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Affordable Sustainable Responsible
DFS Furniture plc
Annual Report & Accounts 2023
LEADING
THE WAY IN
FURNITURE
RETAIL
DFS Furniture plc
Strategic Report
In a challenging economic
climate, the Group has
continued to progress
its strategy and grow
market share.
OUR PURPOSE
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.
CONTENTS
Strategic report
1 Highlights
2 Purpose driven approach
4 At a glance
7 Our fundamentals
8 Chair’s statement
10 Chief Executive’s report
13 Market overview
15 Our customer journey
16 Our business model
17 Our strategy
19 Key performance indicators
21 Financial review
25 Alternative performance measures
28 Risks and uncertainties
36 Section 172 statement
39 Responsibility and sustainability
report
Governance report
 
65 Corporate governance report
71 Audit Committee report
76 Nomination Committee report
78 Directors’ remuneration report
100 Directors’ report
103 Statement of Directors’
responsibilities in respect of the

statements
104 Independent auditor’s report
Financial statements
113 Consolidated income statement
114 Consolidated statement of
comprehensive income
115 Consolidated balance sheet
116 Consolidated statement of
changes in equity
 
118 Notes to the consolidated

151 Company balance sheet
152 Company statement of
changes in equity
 
statements
156 Financial history
157 Shareholder information
Sustainable
Becoming a
circular business
Our Sofa Cycle strategy sets
out a framework for the future.
page 44
Affordable
Choice and innovation
Through market-leading
scale and service.
page 15
Responsible
Driving change and creating value
Through well governed environmental and social targets.
page 41
DFS Furniture plc
1
Strategic Report
34.5p
12.3p
11.1p
FY20
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE
£1,060.2m
£1,149.8m
£1,088.9m
FY20
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE
36.0p
16.9p
9.4p
FY20
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE
£102.6m
£58.5m
£29.7m
FY20
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE
86.4%
86.3%
91.3%
FY20
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE
30.7%
11.7%
18.6%
FY20
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE
£109.2m
£60.3m
£30.6m
FY20
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE
The Group has made good operational and strategic progress in a challenging
environment as we focused on executing our strategy and continuously
improving our operating platforms.
HIGHLIGHTS
Financial highlights




1



1


 
 
 
 
Operational and strategic highlights


4
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

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
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
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





Post purchase NPS
2
91.3%
Established customer NPS
2
18.6%
Group revenue
£1,088.9m

£29.7m


1
£30.6m
Earnings per share
11.1p
Underlying earnings per share
1
9.4p
DFS Furniture plc
2
Strategic Report
PURPOSE DRIVEN APPROACH
CULTURE AND
VALUES




Think customer



Be real




Aim high



RESPONSIBILITY AND
SUSTAINABILITY








page 39

OUR PURPOSE
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 STRATEGY FOR GROWTH




Group strategy
Sourcing &
Manufacturing
Technology
& Data
Logistics People
& Culture
PILLARS
ESG
PLATFORMS
MARKET
CUSTOMER
FINANCIALS
GROUP
STRATEGY
page 17
OUR STAKEHOLDERS









page 36

DFS Furniture plc
3
Strategic Report
Strategic
report
CONTENTS
4 At a glance
7 Our fundamentals
8 Chair’s statement
10 Chief Executive’s report
13 Market overview
15 Our customer journey
16 Our business model
17 Our strategy
19 Key performance indicators
21 Financial review
25 Alternative performance measures
28 Risks and uncertainties
36 Section 172 statement
39 Responsibility and sustainability report
DFS Furniture plc
4
Strategic Report
AT A GLANCE
page 5
page 6

page 6
DFS Furniture plc
5
Strategic Report
AT A GLANCE






















117

£858.5m
We are the leading sofa retailing group in the UK – we operate across
two retail brands, each appealing to different customer segments.
DFS Furniture plc
6
Strategic Report
AT A GLANCE








Delivery vehicles
276
















58
FY23 brand revenue
£230.4m
DFS Furniture plc
7
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.

2.


3.



the DFS group is over three times the size






page 17

digital and physical assets is the right






We are committed to building a sustainable

on the environment and our long-term















4.


DFS Furniture plc
8
Strategic Report
CHAIR’S STATEMENT
Growing market share
in a challenging year














Financial results









The year to June 2023 has been marked by an uncertain and disrupted external
environment, with the continuing impact of the conflict in Ukraine, global
inflationary pressures, and the move away from the extremely low level of
interest rates seen over the last ten years all weighing on UK consumers.

Appointment of a new Chair
Recruitment of a new CFO
Appointment of a new Chair of the
Remuneration Committee

of the Group
STEVE JOHNSON

Bio onpage 63
DFS Furniture plc
9
Strategic Report














People















Strategy
















Board and Governance




































































Capital structure and returns











Looking Forward

















STEVE JOHNSON
Chair of the Board

CHAIR’S STATEMENT
Group revenue
£1,088.9m

£29.7m

brand amortisation
1
£30.6m
 
DFS Furniture plc
10
Strategic Report
CHIEF EXECUTIVE’S REPORT
Strategic progress in a
challenging environment

















The Group has made good progress strategically and operationally throughout the year
as we focused on executing our growth strategy and continuously improving our operating
platforms. We have continued our long term track record of growing our market share in
the UK upholstery sector with a significant 2% pts step up in the period, taking the Group’s
value share of the upholstery market to a record high of 38%. This has been achieved whilst
rebuilding our gross margin rate back towards historical levels. We have also seen a step
change in our customer experience scores through improved operational grip and the easing
of the external supply chain crisis.
TIM STACEY

Bio onpage 63

Continuing to win share in a very tough market,
extending market leadership with 2% pts share
gain to a record 38% of the UK upholstery market
Brands continue to evolve: DFS range continues
to broaden appeal to wider customer base; further
three Sofology showrooms opened taking the
total to 58 (38 at acquisition)
Continue to strengthen the foundations for
growth in the £3bn beds and mattresses market
with drop-ship delivery solution launched and
exclusive brand partnerships extended to bed
ranges, driving online sales up 69% year on year
Operationally in the strongest position since

scores with supply chains, order banks and
customer lead times all fully back to normal
DFS Furniture plc
11
Strategic Report



1









Market update

























Reflections on FY23 financial performance







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















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
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








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
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































The home market opportunity
















Our supporting platforms










CHIEF EXECUTIVE’S REPORT
 
DFS Furniture plc
12
Strategic Report



































































Sustainability















































Outlook













1









Conclusion



















TIM STACEY
Chief Executive Officer

CHIEF EXECUTIVE’S REPORT
 
DFS Furniture plc
13
Strategic Report
We are the leading sofa retailer in the digital age
Large potential customer base







Clear leader in the segment



1




































The Group has continued its long term track record of market share growth achieving a record 38% in FY23.
 
MARKET OVERVIEW
DFS Furniture plc
14
Strategic Report
2023 YTD
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
YoY (19.9%)
1,265
1,480
1,040
1,177
1,189
1,223
1,232
1,226
1,223
1,068
2023 YTD
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
7.6
6.1
(3.5)
(2.0)
6.5
8.3
10.0
10.1
7.7
5.9
3.6
2023 YTD
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
(32.9)
(38.9)
(14.5)
(24.3)
(12.7)
(9.5)
(8.8)
(3.3)
3.1
(2.6)
(18.6)
Market conditions are currently challenging with the UK upholstery market seeing a reduction in volumes.
Historically, the Group has been able to grow market share during economically challenging times.
Key Market Drivers
Consumer confidence










Housing Market










Consumer credit








1

2

3

   

 

MARKET OVERVIEW
DFS Furniture plc
15
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 growing feature of our
products. Our Grand Designs
ranges feature all elements
made from recycled or
recyclable materials and
our fully circular Gaia sofa.
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

research online
90%

175
INTEGRATED
RETAIL MODEL
DESIGN
& INSPIRE
We focus on embracing and
leveraging technology to
maintain our position as the
leading sofa retailer in the
digital age.
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 20% 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
276

84,000
Colleagues enrolled on

programme
40


20%
CUTTING EDGE
TECHNOLOGY MANUFACTURING SERVICE
INNOVATIVE
DELIVERY OPTIONS
SOFA COLLECTION
& RECYCLING
DFS Furniture plc
16
Strategic Report
BUSINESS MODEL
OUR ENABLERS
Customer ethos



Unparalleled scale

1


Complementary brands









Made-to-order products



Vertically integrated model







WHAT WE DO
Design and inspire






Retail











Deliver and install





Service




OUTCOMES
Sustain sector-leading
operating margins









Maintain strong cash generation



Continue to invest in the business




VALUE FOR STAKEHOLDERS
CUSTOMERS
91.3%

EMPLOYEES
35%

SUPPLIERS
37%

2
SHAREHOLDERS
£182m

3
COMMUNITY
£6.9m



 
 
 
How we create value… How we deliver value…
DFS Furniture plc
17
Strategic Report
OUR STRATEGY
Pillars
DFS & Home
Customer proposition and service innovation
New services to engage customers
Focus for 23/24



Sofology
Increase scale of business
To further grow the showroom estate throughout the UK
Focus for 23/24



Platforms
Group Enabling Platforms
Our strategy is made up of the three pillars of our business: Our DFS brand, our Sofology brand, and our expansion into the Home market. The growth of our pillars will be enabled by our group
enabling platforms: Technology and data, Logistics, Sourcing and manufacturing and People and culture. The strategy reflects the Group’s expertise, scale, assets and supporting infrastructure
and the ability to use our enabling platforms to both improve the operational efficiency and the 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.
Technology & data
Using data and technology to
unlock growth in our brands
Logistics
Best in market two person
delivery and installation
Sourcing &
manufacturing
Optimising our supplier portfolio
People & culture
Delivering fundamental
cultural change
Focus for 23/24





Focus for 23/24




Focus for 23/24


Focus for 23/24




DFS Furniture plc
18
Strategic Report
OUR STRATEGY
Revenue ambition
£1.4bn

8%
 
Best experience

86%


Best ranges
91%


Best sales teams
9/10


Best online brand strength

1.8x

87%


Best enhanced technology



Best ecommerce platform



S
u
s
t
a
i
n
a
b
i
l
i
t
y
S
u
s
t
a
i
n
a
b
i
l
i
t
y
Sourcing &
Manufacturing
platform
Technology
& Data
platform
Logistics
platform
People &
Culture
platform

DFS Furniture plc
19
Strategic Report
£1,287.2m
£935.0m
£1,359.4m
£1,474.6m
£1,423.6m
£28.2m
£50.2m
(£63.1m)
£109.2m
£60.3m
£30.6m
FY19**
FY19*
FY20
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE
38.7%
18.7%
13.5%
FY21
FY22
FY23
£141.7m
(£5.0m)
(£7.0m)
FY21
FY22
FY23
0.2x
1.0x
1.9x
FY21
FY22
FY23

Gross Sales
1
£1,423.6m
Description





Performance


Description


Performance




1
(£7.0m)
Leverage
1
1.9x
Description




Performance




Underlying return on capital employed
1
13.5%
Description




Performance





1
£30.6m
Description


Performance




Key
 
 
 
 



DFS Furniture plc
20
Strategic Report
86.4%
86.3%
91.3%
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE
30.7%
11.7%
18.6%
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE
30.6
35.8
39.4
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE
71.8%
72.0%
73.8%
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE
50
55
58
FY21
FY22
FY23
ONCE GRAPH IS BUILT, DATA FIGS SHOULD BE
ALIGNED TO FAR RIGHT GUIDE



91.3%


18.6%
Description


Performance


Description



Performance




Description


Performance


Description


Performance



58
Description


Performance



39.4 days

73.8%
Strategic Links
Strategic Links
Strategic Links
Strategic Links
Strategic Links
Key to Strategic Links




DFS Furniture plc
21
Strategic Report
FINANCIAL REVIEW
Financial review










 
The Group has operated through a challenging trading environment in FY23, influenced
by reductions in consumer disposable income and increased market volatility. Against this
backdrop, we delivered strong market share gains despite Group revenue being towards
the lower end of our expectations coming into the year. There was good progress on gross
margin rate and this together with disciplined cost control helped to underpin profit
conversion and ensured that full year profits were delivered within the guidance range
we shared at our interim results.
JOHN FALLON

Bio onpage 63


1
of
£30.6m, within guidance at interims



share gains
Gross margin up 170bps to 54.4%, on track to keep
improving towards our pre-Covid average of 58%

established, targeting c£50m of annualised
savings by FY26
Net debt increased to £140m from £90m due to

pandemic period, and shareholder returns

extending the facility and diversifying the
lending group
DFS Furniture plc
22
Strategic Report























Gross profit









Basis of preparation









Revenue and gross sales

1










2





































Selling, distribution and administration and
property costs
























Depreciation, amortisation and interest






















Profits and earnings per share



1








FINANCIAL REVIEW


 FY23 
Gross Sales
1
1,423.6 
 1,125.5 
 298.1 
 24.0% 
Revenue 1,088.9 
 
 
 

DFS Furniture plc
23
Strategic Report


































2


















Cash flow, net debt and dividends













1















Looking forward
FY24 Guidance













 

1

 


















‘Cost to Operate’ efficiencies programme
















 





 


















 




FINANCIAL REVIEW
 
 

DFS Furniture plc
24
Strategic Report











Profit margin growth















JOHN FALLON
Chief Financial Officer

FINANCIAL REVIEW

DFS Furniture plc
25
Strategic Report
ALTERNATIVE PERFORMANCE MEASURES
  
Gross sales 





Brand contribution 


Adjusted EBITDA 


Non-underlying items 




Underlying EBITDA 


Underlying profit before tax and brand
amortisation PBT(a)



Underlying earnings per share 



Net bank debt 



Cash EBITDA 




Underlying free cash flow to equity holders 




Leverage (or gearing) 



Underlying return on capital employed
(underlying ROCE)






























DFS Furniture plc
26
Strategic Report
Key performance indicators
Reconciliations to IFRS measures
Adjusted EBITDA 
FY23
£m


 2 63.8 
 3 80.5 
 3 11.6 
 3 2.0
 157.9 
Underlying EBITDA 
FY23
£m


 157.9 
 3 (0.5) 
 157.4 
Underlying profit before tax and brand amortisation – PBTa 
FY23
£m


 2 29.7 
 3 (0.5) 
  1.4 
 30.6 
Net bank debt 
FY23
£m


 165.8 
  1.2 
 (26.7) 
 140.3 
Movement in net bank debt
FY23
£m


 (140.3) 
 90.0 
 (50.3) 
Underlying free cash flow to equity holders 
FY22
£m


 (50.3) 
 21 12.1 
 – 
 – 
 30.9 
 0.3
 (7.0) 

 40.0 
  (3.6) 
Underlying free cash flow to equity holders excluding operating result from discontinued operations
and working capital outflow 29.4 
ALTERNATIVE PERFORMANCE MEASURES
DFS Furniture plc
27
Strategic Report
Leverage 
FY23
£m


 140.3 
  122.4 

 (4.3) 
 (13.2) 
 (8.6) 
 55.8 
 6.0 
 (23.5) 
 (61.6) 
 73.0 
Leverage (A/B) 1.9x 
Underlying return on capital employed from continuing operations 
FY23
£m


 63.8 
 (0.5) 
 63.3 
 22.6% 
Tax adjusted return (A) 49.0 
 97.4 
 312.6 
  22.0 
432.0 
 14 55.8 
 15 7.7 
 15 3.0 
 15 0.1 
 15 0.3
  (39.1) 
  (97.6) 
 (69.8) 
Total capital employed (B) 362.2 
Underlying ROCE (A/B) 13.5% 
ALTERNATIVE PERFORMANCE MEASURES
DFS Furniture plc
28
Strategic Report
1
2
3
RISKS AND UNCERTAINTIES
The Group faces a number of risks and uncertainties in both its day-to-day business operations and strategic
development. Effective mitigation of these risks is essential to enable us to meet the needs of our customers.
Identification of risks


































Board


Audit Committee


Group Risk Team


Group Leadership Team



Group Governance, Risk & Compliance Committee







1. Principal risks



2. Strategic risks



3. Operational risks



DFS Furniture plc
29
Strategic Report
4
3
5
8
2
1
9
7
6
Evaluation of risks




Principal risks and mitigation











Changes to principal risks in the year




Risk heat map









Management of climate change and other
significant ESG risks












RISKS AND UNCERTAINTIES
Principal risks
1

2

3

4

5

6

7



8

9


 

POTENTIAL IMPACT
LIKELIHOOD
DFS Furniture plc
30
Strategic Report
RISKS AND UNCERTAINTIES
Principal Risk
FINANCIAL RISK AND LIQUIDITY
What is the risk?




