covenants to 3.9x net

debt/EBITDA and 1.3x fixed charge cover for the half

yearly assessment at H1 FY25, 3.7x and 1.3x for the

FY25 year end assessment, with leverage returning

to 3.0x and fixed charge increasing to 1.4x for the

H1 FY26 assessment.

The Directors have prepared cash flow forecasts and

performed a going concern assessment for the Group

covering a period of at least twelve months from the

date of approval of these financial statements (the

‘going concern assessment period’), which indicate

that the Group will be in compliance with the agreed

covenants. These forecasts include a number of

assumptions in relation to: market size (assumed to

grow by 2% in FY25, from an already low base relative

to pre-pandemic levels) and the resulting order intake

volumes for the Group; inflationary impacts on gross

margin and other costs; sector-wide manufacturing

and supply chain capacities; and achievement of cost

savings in line with the Group’s strategic plans.

The Directors have also prepared severe but plausible

downside sensitivity scenarios which cover the

same going concern assessment period as the base

case. These scenarios include significantly reduced

customer spending, impacts on gross margin and

other costs from inflationary cost pressures, and a

combination of these scenarios. The Directors have

also performed reverse stress testing analysis to

confirm that circumstances resulting in a covenant

breach were beyond those considered plausible.

As part of this analysis, the Directors have considered

mitigating actions within the Group’s control which

could reduce the impact of these severe but plausible

downside scenarios. These mitigating actions include

reducing discretionary operating expenditure, a pause

on expansionary capital investment, a reduction or

pause in dividend payments, and other measures to

protect cash balances. These forecast cash flows,

considering the ability and intention of the Directors

to implement mitigating actions should they need to,

indicate that there remains sufficient headroom in

the forecast period for the Group to operate within

the committed facilities and to comply with all relevant

revised banking covenants during the going concern

assessment period.

The Directors have considered all of the factors noted

above, including the inherent uncertainty in forecasting

the impact of the current economic and political

environment, and are confident that the Group has

adequate resources to continue to meet all liabilities

as and when they fall due for at least twelve months

from the date of approval of these financial statements.

Accordingly, the financial statements are prepared on a

going concern basis.

1.2 Basis of consolidation

The consolidated financial statements incorporate

the financial statements of the Company and entities

controlled by the Company (its subsidiaries). Control

exists when the Group is exposed to or has rights to

variable returns from its investment with the investee

and has the ability to affect those returns through its

power over the investee. In assessing control, potential

voting rights that are currently exercisable or

convertible are taken into account.

The results of subsidiaries acquired or disposed of

during the period are included in the consolidated

income statement from the date that control

commences until the date that control ceases.

The acquisition method is used to account for the

acquisition of subsidiaries. All intra-group transactions,

balances, income and expenses are eliminated on

consolidation.

1.3 Climate change

As noted in the Responsibility and sustainability report

the Group is committed to addressing climate-related

risks and is focused on reducing its environmental

impact.

The potential impact of climate change has been

considered in the preparation of these financial

statements, including in the carrying values of goodwill

and tangible assets, the measurement of financial

instruments, and in relation to the Group’s going

concern and viability assessments. No material impact

was noted on the consolidated financial statements

in relation to climate change. The potential impact will

continue to be assessed on an ongoing basis.

1.4 Gross sales and revenue

Revenue is measured at the fair value of the

consideration receivable by the Group for the provision

of goods to external customers, being the total amount

payable by the customer (‘gross sales’) less: value added

and other sales taxes, the costs of obtaining interest

free credit on behalf of customers and the amounts

payable to third parties relating to products for which the

Group acts as an agent. For products where the Group

acts as an agent, the amount recognised in revenue is

the net fee receivable by the Group.

Many of the Group’s customers choose to take

advantage of the interest-free credit that the Group

makes available. This credit is provided by external

finance houses, who pay the Group the gross sales

value of the customer order on delivery, less a fee for

taking responsibility for payment collection and bearing

the full credit risk for any future default by the customer.

The fee due to the finance house varies depending on

the amount borrowed by the customer, the length of

the repayment term and the applicable SONIA rate at

the time of the transaction.

In calculating reported revenue in accordance with

IFRS the Group is required to deduct these fees from

the value of the customer order. Reported revenue

will therefore vary depending on the proportion of

customers who choose to take up the interest free

credit offer, the average duration of the interest free

loan period and the prevailing interest rates.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AT 30 JUNE 2024

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Financial Statements

For the purposes of managing its business the Group

focuses on gross sales, which is defined as the total

amount payable by customers, inclusive of VAT

and other sales taxes and prior to any accounting

adjustments for interest-free credit fees or aftercare

product costs. The directors believe gross sales is a

more transparent measure of the activity levels and

performance of its stores and online channels as it is

not affected by customer preferences on payment

options. Accordingly gross sales is presented in this

annual report in addition to statutory revenue, with

a reconciliation between the two measures provided

in note 2 to the financial statements.

Both gross sales and revenue are stated net of returns

and sales allowances, and are recognised when goods

have been delivered to the customer, the revenue and

costs in respect of the transaction can be measured

reliably and collectability is reasonably assured.

Receipt of goods by the customer represents the

completion of the Group’s performance obligation

under the sales contract and payment is received

prior to or immediately after delivery. Expected future

costs of satisfying the Group’s obligations under

long-term product guarantees offered to customers

are determined at the time of the sale, provided for

separately (note 20) and charged to cost of sales.

1.5 Government grants

Government grants are recognised where there is

reasonable assurance that the Group will comply with all

attached conditions and that the grant will be received.

When the grant relates to an expense item, it is

recognised as a deduction from the related expense

within the period it becomes receivable.

1.6 Expenses

Non-underlying items

Items that are material in size, unusual or non-recurring

in nature are disclosed separately in the income

statement in order to provide an indication of the

Group’s underlying business performance. The principal

items which may be included as non-underlying are:

– significant profit or loss on the disposal of non-

current assets;

– significant impairment charges;

– significant non-recurring tax charges or credits;

– costs associated with significant corporate, financial

or operating restructuring, including acquisitions; and

– initial costs of establishing operations in new

geographical territories.

Material finance income or expenses associated with

significant changes in the Group’s borrowings are

disclosed separately as non-underlying items below

operating profit.

Royalty payments

Royalties payable to brand partners on sales of branded

products are charged to cost of sales when the related

product is delivered to the customer.

Finance income and expenses

Finance expenses comprise interest payable, finance

charges on lease liabilities recognised in profit or loss

using the effective interest method and unwinding

of the discount on provisions and other liabilities

measured at present value. Finance income comprises

interest receivable on funds invested, dividend income,

and net foreign exchange gains and losses.

Interest income and interest payable is recognised in

profit or loss as it accrues, using the effective interest

method. Dividend income is recognised in the income

statement on the date the Group’s right to receive

payments is established.

1.7 Employee benefits

Defined contribution plans

Payments to defined contribution pension plans are

recognised as an expense in the income statement

as they fall due.

Short-term benefits

Short-term employee benefit obligations are

measured on an undiscounted basis and are expensed

as the related service is provided.

Share based payments

The fair value of equity settled share based payments

is recognised as an expense over the vesting period

of the related awards, with a corresponding increase

in equity. Fair values are calculated using option pricing

models appropriate to the terms and conditions of the

awards. The amount charged as an expense is regularly

reviewed and adjusted to reflect the achievement of

service and non-market based performance conditions.

1.8 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 a business combination, or items recognised directly

in equity or other comprehensive income.

Current tax is the expected tax payable or receivable

on the taxable income or loss for the period, using tax

rates enacted or substantively enacted at the balance

sheet date, and any adjustment to tax payable in

respect of previous years.

Deferred tax is provided on temporary differences

between the carrying amounts of assets and liabilities

for financial reporting purposes and the amounts

used for taxation purposes. The following temporary

differences are not provided for: the initial recognition

of goodwill; the initial recognition of assets or liabilities

in a transaction that is not a business combination

and that affects neither accounting nor taxable profit

or loss, and differences relating to investments in

subsidiaries to the extent that they will probably not

reverse in the foreseeable future. The amount of

deferred tax provided is based on the expected manner

of realisation or settlement of the carrying amount

of assets and liabilities, using tax rates enacted or

substantively enacted at the balance sheet date.

At interim reporting periods the tax charge is calculated

in accordance with IAS 34, adjusted for material non-

taxable items.

Deferred tax assets are recognised on deductible

temporary differences only to the extent that it is

probable that future taxable profits will be available

against which they can be utilised. Deferred tax assets

are reviewed at each reporting date and are reduced to

the extent that it is no longer probable that the related

tax benefit will be realised.

1.9 Foreign currency

Transactions in foreign currencies are translated to

the respective functional currencies of Group entities

at the foreign exchange rate ruling at the date of the

transaction.

Monetary assets and liabilities denominated in foreign

currencies at the balance sheet date are retranslated

to the functional currency at the foreign exchange rate

ruling at that date. Foreign exchange differences arising

on translation are recognised in the income statement

except for effective differences arising on qualifying

cash flow hedges, which are recognised directly in

other comprehensive income.

1.10 Business combinations

Business combinations are accounted for by applying

the acquisition method as at the acquisition date, which

is the date on which control is transferred to the Group.

Goodwill is initially measured at cost, being the excess

of the acquisition cost over the Group’s interest in the

assets and liabilities recognised. When the excess

is negative, a bargain purchase gain is recognised

immediately in profit or loss.

Costs related to the acquisition, other than those

associated with the issue of debt or equity securities,

are expensed as incurred.

Any contingent consideration payable is recognised

at fair value at the acquisition date. If the contingent

consideration is classified as equity, it is not remeasured

and settlement is accounted for within equity.

Otherwise, subsequent changes to the fair value of the

contingent consideration are recognised in profit or loss.

Acquisitions prior to 31 July 2011

(date of transition to IFRSs)

IFRS 1 grants certain exemptions from the full

requirements of Adopted IFRSs in the transition

period. The Group and Company elected not to restate

business combinations that took place prior to 31 July

2011. In respect of acquisitions prior to transition,

goodwill is included at 31 July 2011 on the basis of its

deemed cost, which represents the amount recorded

under UK GAAP which was broadly comparable

save that goodwill was amortised. On transition,

amortisation of goodwill ceased as required by IFRS 1.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

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Financial Statements

1.11 Property, plant and equipment

Property, plant and equipment are stated at cost

less accumulated depreciation and accumulated

impairment losses.

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 is charged to the income statement on a

straight-line basis over the estimated useful life of each

part of an item of property, plant and equipment.

Land is not depreciated. The estimated useful lives

are as follows:

– buildings 50 years

– plant and equipment 3 to 10 years

– motor vehicles 4 years

– leasehold improvements the period of the

lease, or useful life

if shorter

Depreciation methods, useful lives and residual values

are reviewed at each balance sheet date.

1.12 Leases

At the inception of a contract, the Group assesses

whether a contract is, or contains, a lease under IFRS

16. A contract is, or contains, a lease if the contract

conveys the right to control the use of an identified

asset for a period of time in exchange for consideration.

Lease liability – initial recognition

The Group recognises right of use assets and lease

liabilities at the lease commencement date. The

lease liabilities are recognised at the present value of

future lease payments discounted at the incremental

borrowing rate applicable to the lease.

