Financial statements Accounting Policies For the 52 weeks ended 26 June 2021 GENERAL INFORMATION assumes a government enforced national lockdown for three The Group financial statements consolidate those of Dunelm months over our peak winter trading period, where the stores Group plc (‘the Company’) and its subsidiaries (together are closed but Click & Collect services continue, and no referred to as ‘the Group’). The Company financial statements government support is received. In both of these scenarios on pages 186 to 216 present information aboutthe Company the Group would not breach any of its financial covenants and as a separate entity and not about its Group. would not require any additional sources of financing during the forecast period, being at least until March 2023 (the RCF Dunelm Group plc and its subsidiaries are incorporated and maturity date). domiciled in the UK. Dunelm Group plc is a listed public company, limited by shares and the Company registration In addition, reverse stress testing has been conducted which number is 04708277. The registered office is Watermead shows there would have to be at least a 30% decline in sales Business Park, Syston, Leicestershire, England, LE7 1AD. over the forecast period compared to the ‘central case’ scenario for there to be a risk of financial covenants being breached, The primary business activity of the Group is the sale of which is considered to be highly unlikely. If this decline in homewares in the UK in stores and online. sales were to occur management would follow the course of action undertaken during previous lockdowns. In addition, BASIS OF PREPARATION management could implement further mitigating actions These financial statements have been prepared in accordance including but not limited to: with international accounting standards in conformity with • Reducing discretionary spend (e.g. marketing and the requirements of the Companies Act 2006 (‘IFRS’) and the maintenance); applicable legal requirements of the Companies Act 2006. In • A reduction in capital investment (e.g. new stores and addition to complying with international accounting standards refits); in conformity with the requirements of the Companies Act • Manage stock levels closely to demand; 2006, the consolidated financial statements also comply with • Suspension of ordinary dividends, and no special international financial reporting standards adopted pursuant dividends; to Regulation (EC) No 1606/2002 as it applies in the European Union. These financial statements are presented on pages • Reduce operating model costs (e.g. reduced store 186 to 216. opening hours, lower technology spend with third-party developers); The accounting policies set out below have, unless otherwise • Delay in payments, including landlords and other suppliers; stated, been applied consistently to all periods presented in and these Group financial statements. • Reduction in support centre headcount. The annual financial statements are prepared under the In addition, similar to during FY20 and FY21, the government historical cost convention except for financial assets and could reintroduce actions to address specific closure periods financial liabilities (including derivative financial instruments (e.g. Job Retention Scheme, rates holidays, delay in VAT and share-based payments), which have been stated at payments) from which the Group could chose to benefit. As fair value. The financial statements are prepared in pounds a result, the Board believes that the Group is well placed to sterling, rounded to the nearest 0.1 million. manage its financing and other significant risks satisfactorily and that the Group will be able to operate within the level GOING CONCERN of its facilities for the foreseeable future, being at least 18 The Group has considerable financial resources together with months, until March 2023 (the RCF maturity date). For this long-standing relationships with a number of key suppliers reason, the Board considers it appropriate for the Group and an establishedreputationin the retail sector across the to adopt the going concern basis in preparing its financial UK. In their consideration of going concern, the Directors statements. have reviewed future profit forecasts and cash projections, which are based on market data and includetheir experience Further information regarding the Group’s business over the last 18 months during the Covid-19pandemic. Even activities, together with the factors likely to affect its future in these uncertain times, the Group has grown income and development, performance and position is set out in the profit as it has navigated the various lockdowns and has Strategic Report on pages 2 to 91. The financial position of used the experience gained during this period to model the Group, its cashflows, liquidity position and borrowing two different downside scenarios. The ‘market downturn’ facilities are described in the Financial Review on pages 35 scenario assumes a change in consumer spending away to 39. In addition, note 17 includes the Group’s objectives, from homewares, as the hospitality and travel industry open policies and processes for managing its capital, its financial up, with an additional five week ‘circuit break’ lockdown risk management objectives and its exposures to credit risk in December 2021. The ‘three-month lockdown’ scenario and liquidity risk, as well as details of financial covenants in place. 190 DUNELM GROUP PLC ANNUAL REPORT & ACCOUNTS 2021