Strategic link
Potential impact







Mitigation





FY23 progress




Movement
Principal Risk
REGULATORY ENVIRONMENT
What is the risk?






Strategic link
1
2
3
Potential impact











Mitigation
















FY23 progress

Movement
Link to strategic pillars and platforms
Pillars:
1

2

3

Platforms:
   
Movement:
Increase
Unchanged
Decrease
DFS Furniture plc
31
Strategic Report
RISKS AND UNCERTAINTIES
Principal Risk
CYBER
What is the risk?





Strategic link
Potential impact





Mitigation













FY23 progress




Movement
Principal Risk
SUPPLY CHAIN AND MANUFACTURING RESILIENCE
What is the risk?


Strategic link
Potential impact





Mitigation





FY23 progress


Movement
Link to strategic pillars and platforms
Pillars:
1

2

3

Platforms:
   
Movement:
Increase
Unchanged
Decrease
DFS Furniture plc
32
Strategic Report
RISKS AND UNCERTAINTIES
Principal Risk
MACROECONOMIC UNCERTAINTY
What is the risk?




Strategic link
Potential impact





Mitigation








FY23 progress



Movement
Principal Risk
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
What is the risk?




Strategic link
1
2
3
Potential impact





Mitigation







FY23 progress







Movement
Link to strategic pillars and platforms
Pillars:
1

2

3

Platforms:
   
Movement:
Increase
Unchanged
Decrease
DFS Furniture plc
33
Strategic Report
RISKS AND UNCERTAINTIES
Principal Risk
RETENTION OF SKILLED WORKERS DUE TO LABOUR SHORTAGES
What is the risk?




Strategic link
Potential impact



Mitigation







FY23 progress


Movement
Principal Risk
CONSUMER PROPOSITION AND INDUSTRY COMPETITION
What is the risk?



Strategic link
1
2
3
Potential impact






Mitigation










FY23 progress


Movement
Link to strategic pillars and platforms
Pillars:
1

2

3

Platforms:
   
Movement:
Increase
Unchanged
Decrease
DFS Furniture plc
34
Strategic Report
RISKS AND UNCERTAINTIES
Principal Risk
TRANSFORMATION
What is the risk?


Strategic link
1
2
3
Potential impact





Mitigation








FY23 progress



Movement
Link to strategic pillars and platforms
Pillars:
1

2

3

Platforms:
   
Movement:
Increase
Unchanged
Decrease
DFS Furniture plc
35
Strategic Report
Viability Reporting










Approach
































RISKS AND UNCERTAINTIES
Key Assumptions





























Results


















DFS Furniture plc
36
Strategic Report
Section 172(1) (a)-(f) of the Companies Act 2006 (‘Section 172(1)’) requires a director of a company to act in the way he or she considers, in good faith,
would most likely promote the success of the company for the benefit of its members as a whole.
SECTION 172 STATEMENT
   
A
The likely
consequences of
any decision in
the long term
The Board reviewed the progress made against the
Group’s Pillars and Platforms strategy and ensured
that both decisions taken and future plans support
the long-term success of the Group.


















35


B
The interests of
our colleagues
Our colleagues are critical to the success of our business
and the Board has ultimate responsibility for ensuring the
Group’s decisions consider their interests. 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.





























C
The need to build
strong beneficial
relationships
with our
customers and
suppliers.
Managing these relationships is critical in ensuring the
Group delivers on its strategy. We are committed to
bringing great design and comfort to our customers,

We regularly engage with our suppliers to discuss how
we can achieve our purpose.






















13










Engaging with our stakeholders











DFS Furniture plc
37
Strategic Report
SECTION 172 STATEMENT
   
D
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.

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.























E
The desirability
of the company
maintaining a
reputation for
high standards of
business conduct
We have strong internal governance processes and all
our colleagues receive mandatory online training on Our
Code of Conduct, Data Protection, Modern Slavery, Cyber

are required to comply with our supplier code of practice
which details our requirements for product quality, safety,
employee standards and anti-bribery and corruption
policies. We seek to have a positive and constructive
relationship with the regulatory bodies that authorise
and regulate our business activities.












F
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. During the year the
Board approved a £10m share buyback and paid investors

policy of 1.5p. Throughout the year the Group has
continued to engage with our investors to ensure
their views and interests are taken into account
when making decisions.















DFS Furniture plc
38
Strategic Report
S172 Statement of non-financial information


  
































 






 








SECTION 172 STATEMENT
Board papers highlight information considering Section 172(1) matters
Board Information

page 36 
The Group’s culture helps ensure that there is proper
consideration of the potential impacts of decisions
Board Strategic Discussion


Actions taken as a result of Board engagement
Board Decision

The chart below demonstrates the Board process in considering Section 172(1) in its decision-making.
DFS Furniture plc
39
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT































ALISON HUTCHINSON


page 63





























ALISON HUTCHINSON
Chair of the Responsible and
Sustainable Business Committee
Senior Non-Executive Director
A responsible and
sustainable business
“The Responsible and Sustainable Business
Committee remains focused on ensuring the
business is supporting Our People, Our Planet,
Our Customers and Our Communities.”
DFS Furniture plc
40
Strategic ReportStrategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT
Our Pillars and Highlights
INVESTING IN OUR PEOPLE
129



WINNING PRODUCT DESIGN
Launched fully
circular sofa range
and award-winning
recyclable seat
cushions
BUILDING A
HEALTH & SAFETY
CULTURE
Reduced accidents by
20%

NEW CHARITY PARTNERSHIP
Home-Start
partnership providing
support direct to our
communities
UNDERSTANDING
OUR PEOPLE
more than
>99%


SUSTAINABLE SOURCING
80%


DELIVERING EMISSION
REDUCTION

387

2
e
SUPPORTING OUR CUSTOMERS


-30 to +20
Our People Our Planet Our Customers Our Communities













DFS Furniture plc
41
Strategic Report
 





 


Key
 
 
Our Planet
Sustainable sourcing




Upholstery
Home
27%
53%
Sustainable sourcing




FY23
51%
Sustainable sourcing






Cotton
Viscose
87%
78%
Polyester
81%
Sustainable sourcing



FY23 40%
Sustainable sourcing
 

FY23
47%
Sustainable sourcing
 

Upholstery
Home
100%
3%
Carbon reduction

2


2



FY23 9.1%
15,297 t CO
2
e
Carbon reduction
 
FY22 FY24
Our People
Inclusion and
Diversity




Responded
64%
Inclusion and
Diversity
 

FY23
Female Male
33:67
Our Community
Charity




FY23 40
days
Charity



FY23 £660,000
Our ESG Targets
RESPONSIBILITY AND SUSTAINABILITY REPORT
DFS Furniture plc
42
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT
Our commitment
to our team
Strategy summary




















20%


24,000


64%





DFS Furniture plc
43
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT
Inclusion








































Training













Employee wellbeing





















Health and safety campaign


























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6,000

22,600


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


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





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


















DFS Furniture plc
44
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT
Our roadmap
to the future
Strategy summary














Reduced scope 1 & 2 emission intensity

26%


70%


387kt CO
2
e

Over 80%


DFS Furniture plc
45
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT
Better sourcing













Timber








Leather





















Textiles















Chemicals and waste




















DFS Furniture plc
46
Strategic Report
387,000t CO
2
e (FY23)
38 t CO
2
e (FY39/40)
2024
2030
2035
2040
S1 – 40-50% reduction
(intensity)
S2 – Net Zero
S3 – Supplier Engagment
Suppliers set their own
Net Zero targets
Using sustainable
materials
Reducing our emissions
in operations
Suppliers engage their
value chains while
reducing their emission
Replace legacy technolgy
with lower footprint
alternatives
Suppliers evolve
manufacturing methods
to support circular design
New circular retail models
and products
Fully circular products
and net zero operations
Increase reuse and
recycling in operations
S1 – 90% reduction
(intensity)
S2 – Net Zero
S3 – 50% reduction
S1 – Net Zero
S2 – Net Zero
S3 – 90% reduction
Net Zero
Net Zero Pathway
CO
2
RESPONSIBILITY AND SUSTAINABILITY REPORT
NET ZERO PATHWAY
Our Net Zero strategy












PHASE 1 – FY24-29






PHASE 2 – FY30-34








PHASE 3 – FY35-39













DFS Furniture plc
47
Strategic Report
Scope 1 & 2 progress

































Scope 3 progress and plan

































RESPONSIBILITY AND SUSTAINABILITY REPORT
DFS Furniture plc
48
Strategic Report
6,189
16,873
5,195
17,462
1,697
18,058
223
16,215
104
15,297
2023YTD
2022
2021
2020
2019
RESPONSIBILITY AND SUSTAINABILITY REPORT
Scope 1 and 2 emissions


FY23
MWh




 27,006  
 18,717  
 41,304  
 5,698  
 256
 200
Total energy consumption 93,181  
 

2
 
2

FY23 


     FY23 


  
 15,297      1 10.7    
 1
 104 223     2 0.1    
 5,684      4.0    
Total scope 1+2 MB 15,401      10.8    
Gross sales (£m) 1,423.6   

 
 




Scope 1 & 2 emissions


Scope 3 emissions*

2
 
2

FY23 

    FY23 

   
 320.0      224.8     
 3.7      2.6    11
 5.2      3.6    4 3
 36.7      25.8     32
 0.3      0.2    1 1
 0.5      0.3    1 1
 4.8      3.4     
 0.6      0.4     
 0.0      0.0     
 0.1      0.1     
Total scope 3 emissions 371.9      261.2     
Our Carbon Methodology















DFS Furniture plc
49
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT
CASE STUDY
Award-winning
product
innovation

























CASE STUDY
Our first circular product range



































A Circular Business












2











 

DFS Furniture plc
50
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT
Our customers,
our commitment
Strategy summary










Quality

















50 points
established customer NPS score



‘Excellent’

OUR CUSTOMERS
DFS Furniture plc
51
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT





Ethical business
Code of Conduct













Data protection policy and cyber security









CASE STUDY
Sofology customer service














































DFS Furniture plc
52
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT
Our commitment to
helping everyone thrive
Strategy summary
























>60

labour in their operations and value chain
250
Donated to charity in FY23
£660,000

OUR COMMUNITIES
DFS Furniture plc
53
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT













Modern slavery





























Our Home-Start Partnership




























DFS Group is a values driven business with people at the heart of
everything we do. How we engage our teams, work with our suppliers,
support our communities and lead our industry through change,
always stems from our values – Think Customer, Aim High and Be Real.
The challenges we face, particularly to address the escalating climate
crisis, will rely on the passion and perseverance of our teams and partners,
but we’re confident we can achieve our ambitions, working together.
DFS Furniture plc
54
Strategic Report
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. As climate reporting continues to evolve along with the pressing
nature of climate change issues, so does our performance and strategic reporting. To further align with the
TCFD framework, we have completed our climate scenario analysis, as described in the Strategy section below.
Compliance Statement








Our progress in FY23
 


 


 


 

 




 

Area of focus in FY24
 


 

 

 

 


RESPONSIBILITY AND SUSTAINABILITY REPORT
TCFD
DFS Furniture plc
55
Strategic Report
Governance
Ga) Board oversight of climate-related risks
and opportunities














1


























Gb) Role of management in assessing
and managing climate-related risks
and opportunities.





















2










Looking ahead








Strategy
Sa&b) climate-related risks and opportunities over
short, medium, and long term and its impact to our
businesses, strategy, and financial planning.








  
  


  

  




Intergovernmental Panel on Climate Change
(IPCC) 




International Energy Agency (IEA) scenarios




NGFS (Network for Greening the Financial
System) scenarios





2




Low Carbon World scenario (1.5°C)







2



Hot House World scenario (4°C)










Sc) Resilience of strategy, taking into
consideration different climate related scenarios,
including a 2°C or lower scenario














 

 

RESPONSIBILITY AND SUSTAINABILITY REPORT
DFS Furniture plc
56
Strategic Report
Risk Management
Ra) Processes for identifying and assessing
climate-related risks
















Rb&c) processes for managing climate-related
risks and the integration with our overall risk
management framework
































Metrics and Targets
Ma) Metrics used to assess climate-related risks
and opportunities in line with our strategy and
risk management process















Mb) Scope 1, scope 2, and, scope 3 greenhouse
gas (GHG) emissions

Mc) Targets used to manage climate related risks,
opportunities and performance










RESPONSIBILITY AND SUSTAINABILITY REPORT
DFS Furniture plc
57
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT

Short term risk and opportunities
# Risk Risk/opportunities description Indicator Risk rating Our response
1 Mandates and regulation on our products

P





 







2 Carbon pricing

P









3 Climate change litigation

RPP





















Risk type:
P

T

M

R

Ph

Scenarios:
 
Risk rating:
  
DFS Furniture plc
58
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT
# Risk Risk/opportunities description Indicator Risk rating Our response
4 Building code requirements

P














5 Investment Risk

R







 


Medium to long term risk and opportunities
# Risk Risk/opportunities description Indicator Our response
1 Transition to lower emission technology
and maintaining a circular system.