Lease payments included in the measurement of the

lease liability comprise the following:

– fixed payments, including in-substance fixed

payments; and

– amounts expected to be payable under a residual

value guarantee.

Lease liability – subsequent measurement

The lease liability is subsequently increased by the

interest cost arising from the unwind of the discount,

and decreased by the cash lease payments made.

Lease liability – remeasurement

The lease liability is remeasured if:

– there is a change in either the lease term or the

assessment of an option to purchase the underlying

asset. In these circumstances, the lease liability is

remeasured using a revised discount rate; or

– there is a change in the amounts expected to be

payable under a residual guarantee or if there is a

change in future lease payments resulting from

a change in an index or a rate used to determine

those payments. In these circumstances, the

discount rate remains unchanged, unless the

change in lease payments results from a change

in floating interest rates.

In both scenarios, the carrying value of the right of use

asset will generally be adjusted by the amount of the

remeasurement of the lease liability, to the extent that

the right of use asset will be reduced to nil, with any

further adjustment required from the remeasurement

being recorded in profit or loss.

From time to time, a lease may expire without a new

lease being agreed. In such circumstances, if the

Group has not served or received notice under the

terms of the lease, it may continue to occupy the store

whilst a new lease is agreed, referred to as a ‘holdover

arrangement’. Most of the store portfolio is protected

by the Landlord and Tenant Act (1954), under which,

as tenant, the Group has an automatic right to a new

lease subject to certain specific grounds under which

the landlord can cancel. In a holdover arrangement, the

lease typically continues on a rolling basis on the same

financial terms as the previous lease until new terms

are formally agreed. The Group accounts for holdover

arrangements as a modification to the expired lease,

assuming a lease extension of a period equivalent

to the average length of time that, in the Group’s

experience, leases enter a holdover arrangement for,

with no change to lease payments.

Right of use asset – initial recognition

IFRS 16 defines a right of use asset as an asset which

represents a lessee’s right to use an underlying asset for

the lease term. Generally, right of use assets are initially

measured at an amount equal to the lease liability.

Right of use asset – subsequent measurement

Right of use assets are subsequently measured at

initial carrying value:

– less any accumulated depreciation and any

accumulated impairments losses; and

– adjusted for any remeasurement of the lease

liability.

The right of use asset is subsequently depreciated on a

straight line basis from the commencement date to the

end of the lease term. In addition, the right of use asset

is periodically reduced by impairment losses, if any,

and adjusted for certain remeasurements of the

lease liability.

Practical expedients and exemptions used

The Group has opted to apply the following practical

expedients and exemptions:

– use of a single discount rate to a portfolio of leases

with reasonably similar characteristics; and

– recognising lease payments on short term (less

than 12 months) leases and low value leases as

an expense.

1.13 Intangible assets and goodwill

Goodwill

Goodwill is stated at cost less any accumulated

impairment losses. Goodwill is allocated to cash

generating units and is not amortised but is tested

annually for impairment.

Other intangible assets

Expenditure on internally generated goodwill and

brands is recognised in the income statement as

an expense as incurred.

Other intangible assets that are acquired by the Group

are stated at cost less accumulated amortisation and

accumulated impairment losses. Implementation

costs associated with software and cloud computing

arrangements are only capitalised where they relate to

an identifiable asset under the control of the Group .

Amortisation

Amortisation is charged to the income statement

on a straight-line basis over the estimated useful lives

of intangible assets unless such lives are indefinite.

Intangible assets with an indefinite useful life and

goodwill are systematically tested for impairment at

each balance sheet date. Other intangible assets are

amortised from the date they are available for use.

Estimated useful lives are as follows:

– computer software

and website costs 3 years

– acquired brand names 10 to 20 years

1.14 Inventories

Inventories are stated at the lower of cost and net

realisable value and include goods in transit where

ownership of the goods transfers upon shipment.

The cost of finished goods manufactured by the

Group includes direct materials, direct labour and

appropriate overhead expenditure.

1.15 Impairment

The carrying amounts of the Group’s tangible and

intangible assets other than goodwill are reviewed at

each reporting date to determine whether there is any

indication of impairment. If any such indication exists,

then the asset’s recoverable amount is estimated. For

goodwill, and intangible assets that have indefinite

useful lives or that are not yet available for use, the

recoverable amount is estimated each year at the same

time, or when an indicator of impairment is identified.

An impairment loss is recognised if the carrying amount

of an asset exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss.

An impairment loss in respect of goodwill is not

reversed. In respect of other assets, impairment losses

recognised in prior periods are assessed at each

reporting date for any indications that the loss has

decreased or no longer exists. An impairment loss is

reversed if there has been a change in the estimates

used to determine the recoverable amount. An

impairment loss is reversed only to the extent that the

asset’s carrying amount does not exceed the carrying

amount that would have been determined, net of

depreciation or amortisation, if no impairment loss

had been recognised.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

1.16 Provisions

A provision is recognised in the balance sheet when the

Group has a present legal or constructive obligation as

a result of a past event, that can be reliably measured

and it is probable that an outflow of economic benefits

will be required to settle the obligation. Provisions are

determined by discounting the expected future cash

flows at a pre-tax rate that reflects risks specific to

the liability.

Details of provisions recognised are in note 20 and the

related significant estimates and judgements in note

1.20.

1.17 Non-derivative financial instruments

Non-derivative financial instruments comprise

investments in equity and debt securities, trade and

other receivables, cash and cash equivalents, loans

and borrowings, and trade and other payables.

Trade and other receivables

Trade and other receivables are recognised initially at

fair value. Subsequent to initial recognition they are

measured at amortised cost using the effective interest

method, less allowances for expected credit losses.

Trade and other payables

Trade and other payables are recognised initially at

fair value. Subsequent to initial recognition they are

measured at amortised cost using the effective

interest method.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances, call

deposits and restricted cash of £0.3m (2023: £0.6m).

Bank overdrafts are shown within borrowings in current

liabilities in the balance sheet.

Interest-bearing borrowings

Interest-bearing borrowings are recognised initially

at fair value less attributable transaction costs.

Subsequent to initial recognition, interest-bearing

borrowings are stated at amortised cost using the

effective interest method.

1.18 Derivative financial instruments and hedging

Derivative financial instruments

Derivative financial instruments are recognised at fair

value. The gain or loss on remeasurement to fair value is

recognised immediately in profit or loss. However, where

derivatives qualify for hedge accounting, recognition of

any resultant gain or loss depends on the nature of the

item being hedged (see below).

Cash flow hedges

On adoption of IFRS 9, the Group made the election to

continue to apply the hedge accounting requirements

of IAS 39 to all of its hedging relationships. Therefore,

where a derivative financial instrument is designated

as a hedge of the variability in cash flows of a highly

probable forecast transaction, the effective part of

any gain or loss on the derivative financial instrument

is recognised in other comprehensive income and

presented within the hedging reserve. Any ineffective

portion of the hedge is recognised immediately in the

income statement.

When the forecast transaction subsequently results in

the recognition of a non-financial asset or non-financial

liability, the associated cumulative gain or loss remains

in the hedging reserve and is reclassified into profit or

loss in the same period or periods during which the

asset acquired or liability assumed affects profit or loss.

For other cash flow hedges the associated cumulative

gain or loss is removed from equity and recognised in

the income statement in the same period or periods

during which the hedged forecast transaction affects

profit or loss.

When a hedging instrument expires or is sold,

terminated or exercised, or the Group revokes

designation of the hedge relationship but the hedged

forecast transaction is still expected to occur, the

cumulative gain or loss at that point remains in equity

and is recognised in accordance with the above

policy when the transaction occurs. If the hedged

transaction is no longer expected to take place, the

cumulative unrealised gain or loss recognised in equity

is recognised in the income statement immediately .

1.19 Profit or loss from discontinued operations

A discontinued operation is a component of the Group

that either has been disposed of, abandoned, or is

classified as held for sale. A discontinued operation

represents a separate major line of the business or

geographical area of operation. Profit or loss from

discontinued operations comprises the post-tax

profit or loss of discontinued operations and the

post-tax gain or loss recognised on the measurement

to fair value less costs to sell of the disposal group(s)

constituting the discontinued operation (see also note

29). When an operation is classified as a discontinued

operation, the comparative Consolidated Income

Statement is restated as if the operation had been

discontinued from the start of the comparative period.

1.20 Significant areas of estimation and

judgement

In the application of the Group’s accounting policies, the

Directors are required to make judgements, estimates

and assumptions that affect the value of reported

assets, liabilities, revenues and expenses. The estimates

and associated assumptions are based on historical

experience and other relevant factors, but may differ

from actual results. The following significant area of

judgement or estimation arose in the current financial

statements:

Goodwill impairment

Goodwill is tested annually for impairment by

comparing its carrying value to a calculation of the

value in use of the relevant cash-generating units. This

exercise requires estimates to be made of future cash

flows arising from each cash-generating unit and the

appropriate discount rate to apply. Further details of

the key assumptions underlying the calculation are

provided in note 10. The Directors are satisfied that

no impairment exists at 30 June 2024, however a

reasonably possible change in the estimates used in

the assessment could result in the recognition of an

impairment within the next twelve months.

The following are other areas of important estimates

and judgements relating to material balances in the

Group’s financial statements, but which do not meet

the IFRS-defined criteria of a significant estimate:

Going concern

In making the assessment of going concern for the

Group and the Company, the Directors consider a

number of assumptions and estimates relating to the

future performance of the Group, as detailed in note

1.1 of the consolidated financial statements and note

1 of the Company financial statements. The Directors

are satisfied that no severe but plausible change in

these estimates would result in a change in the going

concern assessment of the Group or the Company

and therefore it is not considered a significant estimate

as at 30 June 2024.

Customer guarantees

The Group maintains a provision for its obligations

under long term product guarantees offered to its

customers. In determining the value of this provision

estimates are made of the number of future claims that

will be received and the cost of satisfying those claims.

Further details are provided in note 20. The Directors

are satisfied that no reasonably possible change in

these estimates would result in a material difference

to the value of the provision and therefore it is not

considered a significant estimate as at 30 June 2024.

Net realisable value of inventories

As detailed in note 14, the Group makes estimates of

applicable selling prices to determine the net realisable

value of inventories. The Directors are satisfied that

no reasonably possible change in these estimates

would result in a material difference to the value of the

provision and therefore it is not considered a significant

estimate as at 30 June 2024.

1.21 New accounting standards

There are no new standards, amendments to existing

standards or interpretations that are effective for the

first time in the period ended 30 June 2024 that have

a material impact on the Group’s results.

A number of new, but not yet effective, standards,

amendments to existing standards, and interpretations

have been published by the IASB. None of these have

been adopted early and therefore have not been

applied by the Group in these financial statements.

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Financial Statements

2 Segmental Analysis

The Group’s operating segments under IFRS 8 have

been determined based on management accounts

reports reviewed by the Group Leadership Team.

Segment performance is assessed based upon

brand contribution. Brand contribution is defined as

underlying EBITDA (being earnings before interest,

tax, depreciation, amortisation, impairments and

non-underlying items) excluding property costs

and central administration costs.

The Group reviews and manages the performance of

its operations on a retail brand basis, and the identified

reportable segments and the nature of their business

activities are as follows:

DFS: the retailing of upholstered furniture and

related products through DFS and Dwell

branded stores and websites.

