Financial statements Independent auditors’ report to the members of Dunelm Group plc Our audit approach Overview Audit scope • The Group is structured with one segment which comprises a consolidation of the Parent Company and seven subsidiary companies. • For the purposes of the Group financial statements, we conducted an audit of the complete financial information of one of these legal entities, together with additional procedures performed including over the Group consolidation. • We separately audited the Parent Company financial statements. Key audit matters • Inventory provisioning (Group) • Covid-19 pandemic impact (Group and Parent Company) Materiality • Overall Group materiality: £7,800,000 (2020: £5,500,000) based on 5% of profit before tax. • Overall Parent Company materiality: £5,400,000 (2020: £5,000,000) based on 1% of total assets. • Performance materiality: £5,850,000 (Group) and £4,050,000 (Parent Company). The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation ofresources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. Transition to IFRS 16, which was a key audit matter last year, is no longer included because the KAM was specific to the year of transition. Otherwise, the key audit matters below are consistent with last year. Key audit matter How our audit addressed the key audit matter Inventory provisioning (Group) Refer to the Audit and Risk Committee Report, the We tested sales made post period-end to ensure that inventory items Accounting Policies, Note 3 (Operating Profit) and Note were held at the lower of cost and NRV. 13 (Inventories). 180 DUNELM GROUP PLC ANNUAL REPORT & ACCOUNTS 2021