T



























2 Increased cost of raw materials





 

Scenarios:
 
Risk rating:
  
Risk type:
P

T



R

Ph

DFS Furniture plc
59
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT
# Risk Risk/opportunities description Indicator Risk rating Our response
3 Shift in customer values









 







4 Cost of capital





 


5 Physical risk

Ph














5 Physical risk

Ph

















Scenarios:
 
Risk rating:
  
Risk type:
P

T



R

Ph

DFS Furniture plc
60
Strategic Report
SUSTAINABILITY GOVERNANCE 2023




Three meetings per annum





Quarterly meetings



Three meetings per annum




Monthly meetings
OUR BOARD
The board is responsible for ensuring the Group meet their corporate governance requirements
and the ESG strategy is robust and aligned with the Group’s strategic objectives.
Nine meetings per annum


in the day-to-day operations and assess the progress against targets, while ensuring that sufficient oversight, guidance, support and resource are available.
Monthly meetings
SUSTAINABILITY CHAMPIONS AND INCLUSION COUNCIL
We want to empower our colleagues to drive change and improvements in both environmental and social areas. The goal of these councils
is to educate and engage the wider population as well as support business initiatives and generate ideas.
Bi-monthly meetings
OversightManagement roles
Responsible and Sustainable Business Committee (RSC)
Group Steering Committees (inclusion and sustainability)
Audit Committee
Group Sustainability and ESG meeting
RESPONSIBILITY AND SUSTAINABILITY REPORT
DFS Furniture plc
61
Strategic Report
RESPONSIBILITY AND SUSTAINABILITY REPORT
TCFD CONSISTENCY INDEX
 


Governance 






Strategy 











Risk
Management



 



Metrics and
Targets















TIM STACEY
Chief Executive Officer
JOHN FALLON
Chief Financial Officer
MATERIALITY ASSESSMENT
Impact to DFS
Importance to external stakeholders
A
B
D
E
F
G
H
I
J
K
L
M
N
C
Area Definition
A
GHG emissions
(scope 1, 2, 3)


B
Deforestation &
biodiversity



C
Customer satisfaction
& product quality


D
Material usage 


E
A circular approach 





F
Sustainable
sourcing




G
Supply chain
traceability &
transparency




Area Definition
H
Inclusion & diversity 


I
Data protection
and cyber risk




J
Colleague
engagement



K
Talent &
development



L
Health, safety
& wellbeing



M
Plastics, packaging
& waste



N
Community
engagement
& investment






DFS Furniture plc
62
Governance
Governance
report
This section introduces our
Directors, and details the
activities of our Board and
Board Committees.
 
 
 
 
 
 
 


 
CONTENTS
DFS Furniture plc
63
Governance
Committee membership key
A

N

R

S



–

STEVE JOHNSON
Non-Executive Chair
NR
TIM STACEY
Chief Executive Officer
S
JOHN FALLON
Chief Financial Officer
–
ALISON HUTCHINSON CBE
Senior Independent
A NR S
Non-Executive Director
Date of joining DFS Date of joining DFS:  Date of joining DFS: Date of joining DFS: 
Experience:











Experience:













Experience:





Experience:










Qualifications:
– 
Qualifications:
– 

– 

Qualifications:
– 

– 

Qualifications:
– 

External appointments:
– 
External appointments:
– 
External appointments:
– 
External appointments:
– 
– 

– 

Independent:
– 
Independent:
– 
Independent:
– 
Independent:
– 
DIRECTORS AND OFFICERS
DFS Furniture plc
64
Governance
DIRECTORS AND OFFICERS
Committee membership key
A

N

R

S



–

JO BOYDELL
Non-Executive Director
A NR
LORAINE MARTINS OBE
Non-Executive Director
A NR S
Designated Non-Executive Director
for Workforce Engagement
GILL BARR
Non-Executive Director
A NR S
LIZ MCDONALD
Group General Counsel
and Company Secretary
Date of joining DFS Date of joining DFS:  Date of joining DFS: Date of joining DFS:
Experience:









Experience:











Experience:












Experience:








Qualifications:




Qualifications:



Qualifications:


Qualifications:



External appointments:





External appointments:

External appointments:


External appointments:

Independent:

Independent:

Independent:

Independent:

DFS Furniture plc
65
Governance
Our commitment to good governance













2023 AGM






STEVE JOHNSON
Chairman

Board activities in 2023 at a glance
Assessing the operating and long term
financial planning, budgeting and the
performance and strategy of the Group,

environment and market expectations
Designing the new Capital allocation
and Distribution policy
Overseeing stakeholder communications
Internal Board Evaluation and a review
of Board composition and skills
Overseeing the strategic changes in our
manufacturing operations
The induction of the new Chief Financial
Officer, John Fallon, and a new Non-
Executive Director, Gill Barr



























Our Board in 2023















STEVE JOHNSON

page 63
CORPORATE GOVERNANCE REPORT
“Ensuring that we are an agile organisation
that is able to respond to changing market
conditions and stakeholder needs is
a key focus of the Board.”
DFS Furniture plc
66
Governance
Governance, Risk & Compliance Committee


Brand ESG Committees

implementation of the People, Planet, Customer and Communities strategy.
Governance at a glance
Governance framework













DFS Furniture plc Board
Chief Executive
Responsible for the day-to-day running of the Group’s business and performance, the development
and implementation of strategy and promoting our culture and standards.
Group Leadership Team

Group financial and operational performance and executing on the strategic initiatives required to deliver the Group’s strategy set by the Board.
Audit
Committee



Remuneration
Committee



Nomination
Committee



Responsible & Sustainable
Business Committee



pages 71 to 75

pages 78 to 99

pages 76 to 77

pages 39 to 61
Role of the Chair














Role of the Chief Executive Officer















Role of the Senior Independent Director (‘SID’)








Role of the Company Secretary









Role of the Chair and Chief Executive Officer


CORPORATE GOVERNANCE REPORT


DFS Furniture plc
67
Governance
3
4
6
1
3
4
3
4

Skills and
experience Retail
Customer
Services/
Marketing
People,
Diversity &
Inclusivity Operations International
Governance &
Regulatory Finance Digital M&A Environmental Logistics Manufacturing







Appointment, election and re-election










Independence




















Directors’ skills and experience













Governance at a glance
CORPORATE GOVERNANCE REPORT
Gender Diversity Ethnicity  
DFS Furniture plc
68
Governance
Name
Meetings
attended
Maximum
meetings Independent Responsibility and role during 21/22
Date of
appointment
CHAIRMAN
Chairman 3 3



Chairman

EXECUTIVE DIRECTORS
CEO 



CFO 2 2



CFO 4 4 
NON-EXECUTIVE DIRECTORS
(SID)













 3 3

STANDING ATTENDEES

Company Secretary



ATTENDED BY INVITATION
 3




 2
 2
 2
 3
 3
Committee meetings










 2 3 3 1
 3 4 4 3
 3 4 4 3
 3 4 4 3
 2 2 1 2
 1 1 1 1
 3 4 4 2
 3 4 4 3
 3 4 4 3
 1 1 1 1
 


 





Governance at a glance
CORPORATE GOVERNANCE REPORT
Board meeting attendance


















External appointments




DFS Furniture plc
69
Governance
CORPORATE GOVERNANCE REPORT
How the Board operates
























UK Corporate Governance Code 2018
Compliance statement



















Directors’ indemnities and conflicts



























Board Evaluation










Results overview












Board action plan for FY24
















New Directors induction









Stages of our Board evaluation
Stage 1 Stage 2 Stage 3











Understand
their duties







Meet the
colleagues



Visit the business


DFS Furniture plc
70
Governance
CORPORATE GOVERNANCE REPORT
Shareholder engagement





















Interaction with all shareholders



















External auditor







Internal audit



Remuneration







DTR Disclosure







ELIZABETH MCDONALD


DFS Furniture plc
71
Governance






























Composition










































AUDIT COMMITTEE REPORT
Key activities during FY23
Embedding of new risk management
technology introduced in FY22
Continued focus on the Group’s
approach to UK audit and corporate
governance reform
“The primary responsibilities of the Committee
remain the oversight of the Group’s external
financial reporting, internal controls and risk
management, and the effectiveness of both the
internal audit function and the external audit.”
JO BOYDELL

page 64
DFS Furniture plc
72
Governance
AUDIT COMMITTEE REPORT
Performance evaluation







Roles and responsibilities


Financial reporting:














Internal and external audit:










Internal controls and risk management:











Activities of the Audit Committee






Financial Reporting
Financial Statements
























Viability









Fair, balanced and understandable














Significant issues considered in relation to the
financial statements











DFS Furniture plc
73
Governance
AUDIT COMMITTEE REPORT
Impairment of goodwill 





















Going concern and viability reporting 


















Parent company investments 





















External Audit
Assessment of effectiveness of the external
audit process




































Appointment of the external auditor






Safeguarding objectivity and independence
relative to non-audit services





Prohibited


Permissible (subject to approval limits)




Services to be considered on a case-by-case
basis














Independence assessment by the Audit
Committee









DFS Furniture plc
74
Governance
AUDIT COMMITTEE REPORT







Internal Audit





















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














Internal control and risk management











































































DFS Furniture plc
75
Governance
AUDIT COMMITTEE REPORT



























































Whistleblowing




















Business ethics


































Accountability








JO BOYDELL
Chair of the Audit Committee

DFS Furniture plc
76
Governance










Chair Succession

















CFO Succession
















NED Appointment















NOMINATION COMMITTEE REPORT
Key activities during FY23
Conducted the search for, consideration
of, and recommendation to the Board of
the appointment of the new Chair
Recommending the appointment of the
Chief Financial Officer
Recommending the appointment of the
new Non-Executive Director and Chair of
the Remuneration Committee
Recommending the appointment of

Non-Executive Director
Reviewing the pipeline of talent within the

their development needs
“This year, the Nomination Committee focused
on the appointment of the new CFO, and
strengthening the Board with the appointment
of an additional Non-Executive to continue to
support the long term strategy of the Group.”
STEVE JOHNSON

page 63
DFS Furniture plc
77
Governance
NOMINATION COMMITTEE REPORT
Composition























Principle Duties















‘Everyone Welcome’




















Board Evaluation











What we will do in 2024
















STEVE JOHNSON
Chair of the Nomination Committee

DFS Furniture plc
78
Governance
Contents of this report
78 Part A: Annual statement by the
Remuneration Committee Chair
81 Part B: Remuneration at a glance
82 Part C: Our remuneration philosophy
and workforce reward
84 Part D: Remuneration policy
90 Part E: Annual Report on Remuneration
DIRECTORS’ REMUNERATION REPORT
Key activities during FY23
– Approving the recruitment arrangements
for our new Chief Financial Officer, John
Fallon, and the termination arrangements
of his predecessor
– Determining outturns for incentives in
respect of FY23, taking into consideration
the experience of key stakeholders over
the period
– Assessing the competitiveness of
executive director remuneration
arrangements
– Setting performance targets for FY24
incentives
– Consideration of market trends and
governance updates
– Consideration of pay and conditions
across the wider workforce
“The Committee seeks to ensure a clear
link between Executive Directors’ pay,
the delivery of our strategy and
enhancement of shareholder value.”
GILL BARR
Chair of the Remuneration Committee
page 64
Part A: Annual statement
by the Remuneration
Committee Chair
On behalf of the Board, I am pleased to present the
Remuneration Committee report for the financial
year ended 25 June 2023, my first as Chair of the
Remuneration Committee having joined the Board
and the Committee in March 2023. I would like
to thank my predecessor, Steve Johnson, for his
guidance and support as I transitioned into the role.
The Remuneration Report provides a
comprehensive picture of the structure of our
remuneration framework, its implementation and
its alignment with the business strategy. In addition,
we explain the impact on the rest of the workforce,
and the decisions made by the Committee as a
result of the Group’s performance in FY23. Finally,
we share the intended arrangements for FY24.
As this was not a policy renewal year, we have
included a summarised version of directors’
remuneration policy. The full report as approved by
shareholders at the 2021 AGM can be accessed
online: https://www.dfscorporate.co.uk/investors/
annual-report-2021.
Remuneration in context
The Committee were delighted by the positive
voting outcome for the annual report on
remuneration at the 2022 AGM which received
91.8% votes in favour. We would like to thank our
shareholders for their continued support, and we
look forward to engaging with our shareholders
during FY24 as part of the triennial review of
directors’ remuneration policy ahead of it being
put to vote at the 2024 AGM.
FY23 has been another challenging year. The
well-publicised global macroeconomic challenges
impacted overall market volumes, which were
down c.15% compared to pre-pandemic levels,
but the Group achieved record market share of 38%.
The Group benefited from the its leading brands,
DFS Furniture plc
79
Governance
DIRECTORS’ REMUNERATION REPORT











Group performance










Shareholder experience






Colleague experience































Pay outcomes in FY23
Base salary increases in FY23







Annual Bonus in FY23






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





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















LTIP vesting in respect of FY23


2




2





Committee consideration of incentive outturns
in the context of stakeholder experiences and
overall Group performance







Base salary for FY24
















 

 
DFS Furniture plc
80
Governance
DIRECTORS’ REMUNERATION REPORT



















Annual Bonus for FY24













LTIP awards for FY24




















Management changes





















Looking ahead











GILL BARR
Chair of the Remuneration Committee

DFS Furniture plc
81
Governance
DIRECTORS’ REMUNERATION REPORT
Part B: Remuneration at a glance
Overview of remuneration policy
Element Policy
 
 
 


 


 
Our compliance with the 2018 UK Corporate Governance Code (‘the Code’)
Key Element of the 2018 Code How is this considered within DFS’s remuneration framework?





 








 






 



Key implementation decisions for FY23

Annual bonus
Performance measure Weighting Achievement (% max)
  

1
 
  
  
  
  
  

1



LTIP
Performance measure Weighting Achievement
  
 
  


Implementation of policy for FY24
Element Implementation
 

 
 
 


 
 



 
DFS Furniture plc
82
Governance
DIRECTORS’ REMUNERATION REPORT
Part C: Our Remuneration Philosophy and Workforce Reward
Our remuneration philosophy & Principles




Fair, market competitive pay and benefits
Aligned to our business strategy
and culture
Supports a high-performance sales
and service culture




























Remuneration in the wider context




 









































DFS Furniture plc
83
Governance
DIRECTORS’ REMUNERATION REPORT
Cascade of remuneration across the group

Level
Employee
numbers
Fixed
remuneration
Annual bonus
or incentive /
commission
plans
Restricted
share plan
Long-term
incentive plan
All employee
HMRC plans


5



 
 

Base salary Pension & benefits
Annual bonus and
recognition awards LTIP, RSP & SAYE











































 



 













DFS Furniture plc
84
Governance
DIRECTORS’ REMUNERATION REPORT
Part D: Remuneration Policy





Remuneration principles










Executive Remuneration Policy Table
Base salary


Operation








Maximum opportunity






Performance measures/assessment and recovery provisions


Benefits

Operation










Maximum opportunity


Performance measures/assessment and recovery provisions

Pension

Operation




Maximum opportunity




Performance measures/assessment and recovery provisions

DFS Furniture plc
85
Governance
DIRECTORS’ REMUNERATION REPORT
Annual bonus

Operation








Maximum opportunity



Performance measures/assessment and recovery provisions






Long-term incentive plan


Operation








Maximum opportunity





Performance measures/assessment and recovery provisions







Minimum shareholding requirements

Operation




Maximum opportunity


Performance measures/assessment and recovery provisions

DFS Furniture plc
86
Governance
DIRECTORS’ REMUNERATION REPORT
All-employee incentives

Operation


Maximum opportunity


Performance measures/assessment and recovery provisions

Illustrations of application of Policy







£0
£0.5m
£1.0m
£1.5m
£2.0m
£2.5m
100%
£531,000
39%
22%
39%
£1,356,000
26%
30%
44%
£2,006,000
22%
25%
54%
£2,443,500
100%
£419,284
43%
22%
34%
£971,253
30%
31%
39%
£1,412,034
25%
26%
49%
£1,690,004
Minimum On-target Maximum Maximum
with share
price growth
Tim Stacey (CEO)
Minimum On-target Maximum Maximum
with share
price growth
John Fallon (CFO)





DFS Furniture plc
87
Governance
DIRECTORS’ REMUNERATION REPORT

   
 

 
 

   

   

Approach to recruitment and promotions








Element Policy description
 


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 
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 
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
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




 






DFS Furniture plc
88
Governance
DIRECTORS’ REMUNERATION REPORT
Executive Director service contracts


 
  

1
 
 




Payments for loss of office







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
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