Sofology: the retailing of upholstered furniture and

related products through Sofology branded

stores and website.

Other segments comprises the manufacture of

upholstered furniture and the supply of contract

logistics.

Segment revenue and profit – continuing operations

		External gross sales		Inter-segment sales		Total gross sales
	53 weeks to	52 weeks to	53 weeks to	52 weeks to	53 weeks to	52 weeks to
	30 June 2024	25 June 2023	30 June 2024	25 June 2023	30 June 2024	25 June 2023
	£m	£m	£m	£m	£m	£m
DFS	1,047.0	1,125.5	–	–	1,047.0	1,125.5
Sofology	264.8	298.1	–	–	264.8	298.1
Other segments	–	–	198.2	215.6	198.2	215.6
Eliminations	–	–	(198.2)	(215.6)	(198.2)	(215.6)
Gross sales	1,311.8	1,423.6	–	–	1,311.8	1,423.6

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Total segments gross sales	1,311.8	1,423.6
Less: value added and other sales taxes	(207.3)	(226.2)
Less: costs of interest free credit and aftercare products	(117.4)	(108.5)
Revenue	987.1	1,088.9
Of which:
Furniture sales	935.1	1,033.3
Commission on sales of aftercare products	52.0	55.6
Revenue	987.1	1,088.9

53 weeks to 30 June 2024 – continuing operations

			Other
	DFS	Sofology	Segments	Eliminations	Total
	£m	£m	£m	£m	£m
Revenue	786.5	200.6	198.2	(198.2)	987.1
Cost of sales	(376.0)	(90.5)	(56.1)	86.3	(436.3)
Gross profit	410.5	110.1	142.1	(111.9)	550.8
Selling & distribution costs (excluding property costs)	(224.3)	(58.8)	(114.1)	81.3	(315.9)
Brand contribution (segment profit)	186.2	51.3	28.0	(30.6)	234.9
Property costs					(27.0)
Underlying administrative expenses					(65.9)
Underlying EBITDA					142.0

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

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2 Segmental Analysis continued

52 weeks to 25 June 2023 – continuing operations

			Other
	DFS	Sofology	Segments	Eliminations	Total
	£m	£m	£m	£m	£m
Revenue	858.5	230.4	215.6	(215.6)	1,088.9
Cost of sales	(424.8)	(106.8)	(61.6)	96.5	(496.7)
Gross profit	433.7	123.6	154.0	(119.1)	592.2
Selling & distribution costs (excluding property costs)	(229.0)	(64.5)	(129.3)	88.4	(334.4)
Brand contribution (segment profit)	204.7	59.1	24.7	(30.7)	257.8
Property costs					(30.2)
Underlying administrative expenses					(70.2)
Underlying EBITDA					157.4

		53 weeks to	52 weeks to
		30 June 2024	25 June 2023
	Note	£m	£m
Underlying EBITDA		142.0	157.4
Non-underlying items	3	(8.9)	0.5
Depreciation, amortisation and impairments		(91.8)	(94.1)
Operating profit		41.3	63.8
Finance income		0.4	0.2
Finance expenses		(41.5)	(34.3)
Non-underlying financing costs	5	(1.9)	–
(Loss)/profit before tax		(1.7)	29.7

A geographical analysis of revenue is presented below:

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
United Kingdom	967.4	1,067.7
Republic of Ireland	19.7	21.2
Total revenue	987.1	1,088.9

		Additions to non-current assets		Depreciation, amortisation and impairment
	53 weeks to	52 weeks to	53 weeks to	52 weeks to
	30 June 2024	25 June 2023	30 June 2024	25 June 2023
	£m	£m	£m	£m
DFS	35.5	42.7	67.5	70.1
Sofology	12.2	11.4	18.0	17.6
Other segments	7.9	6.0	6.3	6.4
Total Group	55.6	60.1	91.8	94.1

Additions to non-current assets include both tangible and intangible non-current assets.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

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3 Operating profit – continuing operations

Group operating profit is stated after charging/(crediting):

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Net foreign exchange losses	0.8	1.6
Depreciation on tangible assets (including depreciation on right of use assets)	77.8	80.5
Amortisation of intangible assets	13.7	11.6
Impairments	0.3	2.0
Net gain on disposal of property, plant and equipment	–	(0.8)
Net gain on disposal of right of use assets	(0.6)	(1.2)
Cost of inventories recognised as an expense	435.9	509.1
Write down of inventories to net realisable value	0.3	2.0
Other costs of sales	0.1	(14.4)
Release of provisions (note 20)	(3.4)	(0.9)
Government grants received (business rates relief)	–	(0.2)
Operating lease rentals	–	0.2

Non-underlying items

53 weeks to

30 June 2024

£m

		52 weeks to
		25 June 2023
		£m
Restructuring costs	6.5	–
Land slippage costs	3.1	–
Release of lease guarantee costs	(0.7)	(0.5)
	8.9	(0.5)

The release of the lease guarantee provision relates to the property provisions detailed in note 20.

Auditor’s remuneration

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Audit of these financial statements	0.3	0.3
Audit of the financial statements of Group subsidiaries	0.5	0.5
Amounts receivable by the Company’s auditor and its associates in respect of:
All other services	0.1	0.1
	0.9	0.9

During the period, an amount of £51,400 was receivable by the Company’s auditor in respect of the review of the Group’s interim financial statements (2023: £49,500)

and £nil in respect of other audit related assurance services (2023: £35,000).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

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4 Staff numbers and costs – continuing operations

The average number of persons employed by the Group during the period, analysed by category, was as follows:

		Number of employees
	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
Production	881	1,016
Warehouse and transport	1,341	1,356
Sales and administration	2,871	3,167
	5,093	5,539

The aggregate payroll costs of these persons were as follows:

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Wages and salaries	173.5	177.4
Social security costs	16.8	17.5
Other pension costs	6.5	5.8
	196.8	200.7
Share based payment expense (equity settled)	3.2	1.8
	200.0	202.5

Aggregate remuneration payable to directors in respect of qualifying services was as follows:

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Emoluments	1.4	1.6
Pension contributions	–	–
Gain on exercise of share options	–	–

Two directors accrued retirement benefits under pension schemes in the period (2023: three). All of the directors’ pension contributions were to defined contribution schemes.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

5 Finance income and expense

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Finance income
Interest income on bank deposits	0.4	0.2
Total finance income	0.4	0.2

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Finance expense
Interest payable on senior revolving credit facility	(12.6)	(10.4)
Interest payable on senior secured notes	(3.5)	–
Bank fees	(0.4)	(0.4)
Unwind of discount on provisions	(0.2)	(0.1)
Interest on lease liabilities	(24.8)	(23.4)
Total underlying finance expense	(41.5)	(34.3)
Non-underlying items:
Refinancing costs	(1.9)	–
Total finance expense	(43.4)	(34.3)

Non-underlying finance costs of £1.9m relate to the refinancing of the Group’s credit facilities in September 2023. This includes the write off of unamortised underwriting fees

associated with the old revolving credit facility and professional fees incurred in relation to the arrangement of the new revolving credit facility and senior secured loan notes.

6 Taxation

Recognised in the income statement

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Current tax
Current period	2.4	5.7
Adjustments for prior years	(2.8)	0.1
Current tax (credit)/expense	(0.4)	5.8
Deferred tax
Origination and reversal of temporary differences	(0.5)	2.4
Deferred tax rate change	–	0.4
Adjustments for prior years	3.9	(1.5)
Deferred tax expense	3.4	1.3
Total tax expense in income statement	3.0	7.1
Total tax expense in income statement
– from continuing operations	3.0	6.7
– from discontinued operations	–	0.4
	3.0	7.1

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

6 Taxation continued

Reconciliation of effective tax rate

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Profit before tax for the period from continuing and discontinued operations	(1.4)	33.3
Tax using the UK corporation tax rate of 25% (2023: 20.5%)	(0.4)	6.9
Non-deductible expenses	1.9	2.3
Tax exempt revenues	–	(1.0)
Effect of tax rates in foreign jurisdictions	(0.1)	(0.4)
Recognition of previously unrecognised tax losses	0.1	–
Adjustments in respect of share options	0.4	0.3
Adjustment in respect of prior years	1.1	(1.4)
Impact of change in tax rate on deferred tax balances	–	0.4
Total tax expense	3.0	7.1

The Finance Act 2021, which was substantively enacted in May 2021, included provisions to increase the rate of UK corporation tax from 19% to 25% with effect from 1 April

2023 resulting in the 2023 tax rate of 20.5%.

Deferred taxation is measured at tax rates that are expected to apply in the periods in which temporary timing differences are expected to reverse based on tax rates and laws

that have been enacted or substantively enacted at the balance sheet date. Accordingly, a tax rate of 25% has been applied when calculating deferred tax assets and liabilities

at 30 June 2024 (25% at 25 June 2023).

Income tax recognised in other comprehensive income

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Effective portion of changes in fair value of cash flow hedges	(0.2)	(1.8)
Net change in fair value of cash flow hedges reclassified to profit or loss	1.5	(3.0)
Impact of change in tax rate on deferred tax balances	–	(1.1)
	1.3	(5.9)

The Group is monitoring developments in relation to the Organisation for Economic Co-operation and Development (OECD)/G20 Base Erosion and Profit Shifting (BEPS)

project (‘Pillar Two model rules’). The first accounting period for which these rules will apply to the Group is the period ending 29 June 2025. The Group may be required to pay a

top up tax in the UK on profits earned in jurisdictions where the effective rate of tax is less than 15%. Profits arising in the Republic of Ireland are taxed at 12.5%, so an additional

2.5% tax would be payable on these profits. As such, any top up tax payable under the Pillar Two model rules is not expected to have a material impact on the Group’s overall

income tax charge.

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Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

7 Earnings per share

Statutory earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the financial period attributable to ordinary equity holders of the parent company by the weighted

average number of ordinary shares outstanding during the period. The weighted average number of shares reflects the movements in share capital detailed in note 22 and

the impact of movements in treasury shares held by the Company. Changes in the Company’s capital structure with no corresponding change in resources are reflected

as if they had occurred at the beginning of the earliest period presented.

Diluted earnings per share is calculated using the same net profit or loss for the financial period attributable to ordinary equity holders of the parent company, but increasing

the weighted average number of ordinary shares by the dilutive effect of potential ordinary shares. Potential ordinary shares arise from employee share based payment

arrangements (note 25). Where share based payments are subject to performance conditions, they are included as potential ordinary shares to the extent that the

performance conditions have been met at the reporting date. Details of share based payment vesting conditions are provided in the Director’s Remuneration Report.

