Designed to deliver
DFS Furniture plc
Annual Report and Accounts 2026
Designed to deliver
This year’s theme reflects how we have built our business
and how we continue to grow. By investing in our people,
strengthening our operations and enhancing the platforms
that support our customers, we are creating a Group that
is equipped to deliver consistently and scale successfully.
Read more in the Chief Executive’s report on page 6
This year also marks the launch of our new Group purpose
and values. These define who we are, what we stand for
and the way we work together every day. They will play an
important role in shaping our culture, guiding our decisions
and supporting our ambitions for the future.
Read more about our new purpose, values and behaviours on page 4
With a clear strategy, strong foundations and talented teams
across the Group, we are well placed to deliver lasting value
for our customers, colleagues and shareholders.
Read more in our Financial review on page 17
Tim Stacey
Chief Executive Officer
Explore our website
Our website has been built to provide a more engaging, transparent
and accessible experience for all our stakeholders. Visit the link to
find out more about our performance.
Welcome message from the CEO
dfscorporate.co.uk
Our 2026 performance
Highlights
Delivering record customer and colleague engagement
scores alongside profit growth and cash generation.
Contents
Strategic Report
1 Highlights
2 At a glance
3 Chair’s statement
4 Our purpose and values
6 Chief Executive’s report
10 Investment case
11 Business model
12 Market review
13 Strategy
14 Key performance indicators
16 Chief Financial Officer’s introduction
17 Financial review
22 Alternative performance measures
24 Risks and uncertainties
31 Viability reporting
32 Stakeholder engagement and Section 172
34 Responsible business report
44
Task Force on Climate-related Financial Disclosures
Governance Report
51 Chair’s introduction to governance
52 Directors and officers
54 Corporate governance report
63 Audit and Risk Committee report
68 Nomination Committee report
70 Directors’ Remuneration report
84 Directors’ report
88 Statement of Directors’ responsibilities
in respect of the Annual Report and the
financial statements
Financial Statements
90 Independent auditor’s report
97 Consolidated income statement
98 Consolidated statement of
comprehensive income
99 Consolidated balance sheet
100 Consolidated statement of changes in equity
101 Consolidated cash flow statement
102 Notes to the consolidated financial statements
122 Company balance sheet
123 Company statement of changes in equity
124 Notes to the Company financial statements
Shareholder Information
126 Financial history
127 Shareholder information
Financial headlines
Definitions and reconciliations of Alternative Performance Measures (‘APMs’) can be found on pages
22 and 23. Throughout this report, references to income statement measures including revenue,
EBITDA
1
, profit before tax, and underlying profit before tax and brand amortisation
1
are in respect
of continuing operations.
Group revenue
£1,057.5m
FY26 £1,057.5m
FY25 £1,030.3m
FY24 £987.1m
FY26 £44.9m
FY25 £30.2m
FY24
Underlying profit before tax, excluding
amortisation of brand names (uPBT(A))
1
£44.9m
Operational and
strategic highlights
Execution of our strategy consolidating our
position as the clear market leader.
•
Exclusive brand partnership ranges resonating
well with the customer, reaching 45% of dfs’s
sales mix.
•
Sofology range refresh and promotional mechanics
continuing to drive order intake growth.
•
Home strategy gains momentum driving
+10.9% year on year order intake growth.
•
Strong performance across all areas of our
Group, driving record customer satisfaction.
•
Profit performance and good capital discipline
driving a substantial £38m reduction in debt.
1. Refer to pages 22 and 23 for APM definitions. 2. Net Promoter Scores for the dfs brand.
Profit/(loss) before tax
£43.7m
FY26 13.8p
FY25 9.2p
FY24 1.5p
Underlying earnings per share
13.8p
FY26 93.1%
FY25 91.8%
FY24 92.8%
Post-purchase NPS
2
93.1%
FY26
FY25
FY24
£32.9m
FY26
58.1%
FY25
54.1%
FY24
28.3%
Earnings/(loss) per share
15.1p
Established customer NPS
2
58.1%
Net bank debt
1
£69.0m
FY26
FY25
(1.9)pFY24
15.1p FY26
FY25
FY24
£69.0m
£107.0m
£164.8m
£10.5m
(£1.7m)
£43.7m
10.5p
Annual Report and Accounts 2026 DFS Furniture plc 1
Strategic Report Corporate Governance Financial Statements Shareholder Information
At a glance
The third largest sofa retailer in the UK
•
Sofology operates through integrated retail channels,
with 56 showrooms in the UK and Republic of Ireland,
and its e-commerce platform.