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
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






Consideration of employee remuneration and shareholders
Consideration of shareholder views





Consideration of employee views and employment conditions elsewhere in the Group










DFS Furniture plc
89
Governance
DIRECTORS’ REMUNERATION REPORT
Non-executive Director Remuneration Policy
Remuneration Policy table




Purpose

Operation












Maximum opportunity



Performance measures/assessment and recovery provisions



 
 
 
 






Letters of appointment






Date of appointment
 
 
 
 
 
 
 


DFS Furniture plc
90
Governance
DIRECTORS’ REMUNERATION REPORT
Part E: Annual Report on Remuneration for the Financial Year
ended 25 June 2023
Single total figure of remuneration for Executive Directors – audited



 




1
 
2

3

4



 
Tim Stacey 2023 453 11 170 – 30 1 495 170 665
 443 44 2  
John Fallon 2023 240 – 80 – 8 38 286 80 366

Mike Schmidt 2023 110 6 – – 7 1 124 – 124
 332 14  4  

 


 
 

 


Annual Bonus outturn for FY23 – Audited





Performance against objectives
Performance measure Weighting Threshold (0%) Target
Maximum
(100%)
Outcome
(% of max)
     


    



    
   




    




    
    
  
 
 


 
 

 
 
DFS Furniture plc
91
Governance
DIRECTORS’ REMUNERATION REPORT
Detail of performance against personal objectives










   
CEO – Tim Stacey 




























CFO – John Fallon 























DFS Furniture plc
92
Governance
DIRECTORS’ REMUNERATION REPORT
LTIP awards vesting in relation to performance in FY23 – audited


LTIP award
Performance
conditions
Weighting
(% award) Detail
Entry level
performance
Max
performance
Actual
performance Vesting %
   


   
  



 




 



 




Total
vesting
0%



Scheme interests awarded in FY23 (2022 awards) – audited


  






 
1
   
 
2
   
 

 


Performance conditions for FY23 (2022 award) LTIP
Adjusted EPS (50%)
Percentage of this portion of the Award vesting
   

   
Relative TSR (50%)
Percentage of this portion of the Award vesting
   




























DFS Furniture plc
93
Governance
DIRECTORS’ REMUNERATION REPORT
SAYE awards – audited

Details of LTIP award performance conditions (where not disclosed elsewhere in report)
LTIP award
Performance
conditions
Weighting
(% award) Detail
Entry level
performance
Target
performance
Max
performance
Threshold level
vesting Target vesting Maximum vesting


  

     
  

 

 
 


 

 
Dilution


Payment to past directors – audited

Payment for loss of office – audited

Single figure remuneration table for Non-Executive Directors – audited


Director Fees Other Total

1
2023 21 – 21


2
2023 96 1 97
  1 
 2023 74 – 74
  
 2023 64 – 64
  

3
2023 148 – 148
  

4
2023 54 – 54
 52 52
 2023 54 – 54
 52 52

 
 
 
 
DFS Furniture plc
94
Governance
DIRECTORS’ REMUNERATION REPORT
Shareholding and other interests at 25 June 2023
– audited









Director
Number of
beneficially
owned shares
1
Number of
shares under
the Deferred
Bonus Plan
2
% of salary
held
3
Shareholding
requirement
met
3
Subject to
conditions
4
Not subject to
conditions
Vested but
unexercised
Unvested
SAYE awards
Total at
25 June 2023
      
   

5
 
  

5
 
  

5
 
  
  
  
Total 945,884 35,961 – – 1,373,212 – – – 2,355,057

 
 
 
 
 


Outstanding share awards

Director Type of award Date of grant
Number of
awards Award vested Awards lapsed
Outstanding
awards
Market price on
date of grant
1
Normal
vesting date
      
     
     
     
     
      
 
 
DFS Furniture plc
95
Governance
DIRECTORS’ REMUNERATION REPORT
Remuneration of CEO role versus wider company
performance since IPO






160
150
140
130
120
110
100
90
80
70
Mar
2015
Jun
2015
Jun
2016
Jun
2017
Jun
2018
Jun
2019
Jun
2023
Jun
2022
Jun
2021
Jun
2020
DFS Furniture plc
FTSE 250 Index


FY 23        
CEO Tim Stacey    
1
    
 665   
3
     
 31.1%   
2
     
 0%         

 
 
 

DFS Furniture plc
96
Governance
DIRECTORS’ REMUNERATION REPORT
Percentage change in the Directors’
remuneration






FY19 – FY20 FY20 – FY21 FY21 – FY22 FY22 – FY23
Annual % change
Base
salary Benefits
Annual
bonus
Base
salary Benefits
Annual
bonus
Base
salary Benefits
Annual
bonus
Base
salary Benefits
Annual
bonus
1
             
 
2
           



2
           
            
            
            
            
            
            


 
 
DFS Furniture plc
97
Governance
DIRECTORS’ REMUNERATION REPORT
Relative Importance of spend on pay


Significant distributions 2023 2022 % change
 £202.5m  


£43.0m  

Statement of implementation of remuneration policy in FY24
Base salary





Pension and benefits



Annual bonus






LTIP



ESG (10% of the award)



Percentage of this portion of the Award vesting
Measure Weighting Nil 20% 100%
Between 20% and 100%
on a straight line basis





 

  



 

  
Underlying EPS (45% of the award)









Percentage of this portion of the Award vesting
Measure Nil 20% 60% 100%
Above Nil and
up to 20% on a
straight-line
basis
Between 20%
and 60% on
a straight-line
basis
Between 60%
and 100% on
a straight-line
basis


   







Relative TSR (45%)
Percentage of this portion of the Award vesting
Measure and weighting Nil 20% 100%
Between 20% and
100% on a straight
-line basis
 

























DFS Furniture plc
98
Governance
DIRECTORS’ REMUNERATION REPORT
Non-Executive Director fees


Gender pay gap reporting and diversity and inclusiveness initiatives
Gender pay gap reporting
















Inclusivity and diversity
















CEO pay ratio





















CEO Pay Ratio Data
Year Method Measure CEO
25th
percentile
50th
percentile
75th
percentile
2023 Option B Pay Ratio 27:1 18:1 18:1
Salary £453,200 £22,907 £32,606 £33,032
Total pay and benefits £665,037 £24,377 £36,407 £37,032
     
    
    
     
    
    
     
    
    




DFS Furniture plc
99
Governance
DIRECTORS’ REMUNERATION REPORT
Matters covered during the Committee’s meetings in FY23






Matter
July
2022
Sep
2022
Oct
2022
Mar
2023

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
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
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
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
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

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

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
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
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

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
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
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

Internal and external support for the Committee











GILL BARR
Chair of the Remuneration Committee

DFS Furniture plc
100
Governance
DIRECTORS’ REPORT































 
 
 
 12
 
 
 
 
 43
 53
 43
 
 
 
 52
 


54
Annual General Meeting (‘AGM’)











Shareholder and voting rights























Directors





 



Steve Johnson
1
 


Ian Durant  


Tim Stacey 




John Fallon 




Mike Schmidt 




Alison
Hutchinson






Jo Boydell 





Jane Bednall 




Loraine Martins 





Gill Barr 




 

DFS Furniture plc
101
Governance
DIRECTORS’ REPORT
Articles of Association























Directors’ service contracts




















Directors’ indemnities and insurance














Conflicts of interest









Dividends









 
 

 





Substantial Shareholders









Investor
Number of
Ordinary
Shares
% voting
rights
Date of
notification




  

   15





  


   




  



  


  

Takeover directive information





Shares



























Share Buyback











Authority to purchase own shares






Authority to allot shares





DFS Furniture plc
102
Governance
DIRECTORS’ REPORT



Change of control



















Significant relationships




Donations


Public Policy




Treasury and risk management




Independent auditors















Subsequent events












Disclaimer


















Going concern





















ELIZABETH MCDONALD


DFS Furniture plc
103
Governance
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT
AND THE FINANCIAL STATEMENTS







































































Responsibility statement of the directors in
respect of the annual financial report


















TIM STACEY
Chief Executive Officer
JOHN FALLON
Chief Financial Officer
DFS Furniture plc
104
Governance
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF DFS FURNITURE PLC
1. Our opinion is unmodified











In our opinion:















Basis for opinion



















Materiality














Coverage 







Key audit matters 
Recurring risks 








DFS Furniture plc
105
Governance
INDEPENDENT AUDITOR’S REPORT
2. Key audit matters: our assessment of risks of material misstatement





The risk Our response
Impairment of goodwill Forecast-based assessment






























Historical comparisons:

Benchmarking assumptions:


Sensitivity analysis: 

Our sector experience:


Comparing valuations:

Assessing transparency:

Our results

DFS Furniture plc
106
Governance
INDEPENDENT AUDITOR’S REPORT
The risk Our response
Going Concern Disclosure quality





































Funding assessment:


Historical comparisons:

Benchmarking assumptions:

Sensitivity analysis:



Evaluation of directors’ intent:


Assessing transparency:





DFS Furniture plc
107
Governance
INDEPENDENT AUDITOR’S REPORT
The risk Our response
Recoverability of the parent’s
investment in subsidiaries and
receivables from other group
companies








Low risk, high value














Tests of detail: 







Assessing subsidiary audits:


Our results




DFS Furniture plc
108
Governance
INDEPENDENT AUDITOR’S REPORT
3. Our application of materiality and an
overview of the scope of our audit
























































Normalised Group profit before tax

Normalised PBT
Group materiality
£2.5m

£1.85m

£2m

£0.125m

99%
(2022: 99%)
91%
(2022: 94%)
Full scope for group audit purposes 2023
Full scope for group audit purposes 2022
Residual components
Group revenue from
continuing operations
98%
(2022: 92%)




from continuing operations
Group materiality

DFS Furniture plc
109
Governance
INDEPENDENT AUDITOR’S REPORT
4. Going concern




















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
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
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
















5. Fraud and breaches of laws and regulations
– ability to detect
Identifying and responding to risks of material
misstatement due to fraud























































Identifying and responding to risks of material
misstatement due to non-compliance with
laws and regulations
















































Context of the ability of the audit to detect
fraud or breaches of law or regulation


















DFS Furniture plc
110
Governance
INDEPENDENT AUDITOR’S REPORT
6. We have nothing to report on the other
information in the Annual Report














Strategic report and directors’ report








Directors’ remuneration report



Disclosures of emerging and principal risks
and longer-term viability









































Corporate governance disclosures


























7. We have nothing to report on the other
matters on which we are required to report
by exception















DFS Furniture plc
111
Governance
INDEPENDENT AUDITOR’S REPORT
8. Respective responsibilities
Directors’ responsibilities














Auditor’s responsibilities





















9. The purpose of our audit work and to whom
we owe our responsibilities











FRANCES SIMPSON
(Senior Statutory Auditor)

Chartered Accountants




DFS Furniture plc
112
Financial Statements
CONTENTS
This section presents details of
the Group’s and the Company’s
financial performance and
position as at 25 June 2023.
113 Consolidated income statement
114 Consolidated statement of
comprehensive income
115 Consolidated balance sheet
116 Consolidated statement of changes in equity
 
 
151 Company balance sheet
152 Company statement of changes in equity
 
156 Financial history
157 Shareholder information
Financial
stateme nts
DFS Furniture plc
113
Financial Statements
52 weeks to 25 June 2023 52 weeks to 26 June 2022
Note
Underlying
£m
Non-underlying
£m
Total
£m
Underlying
£m
Non-underlying
£m
Total
£m
Gross sales
1
1, 2 1,423.6 1,423.6 1,474.6 – 1,474.6
Revenue 2 1,088.9 – 1,088.9 1,149.8 – 1,149.8
Cost of sales (496.7) – (496.7) (543.9) – (543.9)
Gross profit 592.2 – 592.2 605.9 – 605.9
Selling and distribution costs (364.6) – (364.6) (368.0) – (368.0)
Administrative expenses (70.2) 0.5 (69.7) (62.0) (0.4) (62.4)
Operating profit/(loss) before depreciation, amortisation and impairment 3 157.4 0.5 157.9 175.9 (0.4) 175.5
Depreciation (80.5) – (80.5) (77.7) – (77.7)
Amortisation (11.6) – (11.6) (10.5) – (10.5)
Impairment (2.0) – (2.0) – – –
Operating profit/(loss) 2, 3 63.3 0.5 63.8 87.7 (0.4) 87.3
Finance income 5 0.2 – 0.2 – – –
Finance expenses 5 (34.3) – (34.3) (28.8) – (28.8)
Profit/(loss) before tax 29.2 0.5 29.7 58.9 (0.4) 58.5
Taxation 6 (6.6) (0.1) (6.7) (14.3) – (14.3)
Profit/(loss) for the period from continuing operations 22.6 0.4 23.0 44.6 (0.4) 44.2
Profit/(loss) for the period from discontinued operations 29 (0.3) 3.5 3.2 (1.5) (11.3) (12.8)
Profit/(loss) for the period 22.3 3.9 26.2 43.1 (11.7) 31.4
Earnings per share
Basic 7
– from continuing operations 9.6p 0.2p 9.8p 17.5p (0.2)p 17.3p
– from discontinued operations (0.2)p 1.5p 1.3p (0.6)p (4.4)p (5.0)p
Total 9.4p 1.7p 11.1p 16.9p (4.6)p 12.3p
Diluted 7
– from continuing operations 9.5p 0.2p 9.7p 17.4p (0.2)p 17.2p
– from discontinued operations (0.2)p 1.5p 1.3p (0.6)p (4.4)p (5.0)p
Total 9.3p 1.7p 11.0p 16.8p (4.6)p 12.2p
1. Refer to pages 25 to 27 for APM definitions.
CONSOLIDATED INCOME STATEMENT FOR 52 WEEKS ENDED 25 JUNE 2023

DFS Furniture plc
114
Financial Statements
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Profit for the period 26.2 31.4
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 (8.7) 23.6
Net change in fair value of cash flow hedges reclassified to profit or loss
Recognised in cost of sales (13.7) 1.9
Income tax on items that are or may be reclassified subsequently to profit or loss 5.9 (6.4)
Other comprehensive income/(expense) for the period, net of income tax (16.5) 19.1
Total comprehensive income for the period 9.7 50.5
Total comprehensive income for the period attributable to owners of the parent
– from continuing operations 6.5 63.3
– from discontinued operations 3.2 (12.8)
9.7 50.5
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR 52 WEEKS ENDED 25 JUNE 2023