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	pence	pence
Basic earnings/(loss) per share
– from continuing operations	(2.0)	9.8
– from discontinued operations	0.1	1.3
Total basic earnings/(loss) per share	(1.9)	11.1
Diluted earnings/(loss) per share
– from continuing operations	(2.0)	9.7
– from discontinued operations	0.1	1.3
Total diluted earnings/(loss) per share	(1.9)	11.0

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
(Loss)/profit for the period attributable to equity holders of the parent company
– from continuing operations	(4.7)	23.0
– from discontinued operations	0.3	3.1
	(4.4)	26.1

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	No.	No.
Weighted average number of shares in issue for basic earnings per share	230,566,306	235,470,857
Dilutive effect of employee share based payment awards	–	1,783,365
Weighted average number of shares in issue for diluted earnings per share	230,566,306	237,254,222

Where a loss has been recorded, the potential ordinary shares would be anti-dilutive, and therefore in this situation the weighted average number of shares used does not

include the dilutive effect of share based payment awards.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

7 Earnings per share continued

Underlying earnings per share

Underlying basic earnings per share and underlying diluted earnings per share are calculated by dividing the profit for the period attributable to ordinary equity holders

of the parent company, as adjusted to exclude the effect of non-underlying items, by the applicable weighted average numbers of ordinary shares.

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Continuing operations
(Loss)/profit for the period attributable to equity holders of the parent company	(4.7)	23.0
Non-underlying (profit)/lossafter tax	8.1	(0.4)
Underlying profit for the period attributable to equity holders of the parent company from continuing operations	3.4	22.6

53 weeks to

		52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Discontinued operations
Profit/(loss)for the period attributable to equity holders of the parent company	0.3	3.1
Non-underlying (profit)/lossafter tax	(0.3)	(3.5)
Underlying loss for the period attributable to equity holders of the parent company from discontinued operations	–	(0.4)

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	No.	No.
Weighted average number of shares in issue for basic earnings per share	230,566,306	235,470,857
Dilutive effect of employee share based payment awards	452,561	1,783,365
Weighted average number of shares in issue for diluted earnings per share	231,018,867	237,254,222

	3 weeks to	52 weeks to
	30 June 2024	25 June 2023
	pence	pence
Underlying basic earnings/(loss) per share
– from continuing operations	1.5	9.6
– from discontinued operations	–	(0.2)
Total underlying basic earnings per share	1.5	9.4
Underlying diluted earnings/(loss) per share
– from continuing operations	1.5	9.5
– from discontinued operations	–	(0.2)
Total underlying diluted earnings per share	1.5	9.3

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Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

8 Property, plant and equipment

	Land and	Plant and	Motor	Right of use
	buildings	equipment	vehicles	assets	Total
	£m	£m	£m	£m	£m
Cost
Balance at 26 June 2022	21.9	182.5	8.7	510.2	723.3
Reclassifications	(8.3)	49.3	8.8	8.3	58.1
Additions	0.1	20.4	0.1	25.0	45.6
Remeasurements	–	–	–	7.0	7.0
Disposals	(0.2)	(15.7)	(5.1)	(26.1)	(47.1)
Balance at 25 June 2023	13.5	236.5	12.5	524.4	786.9
Additions	1.4	10.2	–	30.7	42.3
Remeasurements	–	–	–	29.8	29.8
Disposals	(0.5)	(23.2)	(5.4)	(11.1)	(40.2)
Balance at 30 June 2024	14.4	223.5	7.1	573.8	818.8
Depreciation and impairments
Balance at 26 June 2022	2.1	97.7	7.4	172.2	279.4
Reclassifications	(1.7)	49.3	8.8	1.7	58.1
Depreciation charge for the period	0.4	20.9	0.8	58.4	80.5
Impairments	–	–	–	2.0	2.0
Disposals	(0.2)	(15.3)	(5.1)	(22.5)	(43.1)
Balance at 25 June 2023	0.6	152.6	11.9	211.8	376.9
Depreciation charge for the period	1.9	19.6	0.5	55.8	77.8
Impairments	–	–	–	0.3	0.3
Disposals	(0.1)	(20.4)	(5.4)	(9.1)	(35.0)
Balance at 30 June 2024	2.4	151.8	7.0	258.8	420.0
Net book value
At 26 June 2022	19.8	84.8	1.3	338.0	443.9
At 25 June 2023	12.9	83.9	0.6	312.6	410.0
At 30 June 2024	12.0	71.7	0.1	315.0	398.8

At 30 June 2024 the Group had contracted capital commitments of £7.9m (2023: £9.1m) for which no provision has been made in the financial statements.

Plant and equipment includes leasehold improvements.

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Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

9 Leases

Right of use assets

	Property	Vehicles	Equipment	Total
	£m	£m	£m	£m
Cost
At 26 June 2022	485.7	22.6	1.9	510.2
Reclassifications	8.3	–	–	8.3
Additions	16.3	8.7	–	25.0
Remeasurements	7.0	–	–	7.0
Disposals	(24.0)	(2.1)	–	(26.1)
At 25 June 2023	493.3	29.2	1.9	524.4
Additions	20.9	9.8	–	30.7
Remeasurements	29.8	–	–	29.8
Disposals	(8.8)	(2.3)	–	(11.1)
At 30 June 2024	535.2	36.7	1.9	573.8
Depreciation and impairment
At 26 June 2022	161.2	9.6	1.4	172.2
Reclassifications	1.7	–	–	1.7
Depreciation charge for the period	53.7	4.5	0.2	58.4
Disposals	(20.5)	(2.0)	–	(22.5)
Impairments	2.0	–	–	2.0
At 25 June 2023	198.1	12.1	1.6	211.8
Depreciation charge for the period	50.1	5.6	0.1	55.8
Disposals	(7.3)	(1.8)	–	(9.1)
Impairments	0.3	–	–	0.3
At 30 June 2024	241.2	15.9	1.7	258.8
Net book value
At 26 June 2022	324.5	13.0	0.5	338.0
At 25 June 2023	295.2	17.1	0.3	312.6
At 30 June 2024	294.0	20.8	0.2	315.0

Amounts recognised in the consolidated balance sheet:

	30 June 2024	25 June 2023
	£m	£m
Current lease liabilities	75.1	84.1
Non-current lease liabilities	326.6	327.3

For more information on the maturity of the Group’s lease liabilities, see note 24.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

9 Leases continued

Amounts recognised in the consolidated income statement:

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Interest on lease liabilities	(24.8)	(23.5)
Variable lease payments not included in the measurement of lease liabilities	(0.3)	(0.3)
Income from subleasing right of use assets	0.3	0.4
Expenses relating to short term leases and low value leases	–	(0.3)

Amounts recognised in the consolidated cash flow statement:

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Total cash outflow for lease liabilities	92.4	85.1

Non-cancellable short term lease rentals are payable as follows:

	30 June 2024	25 June 2023
	£m	£m
Less than one year	–	0.6

The Group has entered into short term leases in respect of warehouses and equipment.

At 30 June 2024, future rentals receivable under non-cancellable leases where the Group is the lessor were £1.8m (2023: £2.4m).

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

10 Intangible assets

	Computer
	software	Brand names	Goodwill	Total
	£m	£m	£m	£m
Cost
Balance at 26 June 2022	55.3	14.8	509.3	579.4
Reclassification	0.9	–	–	0.9
Additions	14.5	–	–	14.5
Disposals	(0.1)	–	–	(0.1)
Balance at 25 June 2023	70.6	14.8	509.3	594.7
Additions	10.0	–	–	10.0
Disposals	(0.2)	–	–	(0.2)
Balance at 30 June 2024	80.4	14.8	509.3	604.5
Amortisation and impairments
Balance at 26 June 2022	37.6	7.0	1.0	45.6
Reclassification	0.9	–	–	0.9
Amortisation charge for the period	10.2	1.4	–	11.6
Disposals	(0.1)	–	–	(0.1)
Balance at 25 June 2023	48.6	8.4	1.0	58.0
Amortisation charge for the period	12.3	1.4	–	13.7
Disposals	(0.1)	–	–	(0.1)
Balance at 30 June 2024	60.8	9.8	1.0	71.6
Net book value
At 26 June 2022	17.7	7.8	508.3	533.8
At 25 June 2023	22.0	6.4	508.3	536.7
At 30 June 2024	19.6	5.0	508.3	532.9

Goodwill

The carrying amount of goodwill is allocated to the following cash generating units:

	Goodwill
	30 June 2024	25 June 2023
	£m	£m
DFS Trading Limited	479.9	479.9
Sofology Limited	28.4	28.4
	508.3	508.3

Goodwill is tested annually for impairment on the basis of value in use. The key assumptions underlying the calculations are those regarding expected future sales volumes,

changes in selling prices and direct costs and the discount rate applied. The inputs applied in respect of these key assumptions are based on management experience and

external inputs in relation to market outlook.

Cash flow forecasts are prepared from the latest financial results and internal budgets for the next four years, which take into account external macroeconomic indicators

as well as internal growth expectations for each cash generating unit. Selling prices and related costs are based on past practice and expected future changes in the market.

The base case forecast assumes market growth of 2% in FY25, followed by continued low single digit annual growth in subsequent years. The base case also reflects a

cautious assessment of the anticipated growth in the Group’s market share driven by delivery of our strategic initiatives. Revenue is assumed in line with order intake,

keeping order bank levels relatively consistent across the assessment period.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

10 Intangible assets continued

Gross margin percentage for FY25 is expected to be ahead of FY24 through more effective sourcing and the annualised impact of price increases already implemented.

Other costs reflect anticipated inflationary increases and benefits from specific cost saving initiatives. Capital expenditure is assumed to remain in line with planned

investments and strategic initiatives.

A terminal value was then calculated on the basis of the four year plan and an estimated long-term growth rate for the UK upholstery furniture sector of 2.0% (2023: 2.0%).

These cash flow forecasts were then discounted at pre-tax discount rates of 14.0% to 15.1% (2023: 13.3% to 14.6%). The discount rates are estimated based on the Group’s

weighted average cost of capital (derived from market indices of risk-free rates, market risk premia, peer group analysis and the Group’s own borrowing costs), risk adjusted

for an individual unit’s circumstances. The Group incurs certain overhead costs in respect of support services provided centrally to the CGUs. Such support services include

Finance, Human Resources, Legal, IT and central management support in respect of stewardship and governance. These overhead costs have been allocated to the CGUs

using relative CGU EBITDA as a proxy for the time spent in supporting the CGU.

For DFS and Sofology, the value in use calculations showed a significant headroom between the calculated value in use and the carrying value of goodwill in the financial

statements. A number of sensitivities were then applied to the base case model to assess whether any reasonably possible changes in assumptions could cause an

impairment that would be material to these consolidated financial statements. This analysis applied a number of challenging scenarios, including possible shortfalls in revenue

or gross margin compared to plan, a decrease in the long term growth rate of the UK upholstery market and changes in applicable discount rates. On the basis of this analysis

the Directors concluded that a reasonably possible change in these assumptions would not lead to an impairment being recognised.

Further analysis was then applied to consider simultaneous shortfalls in revenue and in gross margin compared to plan at the reasonably possible levels outlined above.

The outcome of this simultaneous shortfall scenario was that in the event of these reasonably possible scenarios occurring simultaneously, an impairment to the DFS Trading

Limited goodwill would result. Under the base case, recoverable amount exceeds carrying value by £159.8m. If order intake were to fall 4.0% below expectation, and gross margin

were to fall 0.8% points below expectation, an impairment of £44.7m would occur. No reasonably possible scenarios result in an impairment of the Sofology Limited goodwill.

11 Investments in subsidiaries

The following companies are incorporated in England & Wales, with the exception of Coin Retail Limited (Jersey) which is incorporated in Jersey. They are all wholly owned by

the Group and have been consolidated in these financial statements.