•
Our Sofology retail brand appeals to a style conscious customer,
willing to invest their time and money on their perfect sofa.
The average order value for Sofology is c.30% higher than dfs.
The UK’s largest two-person
sofa delivery business
•
Our Group-wide logistics platform is one of several key
infrastructure components supporting our retail brands.
Delivery vehicles
226
The leading retailer and
manufacturer of sofas in the UK
•
dfs operates through integrated retail channels, with 115
showrooms in the UK and Republic of Ireland, and its
e-commerce platform.
•
Over 55 years’ heritage.
•
Our dfs retail brand is synonymous with upholstery and has
become part of the national culture. In fact dfs is the most
searched for term in the category with over 50% of the UK
population spontaneously aware of the brand.
•
dfs has a track record of working with top home and fashion
brands, to co-create exclusive product designs and style for
our customers. These sit alongside our exclusive in-house
brands providing great customer choice.
•
dfs is the largest sofa manufacturer in the UK.
Our brands
FY26 brand revenue
£823.9m
FY26 brand revenue
£232.8m
dfs
Sofology
dfs and Sofology
Unparalleled scale
FY26 dfs
showrooms
115
FY26 Sofology
showrooms
56
Visit the link to find out more about who we are.
dfscorporate.co.uk/about-us
Annual Report and Accounts 2026 DFS Furniture plc2
Strategic Report
Our business holds a unique
position at the heart of British
homemaking. With a strengthened
balance sheet, a clear strategy,
and a commitment to innovation,
we look forward to the future
with confidence.”
Steve Johnson
Chair of the Board
Chair’s statement
Designed for success
Read more
Our purpose and values on page 4
Introduction to governance on page 51
Steve’s profile on page 52
Our financial performance has improved
markedly compared to the prior year.
This result was underpinned by 2.6% revenue
growth, gross margin expansion, and a disciplined
focus on cost management. Despite a challenging
economic environment and a subdued second-half
market backdrop, the Group delivered an underlying
PBT(A) increase of £14.7m to £44.9m. Strong free
cash flow generation has further strengthened
the balance sheet, enabling the recommencement
of dividend payments.
This has not happened by accident and is
testament to the long-term growth strategy that
we adopted and have been executing since the
end of the pandemic. The DFS Group has grown
its leading market share position, has leveraged
buying scale to rebuild gross margins and has
delivered significant cost efficiencies across
all areas of operations. Furthermore, we have
established a growing presence in adjacent
Home categories.
Notwithstanding the geopolitical and economic
headwinds, the medium-term prospects for the
upholstered furniture market remain robust. We
are optimistic that our market-leading position,
proven strategy, and our improved balance sheet
position will ensure the business is well-placed to
prosper as conditions improve. We remain focused
on delivering against our long-term objectives.
Customer satisfaction
and product innovation
Central to our success is a compelling customer
proposition. We continue to leverage the distinct
and complementary strengths of the DFS and
Sofology brands. Product innovation remains a
key differentiator; this year, the success of our
Cinesound
®
technology and an expanded “Home”
range, supported by a high-profile brand partnership
with Amanda Holden and associations with
Britain’s Got Talent and The Voice, has ensured
our brands remain at the forefront of the
consumer’s mind.
Our showroom refit programme continues to
deliver returns, notably at our upgraded Sofology
showroom in Bolton, the blueprint for future Sofology
store refits. Additionally, the introduction of
mezzanines in a select number of dfs showrooms
has successfully enabled us to showcase our new
Home ranges to a broader audience. These physical
enhancements are matched by a commitment
to service; we have seen consistent growth in
customer NPS ratings, driven by improvements
to the omnichannel journey and excellent
progress within our manufacturing and Sofa
Delivery Company operations.
Purpose, culture and values
Our colleagues remain our most significant asset.
This year, we took the opportunity to redefine our
purpose and values to ensure every team member
can contribute to our collective progress. Led by
a group of senior leaders from across the DFS Group,
supported by the Group Leadership Team and shaped
by extensive internal and external consultation,
we have unified our brands under the new purpose:
“Furnishing better lives, together” and developed
one set of values to guide us all. This cultural
evolution, reinforced by our new charity strategy,
provides a strong foundation for future growth.