DFS Furniture plc
115
Financial Statements
Note
25 June 2023
£m
26 June 2022
£m
Non-current assets
Property, plant and equipment 8 97.4 105.9
Right of use assets 8, 9 312.6 338.0
Intangible assets 10 536.7 533.8
Other financial assets 12 – 4.8
Deferred tax assets 13 15.5 10.8
962.2 993.3
Current assets
Inventories 14 55.8 64.4
Other financial assets 12 0.7 12.8
Trade and other receivables 15 11.1 24.3
Current tax assets 2.7 7.8
Cash and cash equivalents (excluding bank overdrafts) 26.7 17.3
97.0 126.6
Total assets 1,059.2 1,119.9
Current liabilities
Bank overdraft – (12.3)
Trade payables and other liabilities 16 (224.9) (280.7)
Lease liabilities 9 (84.1) (89.0)
Provisions 20 (6.2) (12.8)
Other financial liabilities 17 (6.7) –
(321.9) (394.8)
Non-current liabilities
Interest bearing loans and borrowings 18 (165.8) (93.5)
Lease liabilities 9 (327.3) (356.4)
Provisions 20 (6.9) (6.3)
Other financial liabilities 17 (0.2) –
(500.2) (456.2)
Total liabilities (822.1) (851.0)
Net assets 237.1 268.9
Equity attributable to owners of the Company
Share capital 22 24.1 25.9
Share premium 22 40.4 40.4
Merger reserve 22 18.6 18.6
Capital redemption reserve 22 359.6 357.8
Treasury shares 22 (10.1) (4.9)
Employee Benefit Trust shares 22 (6.6) (6.9)
Cash flow hedging reserve 22 (4.9) 17.5
Retained earnings (184.0) (179.5)
Total equity 237.1 268.9
CONSOLIDATED BALANCE SHEET

board of directors on 21 September 2023 and were
signed on its behalf by:
Tim Stacey
Chief Executive Officer
John Fallon
Chief Financial Officer
Company registered number: 07236769
DFS Furniture plc
116
Financial Statements
Share
capital
£m
Share
premium
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Treasury
shares
£m
Employee
Benefit Trust
shares
£m
Cash flow
hedging
reserve
£m
Retained
earnings
£m
Total
equity
£m
Balance at 27 June 2021 25.9 40.4 18.6 357.8 (0.7) (0.2) (8.0) (149.3) 284.5
Profit for the year – – – – – – – 31.4 31.4
Other comprehensive income/(expense) – – – – – – 25.5 (6.4) 19.1
Total comprehensive income for the year – – – – – – 25.5 25.0 50.5
Dividends – – – – – – – (53.8) (53.8)
Purchase of own shares – – – – (4.4) – – – (4.4)
Treasury shares issued – – – – 0.2 – – (0.2) –
Purchase of shares by Employee Benefit Trust – – – – – (8.1) – – (8.1)
Employee Benefit Trust shares issued – – – – – 1.4 – (1.0) 0.4
Settlement of share based payments – – – – – – – (2.7) (2.7)
Share based payments – – – – – – – 2.6 2.6
Tax recognised directly in equity – – – – – – – (0.1) (0.1)
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
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
DFS Furniture plc
117
Financial Statements
Note
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Net cash from operating activities 26 121.7 132.9
Investing activities
Proceeds from sale of property, plant and equipment 1.3 1.8
Interest received 0.2 –
Acquisition of property, plant and equipment 8 (20.4) (36.8)
Acquisition of other intangible assets 10 (14.5) (10.6)
Net cash used in investing activities (33.4) (45.6)
Financing activities
Interest paid (10.5) (3.8)
Interest paid on lease liabilities 9 (23.5) (25.0)
Payment of lease liabilities 9 (61.6) (63.5)
Drawdown/(repayment) of borrowings 27 72.0 70.0
Purchase of own shares – (8.2)
Proceeds from sale of own shares – 0.4
Purchase of treasury shares (30.9) (4.4)
Ordinary dividends paid (12.1) (28.4)
Special dividends paid – (25.4)
Net cash used in financing activities (66.6) (88.3)
Net increase/(decrease) in cash and cash equivalents 27 21.7 (1.0)
Cash and cash equivalents at beginning of period 27 5.0 6.0
Cash and cash equivalents (including bank overdraft) at end of period 27 26.7 5.0
CONSOLIDATED CASH FLOW STATEMENT FOR 52 WEEKS ENDED 25 JUNE 2023