	Principal activity
Diamond Holdco 2 Limited 1	Intermediate holding company
Diamond Holdco 7 Limited 1	Intermediate holding company
DFS Furniture Holdings plc 1	Intermediate holding company
DFS Furniture Company Limited 1	Intermediate holding company
DFS Trading Limited 1	Furniture retailer
Sofology Limited 3	Furniture retailer
Sofaworks Limited 1	Dormant
Haydock Furniture Limited 3	Dormant
The Sofa Delivery Company Limited 1	Contract logistics
The Sofa Manufacturing Company Limited 1	Dormant
The Sofa Servicing Company Limited 1	Dormant
Coin Retail Limited (Jersey) 2	Intermediate holding company
Coin Furniture Limited 1	Furniture retailer
DFS Spain Limited 1	Furniture retailer

Registered offices:

1 Rockingham Way, Redhouse Interchange, Adwick-le-Street, Doncaster DN6 7NA

2 26 New Street, St Helier, Jersey, JE2 3RA

3 Ashton Road, Golborne, Warrington, WA3 3UL

Coin Furniture Limited (Company number 08586227) and DFS Spain Limited (Company number 09668511) are exempt from the requirement of the Companies Act relating

to the audit of individual financial statements by virtue of s479A of the Companies Act 2006. DFS Furniture plc will guarantee the debts and liabilities of these entities in

accordance with Section 479C of the Companies Act 2006.

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12 Other financial assets

	30 June 2024	25 June 2023
	£m	£m
Current
Foreign exchange contracts	0.1	0.7

Foreign exchange contracts comprise forward contracts which are used to hedge exchange risk arising from the Group’s overseas purchases (note 24).

13 Deferred tax

Deferred tax assets and liabilities are attributable to the following:

	30 June 2024	25 June 2023
	£m	£m
Fixed asset timing differences	1.8	4.4
IFRS 16	7.8	7.8
Remeasurement of derivatives to fair value	0.3	3.0
Brand names	(1.1)	(1.5)
Share based payments	0.5	0.7
Other temporary differences	1.5	1.1
Net tax assets	10.8	15.5

The deferred tax movement in the period is as follows:

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
At start of period	15.5	10.8
(Charged)/credited to the income statement:
Fixed asset timing differences	(2.6)	0.8
Unwind of IFRS 16 transition impact	(1.4)	(2.8)
Tax losses carried forward	–	(0.4)
Brand names	0.4	0.4
Share based payments	(0.2)	–
Derivatives	–	1.5
Other temporary differences	0.4	(0.7)
Recognised in the statement of comprehensive income	(1.3)	5.9
At end of period	10.8	15.5

Deferred tax assets on losses of £4.7m (2023: £4.7m) have not been recognised as they relate to tax losses carried forward that arose in a jurisdiction in which the Group no

longer trades, so are not anticipated to be utilised .

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14 Inventories

	30 June 2024	25 June 2023
	£m	£m
Raw materials and consumables	6.7	8.9
Finished goods and goods for resale	62.8	62.8
	69.5	71.7
Write-down to net realisable value	(10.5)	(15.9)
	59.0	55.8

In applying its accounting policy for inventory, the Group identifies those items where there is a risk that net realisable value does not exceed cost, due to either the age

or condition of the item. An estimate of the net realisable value of such items is made based on the sale of similar items in the past, taking into account expected future

opportunities for sale, and their carrying value reduced by an appropriate provision.

15 Trade and other receivables

	30 June 2024	25 June 2023
	£m	£m
Trade receivables	6.7	7.7
Prepayments	4.0	3.0
Accrued income	0.1	0.1
Other receivables	1.2	0.3
	12.0	11.1

No interest is charged on trade receivables; the Group bears no credit risk in respect of amounts due from retail customers under interest free credit arrangements. The Group

has assessed the expected credit loss as very low and therefore has made no provision for impairment. Prepayments and accrued income do not include impaired assets.

16 Trade payables and other liabilities

	30 June 2024	25 June 2023
	£m	£m
Current
Payments received on account	40.9	39.1
Trade payables	100.4	97.6
Other creditors including other tax and social security	26.1	34.7
Accruals	41.9	53.5
	209.3	224.9

Payments on account represent contract liabilities under IFRS 15, which will be realised through revenue in the subsequent financial year. Trade payables do not bear interest

and are paid within agreed credit terms. For more information on lease liabilities, see note 1.12.

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17 Other financial liabilities

	30 June 2024	25 June 2023
	£m	£m
Non-current
Foreign exchange contracts	–	0.2
Current
Foreign exchange contracts	1.2	6.7

Foreign exchange contracts comprise forward contracts which are used to hedge exchange risk arising from the Group’s overseas purchases (note 24).

18 Other interest-bearing loans and borrowings

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortised cost.

For more information about the Group’s exposure to interest rate and foreign currency risk, see note 24.

	30 June 2024	25 June 2023
	£m	£m
Senior revolving credit facility	139.0	167.0
Senior secured notes	50.0	–
Unamortised issue costs	(1.6)	(1.2)
	187.4	165.8

The Group has a £200.0m revolving credit facility and £50.0m of senior secured notes.

The revolving credit facility bears interest at a rate of credit spread adjusted SONIA plus 3.10% and is repayable in September 2027 with the option of a 16 month extension

subject to mutual agreement with the consortium of lending banks. The revolving credit facility is secured on a first priority basis with fixed and floating charges over

substantially all of the assets of the Group.

The senior secured notes comprise two tranches: £25.0m maturing in September 2028 and £25.0m maturing in September 2030.

For more information on the maturity of the Group’s lease liabilities, see note 24.

19 Employee benefits

Defined contribution pension plans

The Group operates a number of defined contribution pension plans under which contributions by the employees and the Group are administered by trustees in funds

separate from the Group’s assets. The costs of these schemes are charged to the income statement as they become payable under the rules of the scheme. The total

pension cost of the Group for the period was £6.5m (2023: £5.8m).

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20 Provisions

	Guarantee	Property	Other
	provision	provisions	provisions	Total
	£m	£m	£m	£m
Balance at 25 June 2023	7.5	4.6	1.0	13.1
Provisions made during the period	7.3	4.0	0.5	11.8
Provisions used during the period	(5.3)	(0.3)	(0.3)	(5.9)
Provisions released during the period	(2.6)	(0.8)	(0.3)	(3.7)
Balance at 30 June 2024	6.9	7.5	0.9	15.3
Current	5.8	3.3	0.6	9.7
Non-current	1.1	4.2	0.3	5.6
	6.9	7.5	0.9	15.3

The Group offers a long-term guarantee on its upholstery products and in accordance with accounting standards a provision is maintained for the expected future cost of

fulfilling these guarantees on products which have been delivered before the reporting date. In calculating this provision the key areas of estimation are the number of future

claims, average cost per claim and the expected period over which claims will arise (nearly all claims arise within two years of delivery). The Group has considered the sensitivity

of the calculation to these key areas of estimation, and determined that a 10% change in either the average cost per claim or the number of expected future calls would change

the value of the calculated provision by £0.5m. The directors have therefore concluded that reasonably possible variations in estimate would not result in a material difference.

Property provisions relate to potential obligations under lease guarantees offered to former subsidiary companies, the majority of which expire in 2025, and wear and tear

costs for Group properties based on anticipated lease expiries and renewals, which will predominantly be utilised more than five years from the reporting date, and a provision

for the best estimate of the costs of rectification of an area of land slippage at one of the Group’s manufacturing facilities.

Other provisions relate to payment of refunds to customers for payment protection insurance policies and other regulatory costs.

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21 Dividends

The following dividends were recognised and paid during the period:

		53 weeks to	52 weeks to
	Pence per	30 June 2024	25 June 2023
	ordinary share	£m	£m
Final dividend for FY22	3.7p	–	8.6
Interim ordinary dividend for FY23	1.5p	–	3.5
Final dividend for FY23	3.0p	6.9	–
Interim ordinary dividend for FY24	1.1p	2.5	–
		9.4	12.1

The Directors do not recommend the payment of a final dividend in respect of the financial period ended 30 June 2024.

22 Capital and reserves

Share capital

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

	Number of shares	Ordinary shares
Ordinary shares of £0.10 each	‘000	£m
Allotted, called up and fully paid
At the start of the financial period	240,678	24.1
Cancelled during the financial period	(4,678)	(0.5)
At the end of the financial period	236,000	23.6

On 3 May 2024 4,678,120 ordinary shares which had been held in treasury were cancelled.

Share premium

The share premium account represents the surplus of consideration received for issued ordinary share capital over its nominal value. This arose on the issue of ordinary shares

on 11 March 2015.

Merger reserve

The merger reserve arose on the issue of shares in the Company in exchange for minority interests in the issued share capital of a subsidiary company on 10 March 2015.

Capital redemption reserve

The capital redemption reserve represents the par value of cancelled treasury shares.

Treasury shares

Where the Company purchases the Company’s equity share capital into treasury (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, reissued or disposed of.

4,678,120 treasury shares (2023: 17,958,600) were cancelled on 3 May 2024. None of the Company’s own ordinary shares (2023: nil) were used to satisfy employee share

based payment awards during the year. At 30 June 2024 the company had 1,855,580 ordinary shares held in treasury (2023: 6,533,700).

Employee Benefit Trust shares

The Employee Benefit Trust holds ordinary shares which are issued for the purpose of satisfying future employee share based payments awards and is consolidated into

the Group financial statements.

During the period ended 30 June 2024 the Company used 412,104 shares from the Employee Benefit Trust to satisfy employee share based payments awards (2023: 172,800).

At 30 June 2024 the Employee Benefit Trust held 3,456,074 of the Company’s ordinary shares (2023: 3,686,178).

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23 Financial instruments: categories and fair value

	30 June 2024	25 June 2023
	£m	£m
Financial assets
Derivatives in designated hedging relationships	0.1	0.7
Loans and receivables	7.9	8.0
Cash	26.8	26.7
Financial liabilities
Derivatives in designated hedging relationships	(1.2)	(6.9)
Senior revolving credit facility	(137.4)	(165.8)
Senior secured notes	(50.0)	–
Bank overdraft	(2.6)	–
Finance lease obligations	(401.7)	(412.2)

All derivatives are categorised as Level 2 under the requirements of IFRS 7 as they are valued using techniques based significantly on observed market data.

The Directors have reviewed for expected credit losses and consider the amount of any such losses to be immaterial.

1. The Directors consider that the fair values of each category of the Group’s financial instruments are materially the same as their carrying values.

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24 Financial instruments: risk management

The objectives, policies and processes governing the treasury activities of the Group are reviewed and approved by the Board. The Group’s documented treasury policy

includes details of authorised counterparties, instrument types and transaction limits and principles for the management of liquidity, interest and foreign exchange risks.

As part of its strategy for the management of these risks the Group uses derivative financial instruments. The Group does not enter into or trade financial instruments,

including derivative financial instruments, for speculative purposes.

Liquidity risk

The Group manages its cash and borrowing requirements to ensure that it has sufficient liquid resources to meet its obligations as they fall due while making efficient use

of the Group’s financial resources.