Governance and Board structure
Good governance is essential, particularly during
periods of economic uncertainty. Three years ago,
we initiated a programme of Board renewal to ensure
a balance of fresh skills and continuity of experience.
We were pleased to welcome Dominique Highfield
as CFO in May; her experience with leading consumer
brands has already proven invaluable. We will continue
the work to develop our Board and ensure that we
have the right skills and experience going forward.
Conclusion and outlook
A retailer’s success is defined by its people
and its customers. At DFS Group, we have built
a dedicated team who are driven by our purpose
and deliver a proposition highly valued by our
customers. The challenges of recent years have
demanded agility, skill and passion from all our
colleagues; I would like to thank all of them for
their continued dedication.
Our business holds a unique position at the heart
of British homemaking. With a strengthened balance
sheet, a clear strategy, and a commitment to
innovation, we look forward to the future
with confidence.
Dividend
Following the strengthening of the balance sheet
and the reduction of leverage to 0.9x, the Board
is pleased to recommend a final dividend of 2.0
pence per share, bringing the full year dividend to
3.0 pence.
Annual General Meeting
I look forward to welcoming shareholders to
our Annual General Meeting, which will be held
in Doncaster on 13 November 2026. This provides
a great opportunity to hear from and speak with
members of the Board and Group Leadership Team.
Steve Johnson
Chair of the Board
24 September 2026
Annual Report and Accounts 2026 DFS Furniture plc 3
Strategic Report Corporate Governance Financial Statements Shareholder Information
Our purpose and values
This year we launched our new
Group purpose and mission,
evolved our Group values and
introduced new leadership
behaviours. Through our products,
our people and our actions, we
create positive experiences and
lasting value for our customers,
colleagues, and communities.
We see the world through our customers’ eyes.
Every decision we make starts and ends
with them, as we build relationships
founded on trust, empathy and care.
We empower our teams to make decisions
that put the customer first. We remove
barriers to great service and model empathy
in every conversation.
We strive for excellence in everything
we do.
We are committed to making each day
better than the last. We stay curious and
embrace new ideas to constantly improve.
We coach our people to help them grow
and succeed. We empower our teams to
take ownership.
Our greatest strength is our collective spirit.
We create spaces where everyone feels
welcome and can be at their best. We
support each other, and work as one team
to achieve our shared goals.
We create a safe community where
everyone feels welcome and valued.
We build trusting teams by being open,
honest and supportive.
Beyond furniture, we equip people for a
better life. This is care in action. It’s about
doing, not just selling, to help everyone
create a space they love to live in.
This is our heart and impact. We look
beyond our products to improve the
everyday lives of our customers, colleagues
and communities, creating long-term value.
We only win when we work as one. We
thrive through collaboration and mutual
respect, bringing us all together on a
shared mission.
Our guiding principle
The pyramid aligns our Group strategy and culture
into a unified framework. Each layer connects to
the next, ensuring daily decisions are linked back to
our purpose, moving seamlessly from why we exist
and what we do, down to the values and leadership
behaviours that guide how we show up every day.
Furnishing better lives, together
Purpose
Purpose
Mission
Mission
Strategy
Values
Leadership behaviours
Our story and promise
together
never stops
at our heart
Through our passion for style and comfort, we help
customers create spaces they love to live in.
We lead... with context | for excellence | with passion | with respect | for the whole
Values
Leadership behaviours
Annual Report and Accounts 2026 DFS Furniture plc4
Strategic Report
What prompted the decision to redefine
DFS Group’s purpose and values?
In recent years, we have simplified brand
structures and developed Group platforms
to drive operational efficiency. These changes
presented the ideal opportunity to focus on our
collective culture and evolve our purpose and
values. While our brands each maintain a unique
customer proposition, a strong, shared culture
elevates our overarching DFS Group approach,
creating a unified spirit for all of our colleagues,
underpinned by our scale and expertise.
What was the process of defining
the new purpose and values?
It was vital that the new framework truly reflected
DFS Group’s culture from the inside out. Our 2025
Leadership Development Programme (LDP) cohort
led the process. Drawing on external best practice
and internal data sets, the LDP’s proposals were
consulted across the leadership community,
colleague networks and the GLT, before being
fine tuned and shared with the Board. The outcome
it enabled is truly homegrown and it authentically
captures the culture of the Group.
How do the new purpose
and values support the future?
This framework acts as our operational compass.