DFS Furniture plc
118
Financial Statements
1 Accounting 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 registered office is 1 Rockingham Way,
Redhouse Interchange, Adwick-Le-Street, Doncaster,
South Yorkshire, DN6 7NA.
The consolidated financial statements consolidate
those of the Company and its subsidiaries (together
referred to as ‘the Group’). The parent company
financial statements present 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 presented in these consolidated financial
statements. Judgements made by the directors, in
the application of these accounting policies that have
significant effect on the financial statements and
estimates with a significant risk of material adjustment
in the next year are discussed in note 1.20.
1.1 Basis of preparation
The consolidated financial statements have 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 payment
charges which are measured at their fair value.
The financial statements are for the 52 weeks to
25 June 2023 (last year 52 weeks to 26 June 2022).
The Company has elected to prepare its parent
company financial statements in accordance with
Financial Reporting Standard 101 Reduced Disclosure
Framework (‘FRS 101’); these are presented on pages
151 to 155.
Going concern
The financial statements are prepared on a going
concern basis, which the directors believe to be
appropriate for the following reasons.
The Company heads a group which at 25 June 2023
had a £215.0m revolving credit facility maturing in
December 2025. On 1 September 2023 the Group
refinanced its borrowing facilities, replacing the
previous £215.0m facility with a combination of a new
£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 2022, £65.2m of the revolving
credit facility remained undrawn, in addition to cash in
hand, at bank of £2.4m.
Covenants applicable to both the new revolving credit
facility and the private placement debt are unchanged
from the previous facility, being: 3.0x Net Debt /
EBITDA and 1.5x Fixed Charge Cover, and are assessed
on a six-monthly basis at June and December.
The Directors have prepared cash flow forecasts and
performed a going concern assessment for the Group
covering a period of at least twelve months from
the date of approval of these financial statements
(the ‘going concern assessment period’), which
indicate that the Group will be in compliance with
these covenants. These forecasts include a number
of assumptions in relation to: market size and the
Group’s order intake volumes; inflationary impacts on
gross margin and other costs; further increases in UK
interest rates; 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 included: significantly reduced
customer spending; impacts on gross margin and
other costs from inflationary cost pressures; increases
in interest rates, and a combination of these scenarios.
The Directors have also performed reverse stress
testing analysis to confirm that circumstances
resulting in a covenant breach were beyond those
considered plausible.
As part of this analysis, mitigating actions within the
Group’s control should these severe but plausible
scenarios occur have also been considered. Should
these severe but plausible scenarios occur, the
Directors could implement these actions to help
reduce the impact on the Group. These mitigating
actions include reducing discretionary advertising
and other expenditure, retail price increases, a pause
on expansionary capital investment, a reduction or
pause in dividend payments, and other measures
to protect cash balances. These forecast cash flows,
considering the ability and intention of the Directors
to implement mitigating actions should they need
to, indicate that there remains sufficient headroom
in the forecast period for the Group to operate
within the committed facilities and to comply with all
relevant 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
environment, and are confident 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 approval of these financial statements.
Accordingly, the financial statements are prepared
on a going concern basis.
1.2 Basis of consolidation
The consolidated financial statements incorporate
the financial statements of the Company 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 affect those returns through
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
considered in the preparation of these financial
statements, including in the carrying values of goodwill
and tangible assets, the measurement of financial
instruments, and in relation to the Group’s going
concern and viability assessments. No material impact
was noted on the consolidated financial statements
in relation to climate change. The potential impact will
continue to be assessed on an ongoing basis.
1.4 Gross sales and revenue
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 Group 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 to the finance house varies
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 offer, the average duration of the interest free
loan period and the prevailing interest rates.
For the purposes of managing its business the Group
focuses on gross sales, which is defined as the total
amount payable by customers, inclusive of VAT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AT 25 JUNE 2023
DFS Furniture plc
119
Financial Statements
 continued
 continued
and other sales taxes and prior to any accounting
adjustments for interest-free credit fees or aftercare
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 affected by customer preferences 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 to 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 product guarantees offered to customers
are determined at the time of the sale, provided for
separately (note 20) and charged to cost of sales.
1.5 Government 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 relates to 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 charges or credits
– costs associated with significant corporate,
financial or operating restructuring, including
acquisitions
– initial costs of establishing operations
in new geographical territories
Material finance income or expenses associated with
significant changes in the Group’s borrowings are
disclosed separately as non-underlying items below
operating profit.
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 expenses comprise interest payable, finance
charges on lease liabilities recognised in profit or loss
using the effective interest method and unwinding
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 accrues, using the effective interest
method. Dividend income is recognised in the income
statement on the date the Group’s right to receive
payments is established.
1.7 Employee benefits
Defined contribution plans
Payments to defined contribution pension plans are
recognised as an expense in the income statement
as they fall due.
Short-term benefits
Short-term employee benefit obligations are
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
reviewed and adjusted to reflect the achievement of
service and non-market based performance conditions.
1.8 Taxation
Tax on the profit 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 any adjustment to tax payable in
respect of previous years.
Deferred tax is provided on temporary differences
between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts
used for taxation purposes. The following temporary
differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities
in a transaction that is not a business combination
and that affects neither accounting nor taxable
profit or loss, and differences relating to investments
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 accordance with IAS 34, adjusted for
material non-taxable items.
A deferred tax asset is recognised on deductible
temporary differences only to the extent that it is
probable that future taxable profits 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 Foreign 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. Foreign exchange differences arising
on translation are recognised in the income statement
except for effective differences arising on qualifying
cash flow hedges, which are recognised 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 recognised. When the excess
is negative, a bargain purchase gain is recognised
immediately in profit 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
consideration 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 25 JUNE 2023
DFS Furniture plc
120
Financial Statements
 continued
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 item of property, plant and
equipment have different useful lives, they are
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 exchange
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 payments, including in-substance 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 interest rates.
In both scenarios, the carrying value of the right of use
asset will generally be adjusted 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 required from the remeasurement
being recorded in profit or loss.
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 for any remeasurement 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 certain remeasurements 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;
– 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 control 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 are indefinite.
Intangible assets with an indefinite useful life 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 Inventories
Inventories are stated at the lower of cost and
net realisable value. 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 have indefinite
useful lives or that are not yet available for use, the
recoverable amount is estimated each year at the
same time.
An impairment loss is recognised if the carrying
amount of an asset exceeds its estimated recoverable
amount. Impairment losses are recognised in profit
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.
1.16 Provisions
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 outflow of economic benefits
will be required to settle the obligation. Provisions are
determined by discounting the expected future cash
flows at a pre-tax rate that reflects risks specific to
the liability.
Details of provisions recognised are in note 20 and
the related significant estimates and judgements in
note 1.20.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
DFS Furniture plc
121
Financial Statements
 continued
1.17 Non-derivative financial instruments
Non-derivative 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 measured at amortised cost using the effective
interest method, less any impairment losses.
Trade and other payables
Trade and other payables are recognised initially at
fair value. Subsequent to initial recognition they are
measured at amortised cost using the effective
interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances
and call deposits.
Interest-bearing borrowings
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
effective interest method.
1.18 Derivative financial instruments
and hedging
Derivative financial instruments
Derivative financial instruments are recognised at fair
value. The gain or loss on remeasurement to fair value
is recognised immediately in profit or loss. However,
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 derivative financial instrument is designated
as a hedge of the variability in cash flows of a highly
probable forecast transaction, the effective part of
any gain or loss on the derivative financial instrument
is recognised in other comprehensive income and
presented within the hedging reserve. Any ineffective
portion of the hedge is recognised immediately in the
income statement.
When the forecast transaction subsequently results
in the recognition of a non-financial asset or non-
financial liability, the associated cumulative gain or
loss remains in the hedging reserve and is reclassified
into profit or loss in the same period or periods during
which the asset acquired or liability assumed affects
profit or loss.
For 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 forecast transaction affects
profit or loss.
When a hedging instrument expires 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 discontinued 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 discontinued operation
represents a separate major line of the business or
geographical area of operation. Profit or loss from
discontinued operations comprises the post-tax
profit or loss of discontinued 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 discontinued
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 Directors are required to make judgements,
estimates and assumptions that affect 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 differ from actual results. No significant
areas of judgement or estimation arose in the current
financial statements.
In the period ended 26 June 2022 the presentation
of discontinued operations was considered to be an
area of significant judgement requiring consideration
of the criteria under IFRS 5 Non-current Assets
Held for Sale and Discontinued Operations as to
whether the terminated operations represented
a major separate line of business or geographical
area of operations, were part of a single coordinated
disposal plan or represented a subsidiary acquired
exclusively with a view to resale. The Directors
judged that these operations represented a major
geographical area business and the closure was
part of a single coordinated disposal plan and were
therefore satisfied that the criteria under IFRS 5 were
met and presentation as discontinued operations
was appropriate. Accordingly, the results of these
operations were presented as discontinued operations
in the consolidated income statement in that period
and in the current period.
The following are other areas of important estimates
and judgements relating to material balances in the
Group’s financial statements, but which do not meet
the IFRS-defined criteria 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. The Directors are satisfied that no reasonably
possible 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 25 June 2023.
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 from each cash-generating unit and the
appropriate discount rate to apply. Further details of
the key assumptions underlying the calculation are
provided in note 10. The Directors are satisfied that no
reasonably possible change in these estimates would
result in the recognition of an impairment within the
next twelve months and accordingly the carrying value
of goodwill is not considered a significant estimate as
at 25 June 2023.
Customer guarantees
The Group maintains a provision for its obligations
under long term product guarantees offered to 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
Directors are satisfied that no reasonably possible
change in these estimates would result in a material
difference to the value of the provision and therefore
it is not considered a significant estimate as at
25 June 2023.
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 inventories. The Directors are satisfied that
no reasonably possible change in these estimates
would result in a material difference to the value of the
provision and therefore it is not considered a significant
estimate as at 25 June 2023.
1.21 New accounting standards
There are no new standards, amendments to existing
standards or interpretations that are effective for the
first time in the period ended 25 June 2023 that have
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
DFS Furniture plc
122
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 contribution. Brand contribution is defined
as underlying EBITDA (being earnings before
interest, tax, depreciation, amortisation and
non-underlying items) excluding property costs
and central administration costs.
The Group reviews and manages the performance of
its operations on a retail 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
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
DFS 1,125.5 1,169.1 – – 1,125.5 1,169.1
Sofology 298.1 304.9 – – 298.1 304.9
Other segments – 0.6 215.6 187.9 215.6 188.5
Eliminations – – (215.6) (187.9) (215.6) (187.9)
Gross sales 1,423.6 1,474.6 – – 1,423.6 1,474.6
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Total segments gross sales 1,423.6 1,474.6
Less: value added and other sales taxes (226.2) (233.8)
Less: costs of interest free credit and aftercare products (108.5) (91.0)
Revenue 1,088.9 1,149.8
Of which:
Furniture sales 1,033.3 1,096.8
Sales of aftercare products 55.6 53.0
Revenue 1,088.9 1,149.8
52 weeks to 25 June 2023 – continuing operations
DFS
£m
Sofology
£m
Other
Segments
£m
Eliminations
£m
Total
£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
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
DFS Furniture plc
123
Financial Statements
 continued
52 weeks to 26 June 2022 – continuing operations
DFS
£m
Sofology
£m
Other
Segments
£m
Eliminations
£m
Total
£m
Revenue 906.3 242.9 188.5 (187.9) 1,149.8
Cost of sales (452.9) (121.6) (59.8) 90.4 (543.9)
Gross profit 453.4 121.3 128.7 (97.5) 605.9
Selling & distribution costs (excluding property costs) (210.1) (65.9) (137.1) 74.7 (338.4)
Brand contribution (segment profit) 243.3 55.4 (8.4) (22.8) 267.5
Property costs (29.6)
Underlying administrative expenses (62.0)
Underlying EBITDA 175.9
Note
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Underlying EBITDA 157.4 175.9
Non-underlying items 3 0.5 (0.4)
Depreciation, amortisation and impairments (94.1) (88.2)
Operating profit 63.8 87.3
Finance income 0.2 –
Finance expenses (34.3) (28.8)
Profit before tax 29.7 58.5
A geographical analysis of revenue is presented below:
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
United Kingdom 1,067.7 1,129.3
Republic of Ireland 21.2 20.5
Total revenue 1,088.9 1,149.8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
DFS Furniture plc
124
Financial Statements
 continued
Segment assets and liabilities
Assets Liabilities
25 June 2023
£m
26 June 2022
£m
25 June 2023
£m
26 June 2022
£m
DFS 942.9 948.4 (537.3) (625.0)
Sofology 146.0 167.6 (135.3) (142.6)
Other segments 26.4 30.0 (51.8) (52.2)
Total segments 1,115.3 1,146.0 (724.4) (819.8)
Loans and financing – – (165.8) (93.5)
Financial assets/(liabilities) 0.7 17.6 (6.9) –
Current tax 2.7 7.8 – –
Deferred tax 15.5 10.8 – –
Eliminations (75.0) (62.3) 75.0 62.3
Total Group 1,059.2 1,119.9 822.1 (851.0)
Segment assets comprise tangible and intangible non-current assets including goodwill and brand names, inventories, trade and other receivables, cash and cash equivalents.
Segment liabilities comprise trade payables and current and non-current other liabilities and provisions.
Additions to non-current assets
Depreciation, amortisation
and impairment
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
DFS 42.7 72.0 70.1 66.0
Sofology 11.4 14.8 17.6 17.3
Other segments 6.0 12.5 6.4 4.9
Total Group 60.1 99.3 94.1 88.2
Additions to non-current assets include both tangible and intangible non-current assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
DFS Furniture plc
125
Financial Statements
3 Operating profit – continuing operations
Group operating profit is stated after charging/(crediting):
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Depreciation on tangible assets (including depreciation on right of use assets) 80.5 77.7
Amortisation of intangible assets 11.6 10.5
Impairments 2.0 –
Net gain on disposal of property, plant and equipment (0.8) (1.1)
Net loss/(gain) on disposal of right of use assets (1.2) 0.1
Cost of inventories recognised as an expense 509.1 548.1
Write down of inventories to net realisable value 2.0 4.6
Other costs of sales (14.4) (8.8)
Release of provisions (note 20) (0.9) (2.1)
Government grants received (business rates relief) (0.2) (2.0)
Operating lease rentals 0.2 0.7
Non-underlying items
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Release of lease guarantee provision (0.5) (0.3)
Restructuring costs – 0.9
Acquisition costs – (0.2)
(0.5) 0.4
The release of the lease guarantee provision relates to the property provisions detailed in note 20.
In addition to the non-underlying items for continuing operations above, a further £3.8m of non-underlying credits were recognised in respect of discontinued operations.
This amount related to the closure costs of discontinued operations. Further details are presented in note 29 to the consolidated financial statements.
Auditor’s remuneration
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Audit of these financial statements 0.3 0.3
Audit of the financial statements of Group subsidiaries 0.5 0.4
Amounts receivable by the Company’s auditor and its associates in respect of:
All other services 0.1 –
0.9 0.7
During the period, an amount of £49,500 was paid to the Company’s auditor in respect of the review of the Group’s interim financial statements (FY22: £49,500) and £35,000
in respect of other audit related assurance services (FY22: £nil).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
DFS Furniture plc
126
Financial Statements
4 Staff numbers 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
52 weeks to
25 June 2023
52 weeks to
26 June 2022
Production 1,016 1,009
Warehouse and transport 1,356 1,315
Sales and administration 3,167 3,182
5,539 5,506
The aggregate payroll costs of these persons were as follows:
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Wages and salaries 177.4 180.7
Social security costs 17.5 17.6
Other pension costs 5.8 5.6
200.7 203.9
Share based payment expense (equity settled) 1.8 2.6
202.5 206.5
Aggregate remuneration payable to directors in respect of qualifying services was as follows:
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Emoluments 1.6 1.3
Pension contributions – 0.1
Gain on exercise of share options – 0.9
Three directors accrued retirement benefits under pension schemes in the period (2022: two). All of the directors’ pension contributions were to defined contribution schemes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
DFS Furniture plc
127
Financial Statements
5 Finance income and expense
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Finance income
Interest income on bank deposits 0.2 –
Total finance income 0.2 –
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Finance expense
Interest payable on senior revolving credit facility 10.4 2.5
Bank fees 0.4 1.5
Unwind of discount on provisions 0.1 –
Interest on lease liabilities 23.4 24.7
Other interest – 0.1
Total finance expense 34.3 28.8
6 Taxation
Recognised in the income statement
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Current tax
Current period 5.7 4.9
Adjustments for prior years 0.1 0.9
Current tax expense 5.8 5.8
Deferred tax
Origination and reversal of temporary differences 2.4 6.8
Deferred tax rate change 0.4 1.6
Adjustments for prior years (1.5) (0.8)
Deferred tax expense 1.3 7.6
Total tax expense in income statement 7.1 13.4
Total tax expense in income statement
– from continuing operations 6.7 14.3
– from discontinued operations 0.4 (0.9)
7.1 13.4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
DFS Furniture plc
128
Financial Statements
 continued
Reconciliation of effective tax rate
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Profit before tax for the period from continuing and discontinued operations 33.5 44.8
Tax using the UK corporation tax rate of 20.5% (2022: 19%) 6.9 8.5
Non-deductible expenses 2.3 2.2
Tax exempt revenues (1.0) (1.1)
Effect of tax rates in foreign jurisdictions (0.4) 1.4
Recognition of previously unrecognised tax losses – 0.3
Adjustments in respect of share options 0.3 0.4
Adjustment in respect of prior years (1.4) 0.1
Impact of change in tax rate on deferred tax balances 0.4 1.6
Total tax expense 7.1 13.4
The Finance Act 2021, which was substantively enacted in May 2021, included provisions to increase the rate of UK corporation tax to 25% with effect from 1 April 2023.
Deferred taxation is measured at tax rates that are expected to apply in the periods in which temporary timing differences are expected to reverse based on tax rates
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 25 June 2023 (25% at 26 June 2022).
Income tax recognised in other comprehensive income
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Effective portion of changes in fair value of cash flow hedges (1.8) 4.8
Net change in fair value of cash flow hedges reclassified to profit or loss (3.0) 0.4
Impact of change in tax rate on deferred tax balances (1.1) 1.2
(5.9) 6.4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
DFS Furniture plc
129
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
7 Earnings per share
Statutory earnings per share
Basic earnings per share is calculated by dividing the
net profit or loss for 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
average number of shares reflects the movements
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
corresponding change in resources are reflected 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 for the financial period attributable
to ordinary equity holders of the parent company, but
increasing the weighted average number of ordinary
shares by the dilutive effect of potential ordinary
shares. Potential ordinary shares arise from employee
share based payment arrangements (note 25). Where
share based payments are subject to 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
Director’s Remuneration Report. 
52 weeks to
25 June 2023
pence
52 weeks to
26 June 2022
pence
Basic earnings/(loss) per share
– from continuing operations 9.8 17.3
– from discontinued operations 1.3 (5.0)
Total basic earnings per share 11.1 12.3
Diluted earnings/(loss) per share
– from continuing operations 9.7 17.2
– from discontinued operations 1.3 (5.0)
Total diluted earnings per share 11.0 12.2
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Profit/(loss) for the period attributable to equity holders of the parent company
– from continuing operations 23.0 44.2
– from discontinued operations 3.1 (12.8)
26.1 31.4
25 June 2023
No.
26 June 2022
No.
Weighted average number of shares in issue for basic earnings per share 235,470,857 254,675,661
Dilutive effect of employee share based payment awards 1,783,365 1,220,492
Weighted average number of shares in issue for diluted earnings per share 237,254,222 255,896,153
Underlying earnings per share
Underlying basic earnings per share and underlying diluted earnings per share are calculated by dividing the profit for the period attributable to ordinary equity holders of
the parent company, as adjusted to exclude the effect of non-underlying items, by the same weighted average numbers of ordinary shares above used for basic and diluted
earnings per share respectively.
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Continuing operations
Profit for the period attributable to equity holders of the parent company 23.0 44.2
Non-underlying (profit)/loss after tax (0.4) 0.4
Underlying profit for the period attributable to equity holders of the parent company from continuing operations 22.6 44.6
DFS Furniture plc
130
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
 continued
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Discontinued operations
Profit/(loss) for the period attributable to equity holders of the parent company 3.1 (12.8)
Non-underlying (profit)/loss after tax (3.5) 11.3
Underlying loss for the period attributable to equity holders of the parent company from discontinued operations (0.4) (1.5)
52 weeks to
25 June 2023
pence
52 weeks to
26 June 2022
pence
Underlying basic earnings/(loss) per share
– from continuing operations 9.6 17.5
– from discontinued operations (0.2) (0.6)
Total underlying basic earnings per share 9.4 16.9
Underlying diluted earnings/(loss) per share
– from continuing operations 9.5 17.4
– from discontinued operations (0.2) (0.6)
Total underlying diluted earnings per share 9.3 16.8
DFS Furniture plc
131
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
8 Property, plant and equipment
Land and
buildings
£m
Plant and
equipment
£m
Motor
vehicles
£m
Right of use
assets
£m
Total
£m
Cost
Balance at 27 June 2021 20.5 192.5 10.2 462.9 686.1
Reclassification – 0.9 (0.1) (0.4) 0.4
Additions 2.0 34.4 0.4 51.9 88.7
Remeasurements – – – 5.4 5.4
Disposals (0.6) (45.3) (1.8) (9.6) (57.3)
Balance at 26 June 2022 21.9 182.5 8.7 510.2 723.3
Reclassification (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
Depreciation and impairments
Balance at 27 June 2021 1.7 121.4 8.5 117.8 249.4
Reclassification – 0.5 – (0.4) 0.1
Depreciation charge for the period 0.4 19.8 0.5 58.5 79.2
Impairments 0.1 1.2 0.1 3.1 4.5
Disposals (0.1) (45.2) (1.7) (6.8) (53.8)
Balance at 26 June 2022 2.1 97.7 7.4 172.2 279.4
Reclassification (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
Net book value
At 27 June 2021 18.8 71.1 1.7 345.1 436.7
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
Reclassifications in the year between gross cost and depreciation between plant and equipment and motor vehicles relate to historic disposals made at £nil net book value.
In addition, other assets previously presented within land and buildings have been reclassified to property right of use assets during the year. None of these reclassifications
impacted reported profit or total non-current assets. Accordingly, the Directors do not consider the changes sufficiently material to require restatement of prior period balances.
Capital commitments
At 25 June 2023 the Group had contracted capital commitments of £9.1m (2022: £11.8m) for which no provision has been made in the financial statements. Plant and
equipment includes leasehold improvements. 
DFS Furniture plc
132
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
9 Leases
Right of use assets
Property
£m
Vehicles
£m
Equipment
£m
Total
£m
Cost
At 27 June 2021 443.3 17.7 1.9 462.9
Reclassification (0.4) – – (0.4)
Additions 44.2 7.7 – 51.9
Remeasurements 5.4 – – 5.4
Disposals (6.8) (2.8) – (9.6)
At 26 June 2022 485.7 22.6 1.9 510.2
Reclassification 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
Depreciation and impairment
At 27 June 2021 108.0 8.6 1.2 117.8
Reclassification (0.4) – – (0.4)
Depreciation charge for the period 54.6 3.7 0.2 58.5
Disposals (4.1) (2.7) – (6.8)
Impairments 3.1 – – 3.1
At 26 June 2022 161.2 9.6 1.4 172.2
Reclassification 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
Net book value
At 27 June 2021 335.3 9.1 0.7 345.1
At 26 June 2022 324.5 13.0 0.5 338.0
At 25 June 2023 295.2 17.1 0.3 312.6
Amounts recognised in the consolidated balance sheet:
25 June 2023
£m
26 June 2022
£m
Current lease liabilities 84.1 89.0
Non-current lease liabilities 327.3 356.4
For more information on the maturity of the Group’s lease liabilities, see note 24.
DFS Furniture plc
133