The table below shows the maturity analysis of the undiscounted remaining contractual cash flows (including interest) of the Group’s financial liabilities:

	Less than 1 year	1 to 2 years	2 to 5 years	Over 5 years	Total
30 June 2024	£m	£m	£m	£m	£m
Trade and other payables	142.3	–	–	–	142.3
Lease liabilities	80.9	78.3	180.0	141.5	480.7
Senior revolving credit facility	11.6	11.6	152.7	–	175.9
Senior secured notes	4.3	4.3	36.1	27.6	72.3
Other liabilities	11.7	2.1	0.7	0.8	15.3
	250.8	96.3	369.5	169.9	886.5
Derivatives: net settled	–	–	–	–	–
Derivatives: gross settled	–	–	–	–	–
Cash in flows	(105.6)	(10.3)	–	–	(115.9)
Cash out flows	109.2	8.1	–	–	117.3
Total cash flows	254.4	94.1	369.5	169.9	887.9

	Less than 1 year	1 to 2 years	2 to 5 years	Over 5 years	Total
25 June 2023	£m	£m	£m	£m	£m
Trade and other payables	151.1	–	–	–	151.1
Lease liabilities	77.2	74.2	179.1	156.0	486.5
Senior revolving credit facility	13.0	13.0	173.2	–	199.2
Other liabilities	6.2	2.7	1.6	2.6	13.1
	247.5	89.9	353.9	158.6	849.9
Derivatives: net settled	–	–	–	–	–
Derivatives: gross settled	–	–	–	–	–
Cash in flows	(119.1)	(12.0)	–	–	(131.1)
Cash out flows	128.2	9.8	–	–	138.0
Total cash flows	256.6	87.7	353.9	158.6	856.8

Interest rate risk management

The Group’s operating profit is affected by the cost of providing interest free credit to its customers. This cost is in turn impacted by interbank lending rates, including SONIA.

While the relationship is not wholly direct, an increase in SONIA of one percentage point would reduce the Group’s reported revenue by 0.7%.

The Group is also exposed to interest rate risk on its senior revolving credit facility, which bears interest at a floating rate of credit spread adjusted SONIA plus a margin (3.10%

at 30 June 2024); no related interest rate hedging was in place as at 30 June 2024. Based on drawn amounts under the facility at that date, an increase of one percentage point

in SONIA would increase the Group’s annual interest cost by £1.4m.

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24 Financial instruments: risk management continued

Foreign exchange risk management

The Group is exposed to the risks of exchange rate fluctuations on the purchase of products denominated in foreign currencies. Currency requirements are assessed by

analysis of historic purchasing patterns by month, adjusted as appropriate to take into account current trading expectations. The Group’s treasury policy allows for the use

of forward foreign exchange contracts to hedge the exchange rate risk arising from these anticipated future purchases up to 24 months in advance. These contracts are

designated as cash flow hedges.

The table below summarises the forward foreign exchange contracts outstanding at the period end:

	30 June 2024		25 June 2023
	Notional amount	Fair value	Notional amount	Fair value
	£m	£m	£m	£m
Derivatives in designated hedging relationships
US Dollar	117.3	(1.2)	137.9	(6.2)

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

	Assets		Liabilities
	30 June 2024	25 June 2023	30 June 2024	25 June 2023
	£m	£m	£m	£m
US Dollar	14.5	12.9	(18.5)	(18.8)
Euro	5.8	3.0	(1.4)	(0.2)

Foreign currency sensitivity analysis

The Group’s primary foreign currency exposures are to US Dollars and the Euro. The table below illustrates the hypothetical sensitivity of the Group’s reported profit and

closing equity to a 10% weakening of these currencies against Sterling, assuming all other variables were unchanged. The sensitivity rate of 10% represents the directors’

assessment of a reasonably possible change, based on historic volatility.

The analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency

rates. The analysis assumes that exchange rate fluctuations on currency derivatives that form part of an effective cash flow hedge relationship affect the cash flow hedging

reserve in equity.

Positive figures represent an increase in profit or equity.

		Income statement	Equity
	53 weeks to	52 weeks to	53 weeks to	52 weeks to
	30 June 2024	25 June 2023	30 June 2024	25 June 2023
	£m	£m	£m	£m
US Dollar	0.4	0.6	(11.6)	(13.2)
Euro	(0.4)	(0.3)	–	–

A 10% strengthening of the above currencies against the Sterling at the period end would have had the equal but opposite effect on the above currencies to the amounts

shown above, on the basis that all other variables remain constant.

IFRS 9 requires the Group to ensure that hedge accounting relationships are aligned with the Group’s risk management objectives and strategy and to apply a qualitative

and forward-looking approach to assessing hedge effectiveness. The Group determines the existence of an economic relationship between the hedging instrument and the

hedged item based on the currency, amount and timing of their respective cash flows. The Group assesses whether the derivative designated in each hedging relationship is

expected to be and, has been, effective in offsetting cash flows of the hedged item using the hypothetical derivative method.

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24 Financial instruments: risk management continued

In these hedge relationships, the main sources of ineffectiveness are:

– the effect of counterparties and the Group’s own credit risk on the fair value of the forward foreign exchange contracts, which is not reflected in the change in the fair value

of the hedged cash flows attributable to the change in exchange rates; and

– changes in the timing of the hedged transactions.

Financial risk management

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 investment securities.

Investments of cash, borrowings and derivative instruments are transacted only through counterparties meeting the credit rating and investment criteria specified in the

Group’s treasury policy. The Group’s exposure and the credit ratings of its counterparties are regularly reviewed. Concentrations of risk are mitigated through the use of multiple

counterparties and by counterparty limits which are reviewed and approved by the Board. The Group considers that expected credit losses on derivative assets arising from

the default of counterparties are not material.

The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.

Capital management

The capital structure of the Group consists of debt, as analysed in note 27, and equity attributable to the equity holders of the parent company, comprising issued capital,

reserves and retained earnings as shown in the consolidated statement of changes in equity. The Group manages its capital with the objective that all entities within the Group

continue as going concerns while maintaining an efficient structure to minimise the cost of capital. The Group is not restricted by any externally imposed capital requirements.

25 Share based payments

The Group has four share based payment schemes in operation:

Long Term Incentive Plan (LTIP)

The LTIP is a discretionary executive reward plan that allows the Group to grant conditional share awards or nil-cost options to selected executives at the discretion of the

Remuneration Committee. The scheme is focused on the senior leadership roles in the Group, including Executive Directors. The maximum value of LTIP awards granted

to an individual is 150% of base salary, although the Remuneration Committee may in exceptional circumstances increase this to 300%.

LTIP awards vest after a three year performance period subject to the achievement of performance measures based on earnings per share, total shareholder return targets

and ESG targets. Further information on LTIP performance targets and awards made to Directors is given in the Directors’ Remuneration Report on pages 67 to 87.

Based on the scheme rules, the Group may settle the vested shares in cash sum equivalent to the market value of the shares and this decision is driven solely at the discretion

of the Board. During the year, no LTIP shares vested, so no cash payments were made to participating employees (2023: £nil). As there is no present obligation that the Group

will settle future awards in cash, the Group will continue to recognise the LTIP as an equity settled scheme.

Deferred bonus scheme (DBS)

25% of any bonus earned by the Executive Directors is granted as a deferred award under the Deferred Bonus Plan. The deferred award ordinarily has a vesting period of

three years, and its vesting is conditional on the participant’s continued employment with the Group at the end of the vesting period unless they are a ‘good leaver’.

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25 Share based payments continued

Restricted Share Plan (RSP)

The RSP is also a discretionary reward plan under which conditional share awards or nil-cost options may be granted to individuals in key executive roles in the Group,

excluding Executive Directors and other recipients of LTIP awards. Awards may not exceed 50% of an individual’s salary for a particular financial year.

RSP awards vest after a three year performance period (other than those granted shortly after Admission vested in July 2017). For awards granted on or after 1 July 2019,

50% of awards made to each individual are subject to either an earnings per share or underlying profit before tax performance target; remaining awards are not subject to

other performance conditions.

Based on the scheme rules,the Group may settle the vested shares in cash sum equivalent to the market value of the shares and this decision is driven solely at the discretion

of the Board. During the year, the Group settled none of the vested RSP shares by offering cash payments to participating employees (2023: £0.3m). As there is no present

obligation that the Group will settle future awards in cash, the Group will continue to recognise the RSP as an equity settled scheme.

Save as You Earn (SAYE)

SAYE schemes are currently available to all employees in the UK and Republic of Ireland, with invitations to participate generally issued on an annual basis and subject to

HMRC rules. The current maximum monthly savings limit for the schemes is £500. Options are granted at the prevailing market share price less a discount of 20% and

vest three years from the date of grant.

The movements in outstanding awards under each of the schemes are summarised below:

			53 weeks ended 30 June 2024				52 weeks ended 25 June 2023
	LTIP	DBS	RSP	SAY E	LTIP	DBS	RSP	SAYE
	No.	No.	No.	No.	No.	No.	No.	No.
Outstanding at the beginning of the period	2,567,546	60,211	3,765,977	10,925,424	1,982,263	93,938	2,692,875	4,116,029
Granted	2,034,223	61,144	2,678,998	4,627,564	1,547,809	–	2,422,628	10,102,311
Forfeited	(108,699)	–	(626,562)	(341,719)	(526,237)	(33,727)	(535,072)	(283,551)
Exercised	–	–	(402,385)	(38,425)	–	–	(399,060)	–
Lapsed	(558,357)	–	(402,323)	(495,001)	(436,289)	–	(415,394)	(30,622)
Cancelled	–	–	–	(3,674,755)	–	–	–	(2,978,743)
Outstanding at the end of the period	3,934,713	121,355	5,013,705	11,003,088	2,567,546	60,211	3,765,977	10,925,424
Weighted average remaining contractual life (months)	19.2	9.7	20.0	23.1	18.8	15.9	20.4	28.1
Weighted average share price at exercise	–	–	£1.02	£1.14	–	–	£1.15	–

At 30 June 2024 the weighted average exercise price of outstanding SAYE options was £0.90 (2023: £1.01) and the range of exercise prices was £0.82 to £2.18 (2023: £0.88

to £2.18). At 30 June 2024 there were 455,755 (2023: 408,057) exercisable SAYE options, with a weighted average exercise price of £1.62 (2023: £1.88). There were no

exercisable LTIP, DBP or RSP options at 30 June 2024 (2023: nil).

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25 Share based payments continued

Fair value calculations

The LTIP, DBS, RSP and SAYE awards are all accounted for as equity-settled under IFRS 2. The fair value of LTIP awards which are subject to a market based performance

condition (total shareholder return) is calculated using a stochastic (Monte Carlo) option pricing model. RSP awards, SAYE awards and LTIP awards subject to a non-market

based performance condition (earnings per share) are valued using a Black-Scholes option pricing model. The inputs to these models for awards granted during the financial

period are detailed below:

	LTIP	DBS	RSP	SAYE
Grant date	16 October 2023	20 October 2023	16 October 2023	28 November 2023
Share price at date of grant	£1.00	£1.08	£1.00	£1.08
Exercise price	Nil	Nil	Nil	£0.82
Volatility	34.6% to 39.1% 1	– 2	– 2	36.7%
Expected life	3 years	3 years	3 years	3.4 years
Risk free rate	4.3% to 4.5% 1	– 2	– 2	4.3%
Dividend yield	– 3	– 3	4.5%	4.2%
Fair value per share
Market based performance conditions	£0.43 to £0.48 1	–	–	–
Non-market based performance condition	£1.00 1	£1.05	£0.87	–
No performance condition	–	–	£0.87	£0.35

1. The LTIP grant included a number of required holding periods, giving a range of volatility and fair values.

2. Volatility and risk free rates do not impact the fair value calculation for awards with no exercise price or market based performance condition

3. LTIP and DBS participants are entitled to receive dividend equivalents on unvested awards therefore dividend yield does not impact the fair value calculation

Expected volatility is calculated over the period of time commensurate with the relevant performance period or holding period. Expected life has been assumed to equate

to the vesting period of the awards.