It ensures every strategic decision, product
range design and customer interaction ladders
back to our purpose. By grounding our growth
in shared values, we build long-term brand
advocacy, strong colleague retention and unified
momentum to enhance our market position.
How will the leadership behaviours
support the new framework?
The new leadership behaviours are the foundation
of the framework. Our leadership community will
set the standard and role-model how colleagues
live by our values, to drive consistency, facilitate
growth and development for current and aspiring
leaders across the DFS Group.
Our culture in action with
the ‘Room for More’ event
At the end of the financial year we brought
our leadership community together for ‘Room
for More’ in recognition of the Group’s cultural
evolution and enhanced employee value
proposition, marking the start of a phased
roll-out across the business.
Designed as a leader-led initiative, the event
gathered leaders from across retail, manufacturing,
logistics and central support to take ownership.
Immersed in our new context, inspired and
energised, this community is actively driving
local rollout sessions to cascade the framework
directly to their teams. Our leadership community
continues to embed these behaviours into
daily operational reality. Through ongoing
cross-functional learning groups, refreshed
performance review frameworks and site-wide
collateral, leaders ensure all of our colleagues
remain deeply connected to our purpose
and values.
Our purpose and values
continued
Read more
Having launched our new purpose we have also
refreshed our Charity Strategy. Continuing our
partnership with Children in Need we will focus
our efforts on alleviating furniture poverty,
using our knowledge and people to help provide
families with the furniture they need.
See page 38 for more details
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Strategic Report Corporate Governance Financial Statements Shareholder Information
Delivering growth through
innovation and focused execution
Chief Executive’s report
The year was driven by a relentless
focus on innovation, operational
execution and accelerating our
cultural evolution. We have grown
our leading position in the UK
upholstery market, delivered
strong earnings growth and cash
generation, while building an
agile platform to capture
long-term value.”
Tim Stacey
Chief Executive Officer
Read more
Our strategy on page 13
Investment case on page 10
Tim’s profile on page 52
During the year, the DFS Group made strong
operational and financial progress, updated our
corporate strategy and rolled out a new unified
Group purpose, mission and values. Operating
against an unpredictable macroeconomic backdrop
of fluctuating consumer confidence and ongoing
cost pressures, we focused resolutely on what
we could control. Through the hard work, passion
and dedication of our colleagues, we grew our
position as the clear leader to 40%
1
value share of
the UK upholstery market and generated robust
earnings growth, delivering our upgraded guidance
with underlying profit before tax and brand
amortisation
2
increasing significantly from
£30.2m to £44.9m.
In addition, our strong cash flow
performance enabled
us to strengthen our balance
sheet, reducing debt by £38.0m to £69.0m, and
end the period within our target leverage
3
range.
The Board is pleased to recommend a final
ordinary dividend of 2.0p per share, bringing the
total full year dividend to 3.0p per share.
Our customer proposition across both our dfs
and Sofology brands has never been stronger.
All elements of our vertically integrated business
model – design, manufacturing, retail, logistics
and post-sales service – are working together
efficiently and effectively, driving customer
satisfaction metrics to record levels (+7% year
on year). In addition, our colleague ‘Your Say’
survey showed a further step-change in workforce
sentiment, with overall colleague engagement
rising by +19% year on year, reflecting deep
engagement with our new purpose and values.
While we are cautious regarding the broader
trading environment and consumer discretionary
spend, our momentum and improved financial
foundations give us great confidence in the
future growth prospects of the Group.
Our updated strategy
During FY26 we launched an updated DFS Group
strategy focused on building our leading position
in the upholstery market and capturing a larger
share of the broader Home market. While our
overarching strategic objectives remain to grow
DFS Group revenue to £1.4bn and achieve 8%
PBT margins, we have refined our approach,
structuring it around three core growth pillars:
1. Play to win in the sofa market
Upholstered furniture remains the economic
engine of the DFS Group. Our goal is to protect
and extend our clear leadership position in
sofas by penetrating underserved customer
segments and geographies, expanding exclusive
brand partnerships, and sharpening the proposition,
range architecture, and customer experience
for both dfs and Sofology.
2. Build and scale the Home business
Beyond sofas, the Home market (including beds,
mattresses, dining and living room furniture)
represents an addressable target market
expansion opportunity of £5bn. We are beginning
to leverage our scale, marketing engine and
brand partnerships to capture whole-room
home spend to increase customer lifetime
value through higher transaction frequency.