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
 continued
Amounts recognised in the consolidated income statement:
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Interest on lease liabilities (23.5) (25.0)
Variable lease payments not included in the measurement of lease liabilities (0.3) 1.0
Income from subleasing right of use assets 0.4 0.1
Expenses relating to short term leases and low value leases (0.3) (1.8)
Amounts recognised in the consolidated cash flow statement:
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Total cash outflow for lease liabilities 85.1 88.5
Non-cancellable short term lease rentals are payable as follows:
25 June 2023
£m
26 June 2022
£m
Less than one year 0.6 0.1
Between one and five years – –
More than five years – –
0.6 0.1
The Group has entered into short term leases in respect of warehouses and equipment.
At 25 June 2023, future rentals receivable under non-cancellable leases where the Group is the lessor were £2.4m (2022: £2.8m).
DFS Furniture plc
134
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
10 Intangible assets
Computer
software
£m
Brand names
£m
Goodwill
£m
Total
£m
Cost
Balance at 27 June 2021 44.9 14.8 509.3 569.0
Reclassification (0.2) – – (0.2)
Additions 10.6 – – 10.6
Disposals – – – –
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
Amortisation and impairments
Balance at 27 June 2021 28.5 5.1 – 33.6
Amortisation charge for the period 9.1 1.4 – 10.5
Impairments – 0.5 1.0 1.5
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
Net book value
At 27 June 2021 16.4 9.7 509.3 535.4
At 26 June 2022 17.7 7.8 508.3 533.8
At 25 June 2023 22.0 6.4 508.3 536.7
Goodwill
The carrying amount of goodwill is allocated to the following cash generating units:
Goodwill
25 June 2023
£m
26 June 2022
£m
DFS Trading Limited 479.9 479.9
Sofology Limited 28.4 28.4
508.3 508.3
DFS Furniture plc
135
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
 continued
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.
Cash flow forecasts are prepared from the latest financial results and internal budgets for the next four years, which take into account external macroeconomic 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 a further underlying contraction in the Group’s market of 5% in FY24, followed by a slow recovery (mid single digit annual growth)
in subsequent years. The base case also reflects a cautious assessment of the anticipated growth in the Group’s market share driven by delivery of our strategic initiatives.
Revenue is assumed in line with order intake, keeping order bank levels relatively consistent across the assessment period.
Gross margin percentage for FY24 is expected to be ahead of FY23 through more effective sourcing and the annualised impact of price increases and freight rate reductions
already implemented. Other costs reflect anticipated inflationary increases and benefits from specific cost saving initiatives. Capital expenditure is assumed to remain 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% (2022: 2.0%).
These cash flow forecasts were then discounted at pre-tax discount rates of 13.3% to 14.6% (2022: 10.3% – 11.1%). The discount rates are estimated based on the Group’s
weighted average cost of capital (derived from market indices of risk-free rates, market risk premia, peer group analysis and the Group’s own borrowing costs), risk adjusted
for an individual unit’s circumstances.
For DFS and Sofology, the value in use calculations showed a significant headroom between the calculated value in use and the carrying value 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 material to these consolidated 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, further increases in UK interest rates, and changes in
applicable discount rates. On the basis of this analysis the Directors concluded that a reasonably possible change in assumptions would not lead to an impairment
being recognised.
11 Investments in subsidiaries
The following companies are incorporated in England & Wales, with the exception of Coin Retail Limited (Jersey) which is incorporated in Jersey. They are all wholly owned by
the Group and have been consolidated in these financial statements.
Principal activity
Diamond Holdco 2 Limited
1
Intermediate holding company
Diamond Holdco 7 Limited
1
Intermediate holding company
DFS Furniture 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
Haydock Furniture Limited
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 Way, Redhouse Interchange, Adwick-le-Street, Doncaster DN6 7NA
2. 26 New Street, St Helier, Jersey, JE2 3RA
3. Ashton Road, Golborne, Warrington, WA3 3UL
DFS Furniture plc
136
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
12 Other financial assets
25 June 2023
£m
26 June 2022
£m
Non-current
Foreign exchange contracts – 4.8
Current
Foreign exchange contracts 0.7 12.8
Foreign exchange contracts comprise forward contracts which are used to hedge exchange risk arising from the Group’s overseas purchases (note 24).
13 Deferred tax
Deferred tax assets and liabilities are attributable to the following:
25 June 2023
£m
26 June 2022
£m
Fixed asset timing differences 4.4 3.6
IFRS 16 7.8 10.6
Remeasurement of derivatives to fair value 3.0 (4.4)
Tax losses carried forward – 0.4
Brand names (1.5) (1.9)
Share based payments 0.7 0.7
Other temporary differences 1.1 1.8
Net tax assets 15.5 10.8
The deferred tax movement in the period is as follows:
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
At start of period 10.8 24.7
(Charged)/credited to the income statement:
Fixed asset timing differences 0.8 (3.7)
Unwind of IFRS 16 transition impact (2.8) (1.2)
Tax losses carried forward (0.4) (2.2)
Brand names 0.4 0.3
Share based payments – (0.5)
Derivatives 1.5 –
Other temporary differences (0.7) (0.1)
Recognised in the statement of comprehensive income 5.9 (6.5)
At end of period 15.5 10.8
Deferred tax assets on losses of £4.7m (2022: £5.3m) have not been recognised as there is uncertainty over the utilisation of these losses.
DFS Furniture plc
137
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
14 Inventories
25 June 2023
£m
26 June 2022
£m
Raw materials and consumables 8.9 7.3
Finished goods and goods for resale 62.8 76.0
71.7 83.3
Write-down to net realisable value (15.9) (18.9)
55.8 64.4
In applying its accounting policy for inventory, the Group identifies those items where there is a risk that net realisable value does not exceed cost, due to 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 Trade and other receivables
25 June 2023
£m
26 June 2022
£m
Trade receivables 7.7 12.6
Prepayments 3.0 11.4
Accrued income 0.1 0.3
Other receivables 0.3 –
11.1 24.3
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.
Prepayments and accrued income do not include impaired assets.
16 Trade payables and other liabilities
25 June 2023
£m
26 June 2022
£m
Current
Payments received on account 39.1 72.2
Trade payables 97.6 122.5
Other creditors including other tax and social security 34.7 32.5
Accruals 53.5 53.5
224.9 280.7
Payments on account represent contract liabilities under IFRS 15, which will be realised through revenue in the subsequent financial year. Trade payables do not bear interest
and are paid within agreed credit terms. For more information on lease liabilities, see note 1.12.
DFS Furniture plc
138
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
17 Other financial liabilities
25 June 2023
£m
26 June 2022
£m
Non-current
Foreign exchange contracts 0.2 –
Current
Foreign exchange contracts 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.
25 June 2023
£m
26 June 2022
£m
Senior revolving credit facility 167.0 95.0
Unamortised issue costs (1.2) (1.5)
165.8 93.5
The revolving credit facility in place at the year end bore interest at a rate of credit spread adjusted SONIA plus 2.955% and was repayable on 21 December 2025. The revolving
credit facility was secured on a first priority basis with fixed and floating charges over substantially all of the assets of the Group. Subsequent to the year end, the Group
undertook a refinancing of its debt, replacing the previous £215.0m revolving credit facility with a £200.0m facility maturing in September 2027 and £50.0m of private debt.
Refer to note 30 for further details.
For more information on the maturity of the Group’s lease liabilities, see note 24.
19 Employee benefits
Defined contribution pension plans
The Group operates a number of defined contribution pension plans under which contributions by the employees and the Group are administered by trustees 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 £5.8m (2022: £5.6m).
DFS Furniture plc
139
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
20 Provisions
Guarantee
provision
£m
Property
provisions
£m
Other
provisions
£m
Total
£m
Balance at 26 June 2022 8.7 4.0 6.4 19.1
Provisions made during the period 3.8 1.7 – 5.5
Provisions used during the period (5.0) (0.6) (1.2) (6.8)
Provisions released during the period – (0.5) (4.2) (4.7)
Balance at 25 June 2023 7.5 4.6 1.0 13.1
Current 5.2 0.3 0.7 6.2
Non-current 2.3 4.3 0.3 6.9
7.5 4.6 1.0 13.1
The Group offers a long-term guarantee on its upholstery products and in accordance with accounting standards a provision is maintained for the expected future cost
of fulfilling these guarantees on products which have been delivered before the reporting date. In calculating this provision the key areas 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 £0.8m. The directors have therefore concluded that reasonably possible variations in estimate would not result in a
material difference.
Property provisions relate to potential obligations under lease guarantees offered to former subsidiary companies, the majority of which expire in 2025, and wear and tear
costs for Group properties based on anticipated lease expiries and renewals, which will predominantly be utilised more than five years from the reporting date.
Other provisions relate to payment of refunds to customers for payment protection insurance policies and other regulatory costs. Other provisions also include costs
associated with the exit from the Netherlands and Spain, see note 29 for details.
DFS Furniture plc
140
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
21 Dividends
The following dividends were recognised and paid during the period:
Pence per
ordinary share
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Final ordinary dividend for FY21 7.5p – 19.0
Interim ordinary dividend for FY22 3.7p – 9.4
Special dividend 10.0p – 25.4
Final dividend for FY22 3.7p 8.6 –
Interim ordinary dividend for FY23 1.5p 3.5 –
12.1 53.8
The Directors recommend a final dividend of 3.0p in respect of the financial period ended 25 June 2023, resulting in a total proposed dividend of £6.9m. Subject to
shareholder approval it is intended that this dividend will be paid on 29 December 2023. DFS Furniture plc shares will trade ex-dividend from 30 November 2023 and the
record date will be 1 December 2023. This dividend has not therefore been recognised as a liability in these financial statements.
22 Capital and reserves
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.
Ordinary shares of £0.10 each
Number of shares
‘000
Ordinary shares
£m
Allotted, called up and fully paid
At the start of the financial period 258,637 25.9
Cancelled during the financial period (17,959) (1.8)
At the end of the financial period 240,678 24.1
On 9 November 2022 17,958,600 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 Company purchases the Company’s equity share capital into treasury (treasury shares), the consideration paid, including any directly attributable incremental
costs is deducted from equity attributable to the Company’s equity holders until the shares are cancelled, reissued or disposed of.
During the period ended 25 June 2023 21,694,437 shares (2022: 2,585,666) were acquired at a total cost of £30.9m (2022: £4.4m). 17,958,600 treasury shares (2022: nil)
were cancelled on 9 November 2022. None of the Company’s own ordinary shares (2022: 63,444) were used to satisfy employee share based payment awards during
the year. At 25 June 2023 the company had 6,533,700 ordinary shares held in treasury (2022: 2,797,863).
DFS Furniture plc
141
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
 continued
Employee Benefit Trust shares
The Employee Benefit Trust holds ordinary shares which are issued for the purpose of satisfying future employee share based payments awards and is consolidated into the
Group financial statements.
During the period ended 25 June 2023 the Company acquired and issued no ordinary shares to the Employee Benefit Trust (2022: 3,000,000). 172,800 shares were used
during the period (2022: 824,009). At 25 June 2023 the Employee Benefit Trust held 3,686,178 of the Company’s ordinary shares (2022: 4,040,978).
23 Financial instruments: categories and fair value
25 June 2023
£m
26 June 2022
£m
Financial assets
Derivatives in designated hedging relationships 0.7 17.6
Loans and receivables 8.0 12.6
Cash 26.7 17.3
Financial liabilities
Derivatives in designated hedging relationships (6.9) –
Senior revolving credit facility (165.8) (93.5)
Bank overdraft – (12.3)
Amortised cost (164.2) (195.1)
Finance lease obligations (412.2) (445.4)
All derivatives are categorised as Level 2 under the requirements of IFRS 7 as they are valued using techniques based significantly on observed market data.
The Directors have reviewed for expected credit losses and consider the amount of any such losses to be immaterial.
The Directors consider that the fair values of each category of the Group’s financial instruments are the same as their carrying values in the Group’s balance sheet.
DFS Furniture plc
142
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
24 Financial instruments: risk management
The objectives, policies and processes governing the treasury activities of the Group are reviewed and approved by the Board. The Group’s documented 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 strategy for the management of these risks the Group uses derivative financial instruments. The Group does not enter into or trade financial instruments,
including derivative financial instruments, for speculative purposes.
Liquidity risk
The Group manages its cash and borrowing requirements to ensure that it has sufficient liquid resources to meet its obligations as they fall due while making efficient use
of the Group’s financial resources.
The table below shows the maturity analysis of the undiscounted remaining contractual cash flows (including interest) of the Group’s financial liabilities:
25 June 2023
Less than 1 year
£m
1 to 2 years
£m
2 to 5 years
£m
Over 5 years
£m
Total
£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
26 June 2022
Less than 1 year
£m
1 to 2 years
£m
2 to 5 years
£m
Over 5 years
£m
Total
£m
Trade and other payables 176.0 – – – 176.0
Lease liabilities 84.3 79.0 200.8 179.0 543.1
Senior revolving credit facility 3.5 3.5 96.6 – 103.6
Other liabilities 12.8 3.0 1.3 2.0 19.1
276.6 85.5 298.7 181.0 841.8
Derivatives: net settled – – – – –
Derivatives: gross settled
Cash in flows (143.7) (68.3) – – (212.0)
Cash out flows 143.0 51.6 – – 194.6
Total cash flows 275.9 68.8 298.7 181.0 824.4
DFS Furniture plc
143
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
 continued
Interest rate risk management
The Group’s operating profit is affected by the cost of providing interest free credit to its customers. This cost is in turn impacted by interbank lending rates, including SONIA.
While the relationship is not wholly direct, an increase in SONIA of one percentage point would reduce the Group’s reported revenue by 0.6%.
The Group is also exposed to interest rate risk on its senior revolving credit facility, which bears interest at a floating rate of credit spread adjusted SONIA plus a margin
(2.955% at 25 June 2023); no related interest rate hedging was in place as at 25 June 2023. 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 £1.7m.
Foreign exchange risk management
The Group is exposed to the risks of exchange rate fluctuations on the purchase of products denominated in foreign currencies. Currency requirements are assessed by
analysis of historic purchasing patterns by month, adjusted as appropriate to take into account current trading expectations. The Group’s treasury policy allows for the use
of forward foreign exchange contracts to hedge the exchange rate risk arising from these anticipated future purchases up to 16 months in advance. These contracts are
designated as cash flow hedges.
The table below summarises the forward foreign exchange contracts outstanding at the period end:
Notional amount Fair value
25 June 2023
£m
26 June 2022
£m
25 June 2023
£m
26 June 2022
£m
Derivatives in designated hedging relationships
US Dollar 137.9 194.6 (6.2) 17.6
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:
Assets Liabilities
25 June 2023
£m
26 June 2022
£m
25 June 2023
£m
26 June 2022
£m
US Dollar 12.9 1.5 (18.8) (10.3)
Euro 3.0 4.2 (0.2) (0.2)
Foreign currency sensitivity analysis
The Group’s primary foreign currency exposures are to US Dollars and the Euro. The table below illustrates the hypothetical sensitivity of the Group’s reported profit 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 foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency
rates. The analysis assumes that exchange rate fluctuations on currency derivatives that form part of an effective cash flow hedge relationship affect the cash flow hedging
reserve in equity.
Positive figures represent an increase in profit or equity.
Income statement Equity
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
US Dollar 0.6 0.9 (13.2) (20.8)
Euro (0.3) (0.4) – –
DFS Furniture plc
144
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
 continued
A 10% strengthening of the above currencies against the Sterling at the period end would have had the equal but opposite effect on the above currencies to the amounts
shown above, on the basis that all other variables remain constant.
IFRS 9 requires the Group to ensure that hedge accounting relationships are aligned with the Group’s risk management objectives and strategy and to apply a qualitative and
forward-looking approach to assessing hedge effectiveness. The Group determines the existence of an economic relationship between the hedging instrument and the
hedged item based on the currency, amount and timing of their respective cash flows. The Group assesses whether the derivative designated in each hedging relationship
is expected to be and, has been, effective in offsetting cash flows of the hedged item using the hypothetical derivative method.
In these hedge relationships, the main sources of ineffectiveness are:
– the effect of counterparties and the Group’s own credit risk on the fair value of the forward foreign exchange contracts, which is not reflected in the change in the fair
value of the hedged cash flows attributable to the change in exchange rates; and
– changes in the timing of the hedged transactions.
Financial risk management
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from
the Group’s investment securities.
Investments of cash, borrowings and derivative instruments are transacted only through counterparties meeting the credit rating and investment criteria 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 have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.
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 retained earnings as shown in the consolidated statement of changes in equity. The Group manages its capital with the objective that all entities within the Group
continue as going concerns while maintaining an efficient structure to minimise the cost of capital. The Group is not restricted by any externally imposed capital requirements.
25 Share based payments
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%.
LTIP awards vest after a three year performance period subject to the achievement of performance measures based on earnings per share and total shareholder return
targets. Further information on LTIP performance targets and awards made to Directors is given in the Directors’ Remuneration Report on pages 78 to 99.
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 (2022: £1.5m). 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’.
DFS Furniture plc
145
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
 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,
excluding Executive Directors and other recipients of LTIP awards. Awards may not exceed 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 awards made to each individual are subject to either an earnings per share or underlying profit before tax performance target; remaining awards are 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 year, the Group settled part of the vested RSP shares by offering cash payments (£0.3m, FY22: £1.2m) to participating employees. 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)
SAYE schemes are currently available to all employees in the UK and Republic of Ireland, with invitations to participate generally issued on an annual basis and subject to
HMRC rules. The current maximum monthly savings limit for the schemes is £500. Options are granted at the prevailing market share price 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:
52 weeks to 25 June 2023 52 weeks to 26 June 2022
LTIP
No.
DBS
No.
RSP
No.
SAY E
No.
LTIP
No.
DBS
No.
RSP
No.
SAYE
No.
Outstanding at the beginning of the period 1,982,263 93,938 2,692,875 4,116,029 1,929,231 - 3,113,529 4,197,239
Granted 1,547,809 – 2,422,628 10,102,311 675,766 93,938 955,496 1,094,094
Forfeited (526,237) (33,727) (535,072) (283,551) (77,435) – (347,775) (151,159)
Exercised – – (399,060) – (545,299) – (1,028,375) (252,598)
Lapsed (436,289) – (415,394) (30,622) – – – (35,689)
Cancelled – – – (2,978,743) – – – (735,858)
Outstanding at the end 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
Weighted average remaining contractual life (months) 18.8 15.9 20.4 28.1 15.9 27.6 16.0 19.4
Weighted average share price at exercise – – £1.15 – £2.45 – £1.64 £2.28
At 25 June 2023 the weighted average exercise price of outstanding SAYE options was £1.01 (2022: £1.81) and the range of exercise prices was £0.88 to £2.18 (2022: £1.62
to £2.18). At 25 June 2023 there were 408,057 (2022: 148,051) exercisable SAYE options, with a weighted average exercise price of £1.88 (2022: £1.80). There were no
exercisable LTIP, DBP or RSP options at 25 June 2023 (2022: nil).
DFS Furniture plc
146
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
 continued
Fair value calculations
The LTIP, DBS, RSP and SAYE awards are all accounted for as equity-settled under IFRS 2. The fair value of LTIP awards which are subject to a market based performance
condition (total shareholder return) is calculated using a stochastic (Monte Carlo) option pricing model. RSP awards, SAYE awards and LTIP awards subject to a non-market
based performance condition (earnings per share) are valued using a Black-Scholes option pricing model. The inputs to these models for awards granted during the financial
period are detailed below:
LTIP RSP SAYE
Grant date
12 October 2022 and
14 December 2022
12 October
2022
21 November
2022
Share price at date of grant £1.05 and £1.51 £1.05 £1.43
Exercise price Nil Nil £0.89
Volatility 36.5% to 42.7%
1
–
2
47.8%
Expected life 3 years 3 years 3.3 years
Risk free rate 3.3% to 4.5%
1
–
2
3.2%
Dividend yield –
3
7.1% 5.2%
Fair value per share
Market based performance conditions £0.39 to £0.69
1
– –
Non-market based performance condition £0.91 to £1.40
1
£0.85 –
No performance condition – £0.85 £0.88
1. The 2022 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 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 £1.8m (2022: £2.6m).
DFS Furniture plc
147
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
26 Net cash from operating activities
Note
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Profit for the period 26.2 31.4
Adjustments for:
Income tax expense 6 7.1 13.4
Finance income 5 (0.2) –
Finance expenses 5 34.3 29.1
Depreciation of property, plant and equipment 8 22.1 20.7
Depreciation of right of use assets 9 58.4 58.5
Amortisation of intangible assets 10 11.6 10.5
Impairment of assets 8 2.0 6.0
Gain on sale of property, plant and equipment 3 (0.8) (1.1)
(Gain)/loss on disposal of right of use assets 3 (1.2) 0.1
Settlement of share based payments (0.3) (2.7)
Share based payment expense 25 1.8 2.6
Foreign exchange impact on cash flow hedges 1.4 –
Decrease/(increase) in trade and other receivables 13.2 (7.2)
Decrease/(increase) in inventories 8.6 (3.3)
Decrease in trade and other payables (55.8) (16.6)
Decrease in provisions (6.0) (1.7)
Net cash from operating activities before tax 122.4 139.7
Tax paid (0.7) (6.8)
Net cash from operating activities 121.7 132.9
DFS Furniture plc
148
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
27 Net debt
26 June 2022
£m
Cash flow
£m
Other non-cash
changes
£m
25 June 2023
£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)
27 June 2021
£m
Cash flow
£m
Other non-cash
changes
£m
26 June 2022
£m
Cash in hand, at bank 22.7 (5.4) – 17.3
Bank overdraft (16.7) 4.4 – (12.3)
Cash and cash equivalents (including bank overdraft) 6.0 (1.0) – 5.0
Senior revolving credit facility (23.1) (70.0) (0.4) (93.5)
Lease liabilities (454.1) 63.5 (54.8) (445.4)
Total net debt (471.2) (7.5) (55.2) (533.9)
Non-cash changes include the addition of leases within the period of £25.0m (2022: £51.9m), lease remeasurements of £7.0m (2022: £5.4m), disposals of leases of £4.7m
(2022: £2.5m) and the amortisation of capitalised debt issue costs of £0.3m (2022: £0.4m).
28 Related parties
Key Management Personnel
At 25 June 2023, Directors of the Company held 0.4% of its issued ordinary share capital (2022: 0.4%), and a further 0.1% (2022: 0.1%) was held by other key management
personnel. The compensation of key management personnel (including the Directors) is as follows:
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Emoluments 3.5 4.0
Share based payments expense 0.1 0.8
Company contributions to money purchase schemes 0.1 0.3
3.7 5.1
A number of key management personnel hold positions in other companies that result in them having control or significant influence over these companies. One such
relationship was formed during the period, with an entity which the Group already transacted. 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 aggregate value of transactions related to key management personnel and entities over which they have control or significant influence was £4.3m, and the outstanding
balance at the year end was £0.6m.
From time to time key management personnel or tier 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.
DFS Furniture plc
149
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
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 this year. The revenues and expenses of the discontinued operations have
therefore been eliminated from the consolidated income statement for the Group’s continuing operations and are shown as a separate single post-tax line item, consistent
with the presentation adopted for the year ended 26 June 2022. Prior to being classified as discontinued operations, these operations were included within the DFS segment
of the Group’s segmental analysis.
Results from discontinued operations:
52 weeks to
25 June 2023
52 weeks to
26 June 2022
Underlying
£m
Non-underlying
£m
Total
£m
Total
£m
Revenue 2.0 – 2.0 9.0
Cost of sales (1.1) – (1.1) (4.6)
Gross profit 0.9 – 0.9 4.4
Selling and distribution costs (1.1) – (1.1) (5.0)
Administrative expenses – 3.8 3.8 (5.3)
Operating (loss)/profit before depreciation, amortisation and impairment (0.2) 3.8 3.6 (5.9)
Depreciation – – – (1.5)
Impairment – – – (6.0)
Operating (loss)/profit (0.2) 3.8 3.6 (13.4)
Finance expenses – – – (0.3)
(Loss)/profit before tax (0.2) 3.8 3.6 (13.7)
Taxation (0.1) (0.3) (0.4) 0.9
(Loss)/profit for the period from discontinued operations (0.3) 3.5 3.2 (12.8)
Non-underlying items from discontinued operations:
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Impairment of right of use assets – 3.1
Impairment of other assets – 1.4
Impairment of goodwill and intangible assets – 1.5
Other closure (credits)/costs (3.8) 5.3
(3.8) 11.3
The closure credits in the year 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.
DFS Furniture plc
150
Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023
 continued
Cash flows from discontinued operations:
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Net cash from operating activities (0.6) 1.1
Net cash used in investing activities – –
Net cash used in financing activities (0.4) (1.4)
Net decrease in cash and cash equivalents (1.0) (0.3)
Cash and cash equivalents at beginning of period 1.3 1.6
Net cash and cash equivalents (including bank overdraft) at end of period 0.3 1.3
30 Subsequent events
Refinancing
On 1 September, the Group successfully completed a refinancing of its £215.0m revolving credit facility, replacing it with a new £200.0m revolving credit facility and £50.0m
of senior secured notes. The £200.0m revolving credit facility is held with a syndicate of banks and matures in September 2027, with the option of a one year extension, and
attracts variable rate interest (credit spread adjusted SONIA plus a margin). The senior secured notes attract fixed rate interest and comprise two tranches: £25.0m maturing
September 2028 and £25.0m maturing September 2030.
Both of the new debt facilities are subject to the same financial covenants as the previous facility, being: 3.0x Net Debt / EBITDA and 1.5x Fixed Charge Cover, and are
assessed on a six-monthly basis at June and December.
As a consequence of the refinancing, non-underlying finance costs of £1.9m will be recognised in the income statement in FY24 comprising £0.8 m in associated
professional fees and the write-off of £1.1m of unamortised issue costs on the previous £215.0m loan.
Restructuring
On 11 September, a consultation process was commenced on the potential closure of the smallest of the Group’s UK factories. If the closure goes ahead, it is expected
to result in non-underlying restructuring costs of approximately £5.5m, including redundancy costs and asset impairment.
DFS Furniture plc
151
Financial Statements
COMPANY BALANCE SHEET
AT 25 JUNE 2023
Note
25 June 2023
£m
26 June 2022
£m
Non-current assets
Investments 2 254.5 252.7
Amounts due from group companies 3 275.0 205.1
529.5 457.8
Current liabilities
Amounts due to group companies 4 (63.3) (20.1)
Net assets 466.2 437.7
Capital and reserves
Called up share capital 5 24.1 25.9
Share premium 5 40.4 40.4
Merger reserve 5 18.6 18.6
Capital redemption reserve 5 359.6 357.8
Treasury shares 5 (10.1) (4.9)
Shares held by employee benefit trust 5 (6.6) (6.9)
Retained earnings 40.2 6.8
Equity shareholders’ funds 466.2 437.7

