Risks and risk management Principal risks and uncertainties continued Risk How we mitigate Progress in FY21 BUSINESS EFFICIENCY • Costs are managed by the Board and • Continued focus on cost discipline Executive Board through the budget through monthly Executive Board Description and forecasting process and monthly performance review and robust Profitability could be impacted by failure performance reviews. investment approval process. to operate the business efficiently or to • Monthly steering groups in place to • Deloitte appointed to undertake an manage cost-price volatility. review specific areas such as sourcing, assessment of our retail capabilities. stock loss and digital profitability, Output of this has informed a three- Link to strategy: • Dunelm’s scale, growth and increased year plan to invest in core systems All focus areas buying power allows it to secure supply and processes to provide capacity to Performance indicator: of key services and raw materials at support our growth strategy. Operating cost % competitive prices. Commodity price • Productivity group focusing on tracking covers all key materials. delivering productivity in stores, Executive responsibility: • Major non-stock purchase contracts more efficient stock processes, and Chief Financial Officer regularly tendered. supply chain including new customer Reports to: proposition ways of working to Chief Executive Officer Board oversight: maximise efficiency e.g. Click and • Board receives monthly management Collect. Impact compared to FY20: accounts and regular updates on • Negotiation of sea freight shipping strategic focus areas. rates now complete with lower than • Long-term plans and budget reviewed market price achieved (up to March by the Board at least annually. 2022). FINANCE AND TREASURY • Dunelm works with a syndicate of long- • Actions continued to improve controls term, committed partner banks. The around stock and cash management, Description Group has a £165m,five-year Revolving including controls around stock Growth constrained by lack of access to Credit Facility in place until March purchasing and forecasting. capital/financial resource. 2023. • Strong focus remained on cashflow • A Group treasury policy is in place with robust process created to provide Link to strategy: to govern levels of debt, cash dynamic forward-looking cashflows by All focus areas management strategies, and to control week. Performance indicator: foreign exchange exposures. • Clear plan and timetable created for Operating cash conversion • Hedging is in place for foreign refinancing of current Revolving Credit Banking covenant complian exchange, and freight and energy Facility (RCF) and transition from LIBOR ce prices are agreed in advance, to help to SONIA. Executive responsibility: mitigate volatility and aid margin Chief Financial Officer management. Reports to: Board oversight: Chief Executive Officer • Board receives monthly treasury report. Impact compared to FY20: 88 DUNELM GROUP PLC ANNUAL REPORT & ACCOUNTS 2021