The total share based payment expense included in administration costs in respect of the above schemes was £3.2m (2023: £1.8m).

132

DFS Furniture plc Annual Report & Accounts 2024

Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

26 Net cash from operating activities

Note

		53 weeks to	52 weeks to
		30 June 2024	25 June 2023
		£m	£m
(Loss)/profit for the period		(4.4)	26.2
Adjustments for:
Income tax expense	6	3.0	7.1
Finance income	5	(0.4)	(0.2)
Finance expenses	5	41.5	34.3
Exceptional financing costs	5	1.9	–
Depreciation of property, plant and equipment	8	22.0	22.1
Depreciation of right of use assets	9	55.8	58.4
Amortisation of intangible assets	10	13.7	11.6
Impairment of assets	8	0.3	2.0
Loss/(gain) on sale of property, plant and equipment	3	2.0	(0.8)
Gain on disposal of right of use assets	3	(0.6)	(1.2)
Settlement of share based payments		–	(0.3)
Share based payment expense	25	3.2	1.8
Foreign exchange impact on cash flow hedges		(1.3)	1.4
(Increase)/decrease in trade and other receivables		(0.9)	13.2
(Increase)/decrease in inventories		(3.2)	8.6
Decrease in trade and other payables		(15.9)	(55.8)
Increase/(decrease) in provisions		2.2	(6.0)
Net cash from operating activities before tax		118.9	122.4
Tax paid		(3.0)	(0.7)
Net cash from operating activities	26	115.9	121.7

27 Net debt

			Other non-cash
	25 June 2023	Cash flow	changes	30 June 2024
	£m	£m	£m	£m
Cash in hand, at bank	26.7	0.1	–	26.8
Bank overdraft	–	(2.6)	–	(2.6)
Cash and cash equivalents (including bank overdraft)	26.7	(2.5)	–	24.2
Senior revolving credit facility	(165.8)	28.0	0.4	(137.4)
Senior secured notes	–	(50.0)	–	(50.0)
Lease liabilities	(411.4)	92.4	(82.7)	(401.7)
Total net debt	(550.5)	67.9	(82.3)	(564.9)

			Other non-cash
	26 June 2022	Cash flow	changes	25 June 2023
	£m	£m	£m	£m
Cash in hand, at bank	17.3	9.4	–	26.7
Bank overdraft	(12.3)	12.3	–	–
Cash and cash equivalents (including bank overdraft)	5.0	21.7	–	26.7
Senior revolving credit facility	(93.5)	(72.0)	(0.3)	(165.8)
Lease liabilities	(445.4)	61.6	(27.6)	(411.4)
Total net debt	(533.9)	11.3	(27.9)	(550.5)

Non-cash changes include the addition of leases within the period, lease remeasurements, disposals of leases, lease interest and the prepayment of debt issue costs net

of amortisation.

133

DFS Furniture plc Annual Report & Accounts 2024

Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

28 Related parties

Key Management Personnel

At 30 June 2024, Directors of the Company held 0.4% of its issued ordinary share capital (2023: 0.4%), and a further 0.1% (2023: 0.1%) was held by other key management

personnel. The compensation of key management personnel (including the Directors) is as follows:

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Emoluments	4.2	3.5
Share based payments expense	0.3	0.1
Company contributions to money purchase schemes	0.1	0.1
	4.6	3.7

A number of key management personnel hold positions in other companies that result in them having control or significant influence over these companies. During the

year, one such relationship existed with an entity which the Group conducts business. The terms and conditions of these transactions were no more favourable than those

available, or which might reasonably be expected to be available, in similar transactions with other companies with no relationship with members of key management, and were

conducted on an arm’s length basis.

The aggregate value of transactions related to key management personnel and entities over which they have, or had during the year, control or significant influence was £4.8m

(2023: £4.3m), and the outstanding balance at the year end was £0.8m (2023: £0.6m).

From time to time key management personnel or their related parties may buy goods from the Group. These purchases are on the same terms and conditions as those

entered into by other Group employees or customers.

29 Discontinued operations

During the period to 26 June 2022 the Group took the decision to exit its operations in the Netherlands and Spain. The cessation of these operations was completed in

the year ended 25 June 2023, with the order book at the point of closure being delivered during that year. The revenues and expenses of the discontinued operations were

therefore eliminated from the consolidated income statement for the Group’s continuing operations and are shown as a separate single post-tax line item. Prior to being

classified as discontinued operations, these operations were included within the DFS segment of the Group’s segmental analysis.

Results from discontinued operations:

		53 weeks to		52 weeks to
		30 June 2024		25 June 2023
	Underlying	Non-underlying	Total	Total
	£m	£m	£m	£m
Revenue	–	–	–	2.0
Cost of sales	–	–	–	(1.1)
Gross profit	–	–	–	0.9
Selling and distribution costs	–	–	–	(1.1)
Administrative expenses	–	0.3	0.3	3.8
Operating (loss)/profit before depreciation, amortisation and impairment	–	0.3	0.3	3.6
Depreciation	–	–	–	–
Impairment	–	–	–	–
Operating (loss)/profit	–	0.3	0.3	3.6
Finance expenses	–	–	–	–
(Loss)/profit before tax	–	0.3	0.3	3.6
Taxation	–	–	–	(0.4)
(Loss)/profit for the period from discontinued operations	–	0.3	0.3	3.2

134

DFS Furniture plc Annual Report & Accounts 2024

Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

29 Discontinued operations continued

Non-underlying items from discontinued operations:

	53 weeks to	52 weeks to
	30 June 2024	25 June 2023
	£m	£m
Closure credits	(0.3)	(3.8)

Closure credits relate to the release of provisions made in FY22 for costs associated with the closure of these operations where the actual costs incurred were lower than had

been expected when the provision was made.

Cash flows from discontinued operations:

	52 weeks to	52 weeks to
	25 June 2023	25 June 2023
	£m	£m
Net cash from operating activities	–	(0.6)
Net cash used in investing activities	–	–
Net cash used in financing activities	–	(0.4)
Net decrease in cash and cash equivalents	–	(1.0)
Cash and cash equivalents at beginning of period	0.3	1.3
Net cash and cash equivalents (including bank overdraft) at end of period	0.3	0.3

30 Subsequent events

As detailed in the Financial review on page 18, whilst the Group expects to stay within the covenants applicable to its borrowing facilities, in September 2024 a temporary

widening of covenants was agreed which provides additional headroom in the event of unanticipated downside scenarios that result in a further decline in market volumes

and lower EBITDA.

The amended leverage covenant widens to 3.9x at H1 FY25 and 3.7x at FY25 period end, before returning to 3.0x at H1 FY26. The amended fixed charge cover covenant

widens to 1.3x at H1 FY25, 1.3x at FY25 period end and 1.4x at H1 FY26, before returning to 1.5x at FY26.

135

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Financial Statements

COMPANY BALANCE SHEET

AT 30 JUNE 2024

Note

30 June 2024

£m

25 June 2023

£m

Non-current assets

Investments 2 257.7 254.5

Amounts due from group companies 3 275.0 275.0

532.7 529.5

Current liabilities

Amounts due to group companies 4 (72.8) (63.3)

Net assets 459.9 466.2

Capital and reserves

Called up share capital 5 23.6 24.1

Share premium 5 40.4 40.4

Merger reserve 5 18.6 18.6

Capital redemption reserve 5 360.1 359.6

Treasury shares 5 (2.9) (10.1)

Sharesheldbyemployeebenefittrust 5 (5.9) (6.6)

Retained earnings 26.0 40.2

Equity shareholders’ funds 459.9 466.2

TheCompany’sprofitfortheperiodwas£nil

(2023:£70.0m).

Thesefinancialstatementswereapprovedby

the board of directors on 25 September 2024

and were signed on its behalf by:

TIM STACEY

Chief Executive Officer

JOHN FALLON

Chief Financial Officer

Company registered number: 07236769

136

DFS Furniture plc Annual Report & Accounts 2024

Financial Statements

COMPANY STATEMENT OF CHANGES IN EQUITY

AT 30 JUNE 2024

Share capital

£m

premium

£m

Merger

reserve

£m

Capital

redemption

reserve

£m

Treasury

£m

Shares held

by employee

benefittrust

£m

Retained

earnings

£m

Total equity

£m

Balance at 26 June 2022 25.9 40.4 18.6 357.8 (4.9) (6.9) 6.8 437.7

Profitfortheperiod – – – – – – 70.0 70.0

Other comprehensive income – – – – – – – –

Total comprehensive income for the period – – – – – – 70.0 70.0

Dividends paid – – – – – – (12.1) (12.1)

Purchase of own shares – – – – (30.9) – – (30.9)

Cancellation of treasury shares (1.8) – – 1.8 25.7 – (25.7) –

EmployeeBenefitTrustsharesissued – – – – – 0.3 (0.3) –

Settlement of share based payments – – – – – – (0.3) (0.3)

Share based payments – – – – – – 1.8 1.8

Balance at 25 June 2023 24.1 40.4 18.6 359.6 (10.1) (6.6) 40.2 466.2

Profitfortheperiod – – – – – – – –

Other comprehensive income – – – – – – – –

Total comprehensive income for the period – – – – – – – –

Dividends paid – – – – – – (9.5) (9.5)

Cancellation of treasury shares (0.5) – – 0.5 7.2 – (7.2) –

EmployeeBenefitTrustsharesissued – – – – – 0.7 (0.7) –

Share based payments – – – – – – 3.2 3.2

Balance at 30 June 2024 23.6 40.4 18.6 360.1 (2.9) (5.9) 26.0 459.9

137

DFS Furniture plc Annual Report & Accounts 2024

Financial Statements

NOTES TO THE COMPANY FINANCIAL STATEMENTS

AT 30 JUNE 2024

1 Accounting policies

Basis of preparation

Thefinancialstatementsarepreparedinaccordance

with Financial Reporting Standard 101 Reduced

Disclosure Framework (“FRS 101”).

Inpreparingthesefinancialstatements,theCompany

applies the recognition, measurement and disclosure

requirements of international accounting standards

(“UK-adoptedIFRSs”),butmakesamendments

where necessary in order to comply with Companies

Act 2006. The Company has applied the exemption

available under FRS101 in respect of the following

disclosures:

– acashflowstatementandrelatednotes;

– comparative period reconciliations;

– disclosures in respect of transactions with wholly

owned subsidiaries;

– disclosures in respect of capital management; and

– theimpactofnewbutnotyeteffectiveIFRSs.

As the consolidated accounts of the Company include

the equivalent disclosures, the Company has also taken

the exemption available under FRS 101 in respect of

IFRS 2 Share Based Payments disclosures of group

settled share based payments. Under Section 408

of the Companies Act 2006, the Company is not

requiredtopresentitsownprofitandlossaccount.