(2022: £10.0m).

board of directors on 21 September 2023 and were
signed on its behalf by:
Tim Stacey
Chief Executive Officer
John Fallon
Chief Financial Officer
Company registered number: 07236769
DFS Furniture plc
152
Financial Statements
COMPANY STATEMENT OF CHANGES IN EQUITY
AT 25 JUNE 2023
Share capital
£m
Share
premium
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Treasury
shares
£m
Shares held
by employee
benefit trust
£m
Retained
earnings
£m
Total equity
£m
Balance at 27 June 2021 25.9 40.4 18.6 357.8 (0.7) (0.2) 52.0 493.8
Profit for the period – – – – – – 10.0 10.0
Other comprehensive income – – – – – – – –
Total comprehensive income for the period – – – – – – 10.0 10.0
Dividends paid – – – – – – (53.8) (53.8)
Purchase of own shares – – – – (4.4) – – (4.4)
Treasury shares issued – – – – 0.2 – (0.2) –
Purchase of shares by Employee Benefit Trust – – – – – (8.1) – (8.1)
Employee Benefit Trust shares issued – – – – – 1.4 (1.0) 0.4
Settlement of share based payments – – – – – – (2.7) (2.7)
Share based payments – – – – – – 2.6 2.6
Tax recognised directly in equity – – – – – – (0.1) (0.1)
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
DFS Furniture plc
153
Financial Statements

Basis of preparation

with Financial Reporting Standard 101 Reduced
Disclosure Framework (‘FRS 101’).

Company applies the recognition, measurement and
disclosure requirements of international accounting
standards in conformity with the requirements of the
Companies Act 2006 (‘UK-adopted IFRSs’), but makes
amendments where necessary in order to comply with
Companies Act 2006. The Company has applied the
exemption available under FRS 101 in respect of the
following disclosures:
– 
– comparative period reconciliations
– disclosures in respect of transactions with wholly
owned subsidiaries
– disclosures in respect of capital management
– 
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


(2022: £10.0m).
The Company proposes to continue to adopt the
reduced disclosure framework of FRS 101 in its next

The accounting policies set out below have, unless
otherwise stated, been applied consistently to all

Going concern
The Company heads a group which at 25 June 2023
had a £215.0m revolving credit facility maturing in
December 2025. On 1 September 2023 the Group

previous £215.0m facility with a combination of a new
£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 2022, £65.2m of the revolving credit
facility remained undrawn, in addition to cash in hand,
at bank of £2.4 m. The Directors have considered

the Company, including the inherent uncertainty in
forecasting the impact of the current economic and

Company has adequate resources to continue to meet
all liabilities as and when they fall due for at least twelve


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

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 any provision for impairment.
Taxation

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

the carrying amounts of assets and liabilities for

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

investment in subsidiaries. The amount recognised is
equivalent to the equity-settled share based payment

statements. The corresponding credit is recognised
directly in equity.
Treasury shares

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

the information is required instead to be disclosed

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

Management Personnel compensation.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
AT 25 JUNE 2023
DFS Furniture plc
154
Financial Statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
AT 25 JUNE 2023

Shares in subsidiary undertakings
52 weeks to
25 June 2023
£m
52 weeks to
26 June 2022
£m
Cost and net book value
At the start of the financial period 252.7 250.1
Additions 1.8 2.6
At the end of the financial period 254.5 252.7

made in respect of share based payments schemes for the Group’s employees. As a consequence of the Company’s share price at 25 June 2023, a value in use calculation




assumptions would not lead to an impairment being recognised.

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.

25 June 2023
£m
26 June 2022
£m
Amounts due from subsidiary undertakings (non-interest bearing, repayable on demand) 275.0 205.1


25 June 2023
£m
26 June 2022
£m
Amounts due to subsidiary undertakings (non-interest bearing, repayable on demand) 63.3 20.1

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 258,637 25.9
Cancelled during the financial period (17,959) (1.8)
At the end of the financial period 240,678 24.1
On 9 November 2022 17,958,600 ordinary shares which had been held in treasury were cancelled.
DFS Furniture plc
155
Financial Statements
NOTES TO THE COMPANY FINANCIAL STATEMENTS
AT 25 JUNE 2023
 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

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.
During the period ended 25 June 2023 21,694,437
shares (2022: 2,585,666) were acquired at a total cost
of £30.9m (2022: £4.4m). 17,958,600 treasury shares
(2022: nil) were cancelled on 9 November 2022. None
of the Company’s own ordinary shares (2022: 63,444)
were used to satisfy employee share based payment
awards. At 25 June 2023 the company had 6,533,700
ordinary shares held in treasury (2022: 2,797,863).
Employee Benefit Trust shares

which are issued for the purpose of satisfying future
employee share based payments awards.
During the period ended 25 June 2023 the Company
acquired and issued no ordinary shares to the

shares were used during the period (2022: 824,009).

3,686,178 of the Company’s ordinary shares (2022:
4,040,978).
DFS Furniture plc
156
Financial Statements
FINANCIAL HISTORY
FY23 FY22
FY21
Restated
3
FY20
FY19
2
52 weeks
FY19
1
48 weeks
IFRS 16 IAS 17
Gross sales £m 1,423.6 1,474.6 1,359.4 935.0 1,287.2 1,165.0
Revenue £m 1,088.9 1,149.8 1,060.2 724.5 996.2 901.0
Underlying EBITDA £m 157.4 175.9 224.0 61.9 90.2 65.1
Underlying profit/(loss) before tax excluding brand amortisation £m 30.6 60.3 109.2 (63.1) 50.2 28.2
Profit/(loss) before tax from continuing operations £m 58.5 102.6 (81.2) 43.6 22.4
Basic earnings per share from continuing operations p 9.8 17.3 35.8 (31.4) 16.5 8.6
Ordinary dividends per share p 4.5 7.4 7.5 – 11.2 11.2
Special dividends per share p – 10.0 – – – –
Purchase of own shares £m 30.9 4.4 – 1.1 – –
Total shareholder return % -28.3 -37.9 +71.4 -32.5 +31.9 +31.5
1. Audited statutory period: 48 weeks ended 30 June 2019.
2. Unaudited pro-forma period: 52 weeks ended 30 June 2019.
3. Restated to exclude operations becoming discontinued in FY22.
DFS Furniture plc
157
Financial Statements
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

Redhouse Interchange
Adwick-le-Street
Doncaster
DN6 7NA
Corporate advisors
Auditor
KPMG LLP
1 Sovereign Square
Sovereign Street
Leeds
LS1 4DA
Remuneration advisor

51 Lime Street
London
EC3M 7DQ
Brokers

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

Spencer Road
Lancing

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.
For institutional investor enquiries, please contact:
Tulchan Group
85 Fleet Street
London
EC4Y 1AE
+44 (0)20 7353 4200
Annual General Meeting 2023
This year’s AGM will be held at 2:30pm on 10 November 2023

Adwick-le-Street, Doncaster, DN6 7NA
Financial calendar
FY23 full year results 21 September 2023
Annual General Meeting 10 November 2023
Report and Accounts
Registered number 7236769
25 June 2023
Company No. 07236769
DFS Furniture plc
158
Financial Statements
NOTES
www.dfscorporate.co.uk
www.dfs.co.uk
www.sofology.co.uk