CFO’s review BANKING AGREEMENTS In line with our capital policy, and as a result of The Group has in place a £165m syndicated the strong cash flow and net cash position at the Revolving Credit Facility (RCF) which matures in end of the year, the Board has declared a special March 2023. The terms of the RCF are consistent dividend of 65p. The special dividend will be paid with normal practice andinclude cov thenants (bo on 8 October 2021 to shareholders on the register calculated on a pre-IFRS 16 basis) in respect of at the close of business on 17 September 2021. leverage (net debt to be no greater than 2.5× EBITDA) and fixed charge cover (EBITDAR to be The payment of this special dividend will return us no less than 1.75× fixed charges), both of which to the bottom of our target leverage range (0.2×), were met comfortably as at 26 June 2021. maintaining a prudent approach given the current macro-outlook. In addition, the Group maintains £10m of uncommitted overdraft facilities and has an TREASURY MANAGEMENT accordion option within the RCF for a maximum The Group Board has established an overall facility of £75m. Treasury Policy, day-to-day management of which is delegated to the Chief Financial Officer. CAPITAL AND DIVIDEND POLICY The policy aims to ensure the following: The Board policy on capital structure targets an • Effective management of all clearing bank average netdebt level exc( luding lease obligations operations and short-term fluctuations in working capital) • Access to appropriate levels of funding and of between 0.2× and 0.6× of the last 12 months’ liquidity EBITDA (on a post IFRS 16 basis). The Group’s capital anddividend policy targets ordinary • Effective monitoring and management of all dividend cover of between 1.75× and 2.25× banking covenants earnings per share during the financial year to • Optimal investment of surplus cash within an which the dividend relates. approved risk/return profile • Appropriate management of foreign exchange The Board will continue to consider returning exposures and cash flows surplus cash to shareholders if average net debt over a period consistently falls below the minimum target of 0.2× EBITDA, subject to known and anticipated investment plans at the time. Laura Carr Chief Financial Officer THE GROUP’S FULL CAPITAL AND DIVIDEND 8 September 2021 POLICY IS AVAILABLE ON OUR WEBSITE AT WWW.CORPORATE.DUNELM.COM. DIVIDENDS An interim dividend of 12p per share was paid in April 2021 (FY20: nil). It is proposed to pay a final dividend of 23p per share (FY20: nil). The total ordinary dividend of 35p gives a dividend cover of 1.8×. This cover level is within our policy OUR TAX STRATEGY as described above. Subject to approval by shareholders at the AGM, the final dividend is 2021 2020 payable on 19 November 2021 to shareholders Total tax contributions £m £m on the register on 29 October 2021. Net VAT collected3 83.3 80.0 Payroll taxes including National Insurance4 39.0 36.4 Corporation tax 35.5 34.3 Total tax contributions 157.8 150.7 Dunelm is committed to full compliance with all statutory obligations and full disclosure to tax authorities. The Group’s tax affairs are managed in a way which is consistent with the Group’s commitment to high standards of governance. Our Board has established a set of principlesthat form the basis ofthe management philosophy and the tax policy of the Group. These principles can be found in full in our Group Tax Strategy which is published on our corporate website and updated each year. Our Group Tax Strategy sets out one shared vision within the Group of tax compliance and one view of performance. TAX STRATEGY AVAILABLE ON CORPORATE.DUNELM.COM 3. VAT total for FY20 includes VAT payments deferred due to Covid-19 of £19 million, which have now been paid. 4.All Dunelm colleagues are based in the United Kingdom, except for 45 colleagues who work in our store in Jersey. 38 DUNELM GROUP PLCANNUAL REPORT & ACCOUNTS 2021