3. Leverage and build platforms
We are unlocking value across our shared
enabling platforms. This includes expanding
The Sofa Delivery Company as a commercial
two-person logistics platform for third-party
retailers by utilising spare capacity within our
existing network and delivering DFS Group-wide
systems simplification to replace legacy systems
with a single, streamlined operating platform.
By unifying our core architecture, we are removing
operational complexity and consolidating ways
of working across our brands to improve the
end-to-end customer experience.
Strategic progress
To drive our updated strategy we
continue to focus on three key enablers:
Leveraging our scale
and vertical integration
Our scale – operating with 40%
1
value share of
the UK upholstery market, with sales densities
over three times our nearest competitor; this
scale provides us with structural advantages
across the value chain.
A core differentiator of our proposition is our
exclusive brand portfolio within dfs. This year, we
strengthened our collaborations with high profile
lifestyle brands including new ranges with French
Connection, Joules, Ted Baker, Country Living,
and La-Z-Boy and expanded these partnerships
into our growing Home category. We also broadened
our reach through a new partnership with Amanda
Holden and high-visibility associations with
Britain’s Got Talent and The Voice.
Annual Report and Accounts 2026 DFS Furniture plc6
Strategic Report
Our nationwide physical retail estate remains a
vital asset and is fully integrated with our digital
channels. Sofology’s upgraded showroom in
Bolton is performing well and serves as the
blueprint for future estate refits. Across dfs
we have selectively
introduced dedicated Home
mezzanines to showrooms
to showcase our
expanded bed and living room ranges.
This included installing a mezzanine at our
dfs Stockton showroom and works are now
underway at our Leeds Birstall showroom, due
for completion early in FY27. Following these
positive initial results, we have identified a strong
pipeline of mezzanine opportunities to further
scale our Home proposition.
Underpinning these initiatives is our vertically
integrated sourcing model. By combining the
commercial buying teams across dfs and Sofology
under unified DFS Group leadership, we are
leveraging our scale to achieve significant cost
of goods savings through supplier renegotiations,
materials standardisation, and manufacturing
optimisation. This contributed to gross margin
expansion in the period to 58.1% (FY25: 56.5%),
achieving our strategic target of 58%. We also
optimised our operational structure to maximise
internal capability and efficiency; key initiatives
included streamlining our customer service
operations into consolidated, specialist teams
and expanding our in-house creative capabilities
to produce marketing assets more cost effectively
and accelerate our speed to market.
We made good progress in commercialising
our operational platforms. The Sofa Delivery
Company, our logistics operation, is the largest
two-person sofa delivery company in the UK.
It supports both of our retail brands through a
shared infrastructure and provides a seven-days-
a-week installation and delivery service with a
strong focus on customer experience, including
the removal and recycling of all packaging waste.
In FY26 we onboarded three third-party retailers
as part of a successful ‘test and learn’ phase
with very positive feedback and have launched
a dedicated portal to seamlessly onboard
future partners.
Finally, to widen our total reach to underserved
customer segments, we expanded our commercial
proposition introducing express ranges capable
of delivery within 7-14 days to address market
demand. We see this as a good growth opportunity
to unlock new customer segments and capture
immediate-need purchases.
Utilising data, technology and AI
We view data, technology and AI as critical
enablers of operational efficiency and our
customer journey across the DFS Group.
A central tenet of our technology strategy
is empowering our colleagues through the use
of AI. We firmly believe that the human touch
– whether in showroom consultations, customer
service or final-mile delivery – remains a key
differentiator. Consequently, AI is deployed
across our operations to remove administrative
friction, automate repetitive manual tasks,
and surface real-time insights, thereby freeing
up our
colleagues to focus on high-value
human interactions.
For some years we have been successfully
deploying AI and machine learning technologies
to deliver measurable operational benefits. Key
applications include the Apollo delivery routing
engine which utilises real-time data and proprietary
algorithms to optimise final-mile delivery schedules
– significantly reducing overall mileage, lowering
the Group’s carbon footprint, and unlocking
distribution cost savings. We use AI-powered
voice assistant tools to help manage customer
delivery updates and process phone payments,
while AI-driven support tools provide real-time
recommendations and automated query summaries
for customer service teams. These have facilitated
the resolution of c.17,000 tickets per month and
reduced handling times by up to five minutes
per interaction.
The pace of change in AI capabilities has picked
up substantially and provides us with a lot
of opportunities to improve our processes.