TheCompany’sprofitfortheperiodwas£nil(2023:

£70.0m).

The Company proposes to continue to adopt the

reduced disclosure framework of FRS 101 in its next

financialstatements.

The accounting policies set out below have, unless

otherwise stated, been applied consistently to all

periodspresentedinthesefinancialstatements.

Going concern

TheCompanyheadsagroupwhichhasa£200.0m

revolving credit facility with a consortium of lending

banksmaturinginSeptember2027and£50.0mof

privateplacementdebt,£25.0mofwhichmaturesin

September2028and£25.0minSeptember2030.At

18September2024,£63.0moftherevolvingcredit

facility remained undrawn, in addition to cash in hand,

atbankof£5.7m.TheDirectorshaveconsidered

theprojectedtradingandcashflowforecastsfor

the Company, including the inherent uncertainty

in forecasting the impact of the current economic

andpoliticalenvironment,andareconfidentthat

the Company has adequate resources to continue

to meet all liabilities as and when they fall due for the

foreseeable future and at least twelve months from

thedateofapprovalofthesefinancialstatements.

Accordingly,thefinancialstatementsarepreparedona

going concern basis.

Investments

Investments are stated at cost, less any accumulated

impairment losses. Carrying values of investments in

subsidiary companies are reviewed at each reporting

date to determine whether there is any indication of

impairment. If any such exists, then the investment’s

recoverable amount is estimated based on a value in

use calculation. An impairment loss is recognised if

the carrying amount of the investment exceeds its

estimated recoverable amount. Impairment losses

arerecognisedinprofitorloss.

Amounts due from and to group companies

Amounts receivable from or payable to other companies

within the Company’s group are recognised initially at

fair value and subsequently measured at amortised

cost less allowances for expected credit losses.

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 a business combination, or items recognised directly

in equity or other comprehensive income. Deferred

taxisprovidedontemporarydifferencesbetweenthe

carryingamountsofassetsandliabilitiesforfinancial

reporting purposes and the amounts used for

taxation purposes.

Share based payments

Awards (options or conditional shares) granted by

the Company over its own shares to the employees of

subsidiary companies are recognised in the Company’s

ownfinancialstatementsasanincreaseinthecostof

investment in subsidiaries. The amount recognised is

equivalenttotheequity-settledsharebasedpayment

chargerecognisedintheconsolidatedfinancial

statements. The corresponding credit is recognised

directly in equity.

Treasury shares

Where the Company purchases the Company’s

equity share capital into treasury (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, reissued or disposed of.

Audit fees

Amounts receivable by the Company’s auditor, and its

associates in respect of services to the Company and

its associates, other than the audit of the Company’s

financialstatementshavenotbeendisclosedas

the information is required instead to be disclosed

onaconsolidatedbasisintheconsolidatedfinancial

statements.

Directors’ remuneration and staff numbers

The Company has no employees other than the

Directors, who did not receive any remuneration for

their services directly from the Company in either

the current or preceding period. See note 28 in the

consolidatedfinancialstatementsforKeyManagement

Personnel compensation.

138

DFS Furniture plc Annual Report & Accounts 2024

Financial Statements

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

2 Investments

Shares in subsidiary undertakings

53 weeks to

30 June 2024

£m

52 weeks to

25 June 2023

£m

Cost and net book value

Atthestartofthefinancialperiod 254.5 252.7

Additions 3.3 1.8

Attheendofthefinancialperiod 257.8 254.5

DetailsoftheCompany’sinvestmentsaregiveninnote11totheconsolidatedfinancialstatements.Additionsinthecurrentandpriorperiodrelatetocapitalcontributions

made in respect of share based payments schemes for the Group’s employees. As a consequence of the Company’s share price at 30 June 2024, a value in use calculation

wasperformedtotestthecarryingvalueoftheinvestmentsforimpairment.Thekeyassumptionsusedwereinlinewiththosesetoutinnote10totheconsolidatedfinancial

statements.Thevalueinusecalculationsassessedthevalueinuseofequityonly,andshowedasignificantheadroombetweenthecalculatedvalueinuseandthecarrying

valueoftheinvestmentsintheCompanyfinancialstatements.Anumberofsensitivitieswerethenappliedtothebasecasemodeltoassesswhetheranyreasonablypossible

changesinassumptionscouldcauseanimpairmentthatwouldbematerialtotheseCompanyfinancialstatements.OnthebasisofthisanalysistheDirectorsconcludedthat

a reasonably possible change in assumptions would not lead to an impairment being recognised.

Coin Furniture Limited (Company number 08586227) and DFS Spain Limited (Company number 09668511) are exempt from the requirement of the Companies Act relating

totheauditofindividualfinancialstatementsbyvirtueofs479AoftheCompaniesAct2006.DFSFurnitureplcwillguaranteethedebtsandliabilitiesoftheseentitiesin

accordance with Section 479C of the Companies Act 2006.

3 Debtors

30 June 2024

£m

25 June 2023

£m

Amountsduefromsubsidiaryundertakings(non-interestbearing,repayableondemand) 275.0 275.0

Amountsduefromsubsidiaryundertakingshavebeenclassifiedasnon-currentassetsastheyarenotexpectedtobesettledwithinthenext12months.TheCompanyhas

assessed the expected credit loss as very low and has therefore made no provision for impairment.

4 Creditors: amounts due in less than one year

30 June 2024

£m

25 June 2023

£m

Amountsduetosubsidiaryundertakings(non-interestbearing,repayableondemand) 72.8 63.3

5 Capital and reserves

Share capital

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

Number of shares

‘000

Ordinary shares

£m

Ordinary shares of £0.10 each

Allotted, called up and fully paid

Atthestartofthefinancialperiod 240,678 24.1

Cancelledduringthefinancialperiod (4,678) (0.5)

Attheendofthefinancialperiod 236,000 23.6

On 3 May 2024 4,678,120 ordinary shares which had been held in treasury were cancelled.

139

DFS Furniture plc Annual Report & Accounts 2024

Financial Statements

5 Capital and reserves continued

Share premium

The share premium account represents the surplus of

consideration received for issued ordinary share capital

over its nominal value. This arose on the issue of

ordinary shares on 11 March 2015.

Merger reserve

The merger reserve arose on the issue of shares in

the Company in exchange for minority interests in

the issued share capital of a subsidiary company on

10 March 2015.

Capital redemption reserve

The capital redemption reserve represents the par

value of cancelled treasury shares.

Treasury shares

Where the Company purchases the Company’s

equity share capital into treasury (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, reissued or disposed of.

4,678,120 treasury shares (2023: 17,958,600) were

cancelled on 3 May 2024. None of the Company’s

own ordinary shares (2023: nil) were used to satisfy

employee share based payment awards during the year.

At 30 June 2024 the company had 1,855,580 ordinary

shares held in treasury (2023: 6,533,700).

Employee Benefit Trust shares

TheEmployeeBenefitTrustholdsordinaryshares

which are issued for the purpose of satisfying future

employee share based payments awards and is

consolidatedintotheGroupfinancialstatements.

During the period ended 30 June 2024 the Company

used172,800sharesfromtheEmployeeBenefitTrust

to satisfy employee share based payments awards

(2023: 172,800). At 30 June 2024 the Employee

BenefitTrustheld3,456,074oftheCompany’sordinary

shares (2023: 3,686,178).

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

AT 30 JUNE 2024

140

DFS Furniture plc Annual Report & Accounts 2024

Shareholder Information

FY24 FY23 FY22 FY21Restated

FY20

IFRS 16

Gross sales £m 1,311.8 1,423.6 1,474.6 1,359.4 935.0

Revenue £m 987.1 1,088.9 1,149.8 1,060.2 724.5

Underlying EBITDA £m 142.0 157.4 175.9 224.0 61.9

Underlyingprofit/(loss)beforetaxexcludingbrandamortisation £m 10.5 30.6 60.3 109.2 (63.1)

Profit/(loss)beforetaxfromcontinuingoperations £m (1.7) 29.7 58.5 102.6 (81.2)

Basic earnings per share from continuing operations p (2.0) 9.8 17.3 35.8 (31.4)

Ordinary dividends per share p 1.1 4.5 7.4 7.5 –

Special dividends per share p – – 10.0 – –

Purchase of own shares £m – 30.9 4.4 – 1.1

Total shareholder return % -17.3 -28.3 -37.9 +71.4 -32.5

1. RestatedtoexcludeoperationsbecomingdiscontinuedinFY22.

FINANCIAL HISTORY

AT 30 JUNE 2024

141

DFS Furniture plc Annual Report & Accounts 2024

Shareholder Information

SHAREHOLDER INFORMATION

Contacts

Chief Executive Officer

Tim Stacey

Chief Financial Officer

John Fallon

Group Company Secretary & General Counsel

Elizabeth McDonald

Companysecretary@dfs.co.uk

Investor relations

Investor.relations@dfs.co.uk

Corporate website

www.dfscorporate.co.uk

Registered office

DFS Furniture plc

1 Rockingham Way

Redhouse Interchange

Adwick-le-Street

Doncaster

DN6 7NA

Corporate advisors

Auditor

KPMG LLP

1 St Peter’s Square

Manchester

M2 3AE

Remuneration advisor

Deloitte LLP

2 New Street Square

London

EC4A 3BZ

Brokers

PeelHuntLimited&JefferiesInternationalLimited

Shareholder enquiries

The Company’s registrar is Equiniti. They will be pleased

to deal with any questions regarding your shareholding

or dividends. Please notify them of your change of

address or other personal information. Their address

details are:

Equiniti

Aspect House

Spencer Road

Lancing

West Sussex

BN99 6DA

Equiniti helpline: 0371 384 2030. Overseas holders

should contact +44 (0)121 415 7047.

Lines are open 8.30am to 5.30pm, Monday to Friday

(excluding public holidays).

Shareholders are able to manage their shareholding

online and facilities include electronic communications,

account enquiries, amendment of address and dividend

mandate instructions.

Electronic communications

Shareholders will receive annual report and accounts

and other documentation electronically, unless they tell

our registrar that they would like to continue to receive

printed materials. This is in line with best practice

and underpins our commitment to reduce waste.

Shareholders may view shareholder communications

online instead of receiving them in hard copy.

Shareholdersmayelecttoreceivenotificationsbyemail

whenever shareholder communications are added

to the website by visiting www.shareview.co.uk and

registering online.

For institutional investor enquiries, please contact:

Teneo

The Carter Building

11 Pilgrim Street

London

EC4V 6RN

+44 (0)20 7353 4200

Annual General Meeting 2024

This year’s AGM will be held at 2.30pm on

22 November 2024 at DFS Group Support Centre,

1 Rockingham Way, Redhouse Interchange,

Adwick-le-Street,Doncaster,DN67NA.

Financial calendar

FY24fullyearresults  25September2024

Annual General Meeting 22 November 2024

Company registration number

07236769

Registered address

1 Rockingham Way

Redhouse Interchange

Adwick-le-Street

Doncaster

DN6 7NA

Corporate website

www.dfscorporate.co.uk

142

DFS Furniture plc Annual Report & Accounts 2024

Shareholder Information

NOTES