We are approaching this as follows:
1. First, our people: We will upskill and empower
our teams, our greatest strength, to harness
AI as an advantage, while operating within a
clear governance framework.
2. Second, the front end of the business:
We know that both generative engine
optimisation and agents interacting with our
websites are changing consumer shopping
and we are focused on ensuring the best
customer experience with the best technology
and tools available. In store, where our people
make the difference, we will utilise AI tools
across training and other routes to improve
the customer journey and increase conversion
across all channels.
3. Finally our operations and back office:
We believe a significant benefit is achieved
through re-imagining end-to-end processes.
While generative AI can absolutely help
individual productivity, the real organisational
added value will stem from utilising AI across
workflows and processes. We have seen this
in our technology team as it has increased
both our capability and capacity, with the aim
to move from AI assisted to AI automated
for software delivery.
We are driven by innovation and constantly review
other new technology to improve our customer
services and everyday operations. In FY26 we
launched our soft credit eligibility checker that
allows customers to assess financing from home
without impacting their credit score whilst
streamlining in-store checkout processes.
Interest-free credit (IFC) remains a cornerstone
of the UK upholstery market and through leveraging
our scale as a primary partner to leading credit
providers, we continue to innovate in this area.
Chief Executive’s report continued
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Strategic Report Corporate Governance Financial Statements Shareholder Information
Chief Executive’s report continued
Our digital sales channels remain a vital asset,
serving as a highly complementary engine to
our wider omnichannel proposition. Across both
web platforms, continuous digital releases have
elevated the customer journey and delivered
record post-purchase online NPS. In dfs, AI-driven
personalisation, site speed enhancements, and
upgraded ‘Shared Basket’ functionality have
boosted digital conversion while empowering
showroom colleagues to collaborate seamlessly
with online shoppers. In Sofology we have been
utilising new automated, behaviour-triggered
email programmes for abandoned baskets, recovering
potential sales without manual intervention.
In parallel, in-product technology innovation
elevates our average order values and serves as
a key commercial differentiator. Features such
as integrated sound, 4D vibration, and wireless
charging across exclusive collections like Cinesound
and Soundwave by Shaquille O’Neal Home have
proved highly popular.
Harnessing our unique culture
to drive performance
Building a high-performing business starts with a
strong, shared culture. We aim to lead our people
with an open and empathetic leadership style and
by embedding an inclusive and customer-focused
mindset across our teams, we enable our people
to perform at their best, delivering outstanding
customer experiences that translate directly into
business results. In FY26, following extensive
consultation across the DFS Group, we unified
our retail and logistics brands under a single DFS
Group Employee Value Proposition titled ‘Room
for More’ which includes a new Group purpose,
mission, and values:
•
Our purpose: Furnishing better lives, together.
This reflects our belief that our role extends
beyond selling furniture to equipping people
for better everyday living in their homes
and communities.
•
Our mission: Through innovative design,
teamwork, and a passion for style and comfort,
we help customers create spaces they love
to live in.
•
Our values:
1. Customer at our heart: We see the world
through our customers’ eyes, build relationships
founded on trust, empathy and care, and
empower our teams to put them first.
2. Better never stops: We embrace curiosity
and continuous improvement, empowering
and coaching our teams to achieve excellence.
3. Everyone together: Working as one unified
team, harnessing our collective strength,
and fostering an inclusive community where
everyone feels welcome and thrives together.
Retaining top talent begins with an inclusive
workplace where everyone feels welcome, valued,
and respected. Embracing diverse perspectives
fuels our creativity and helps us authentically
connect with a broader customer base. Our
executive-sponsored colleague networks continue
to drive our inclusion agenda, highlighted this year
by the launch of our seventh network, the Mankind
Network, focused on men’s mental health.
Together with our realigned charity partnership
with BBC Children in Need to address furniture
poverty, these initiatives helped drive a substantial
19% year on year increase in colleague engagement
across the DFS Group.
Our success relies on the expertise, agility, and
dedication of our colleagues. On behalf of the
Board, I want to thank them for their continued
commitment to serving our customers.
Sustainability
Our vertically integrated business model gives
us direct insight into and data of the areas where
our climate exposure is greatest, enabling us to
convert intent into measurable delivery in FY26,
while we continue to manage climate change as
a principal risk.
Sustainability remains fully integrated into
our operational strategy through our Sofa Cycle
framework. Having achieved official validation
from the Science Based Targets initiative (SBTi)
for our Net Zero 2050 target and near-term Scope
1, 2, and 3 reduction goals, our focus in FY26 was
on delivery and value chain engagement:
•
Supplier decarbonisation: Through our ‘In
This Together’ campaign, manufacturing and
raw material partners representing 20% of our
Scope 3 emissions have now committed to
setting their own science based targets.
•
Responsible sourcing: Over 95% of the timber
used across our DFS Group models is now
FSC/PEFC certified, and 93% of our
upholstery leather tanneries are Leather
Working Group (LWG) certified.
•
Operational decarbonisation: We continued
the transition of our corporate and service
vehicle fleets to hybrid and electric models,
alongside testing infrared heating solutions
across our warehouse network to reduce
Scope 1 heating emissions.
•
Circularity and product passports: In
preparation for upcoming legislation, we
piloted our first Digital Product Passport (DPP)
on select ranges, tracking raw material
provenance, repairability metrics, and
recyclability.
Annual Report and Accounts 2026 DFS Furniture plc8
Strategic Report
Chief Executive’s report continued
Future growth
Our strategic objectives to grow DFS Group
revenue to £1.4bn and PBT margins to 8% are
anchored on clear levers:
1. Sofa market recovery and market share
progression: The core UK upholstery market
volume
4
remains approximately 20% below
pre-pandemic levels. As consumer confidence
strengthens we expect the market to recover,
and given the operational leverage within the
business any top line recovery from the market
normalisation is expected to result in high
profit growth with revenue to profit drop
through at around 40%. In addition, we have
clear opportunities to grow our share such as
through the expansion of the Sofology retail
store footprint from 56 to between 65 and
70 showrooms.
2. Scaling the Home proposition: Capturing
non-upholstery spend across bedrooms and
living rooms provides a £5bn addressable
market expansion opportunity. With the
foundational infrastructure – including our
drop-ship solution and dedicated warehouse
management systems – now fully in place,
we are well positioned to scale. Expanding
our high-profile exclusive brand partnerships
into Home categories continues to differentiate
our offer and drive growth. By rolling out
dedicated Home mezzanines displaying up
to 25 complete bedroom sets across key
dfs showrooms, paired with an expanded
digital-first living room range, we are confident
that we can deliver an incremental £100m
in revenue over the medium term.
3. Platform commercialisation: Monetising
The Sofa Delivery Company by offering our
two-person logistics service to third-party
home retailers opens up a new business to
business profit stream with minimal capital
investment required.
Board changes
I would like to take this opportunity to echo the
Chair’s comments regarding the evolution of our
leadership team. We were delighted to welcome
Dominique Highfield to the Board as Chief Financial
Officer in May 2026; her extensive experience
and cultural alignment have proven a great fit,
and she is already adding immense value to our
strategic execution.
Conclusion and outlook
The performance delivered in FY26 demonstrates
the fundamental strength, agility and resilience
of the DFS Group. By maintaining disciplined cost
management, improving gross margins to 58%
and empowering our colleagues through data
and technology, we delivered robust earnings
growth and significantly strengthened our
balance sheet.
Looking ahead into FY27, market uncertainty
continues to influence consumer confidence and
footfall, and we remain appropriately cautious
regarding the broader macroeconomic environment.
However, our scale, culture and technology
investments – all fuelled by our new purpose
and values – provide us with a clear advantage.
We remain confident in our ability to outperform
the market and deliver moderate profit growth in
FY27, where we are comfortable with current
analyst PBT forecasts
5
. Looking further ahead, we
remain fully focused on achieving our medium-
term £1.4bn revenue and 8% PBT margin targets
to create sustained, long-term value for all
our stakeholders.
Tim Stacey
Chief Executive Officer
24 September 2026
1. GlobalData - calendar year 2025.
2. Refer to pages 22 and 23 for APM definitions.
3. Bank leverage calculated as net debt divided by last
12 months EBITDA. Net debt is net bank debt plus a
proportion of finance leased assets. Fixed charge
cover is calculated as last 12 months EBITDARent
divided by rent + interest.
4. Proprietary banking data covering 14 specialist
upholstery retailers.
5. Company compiled consensus £48.0m uPBT(A)
Annual Report and Accounts 2026 DFS Furniture plc 9
Strategic Report Corporate Governance Financial Statements Shareholder Information
Our market leadership, ongoing innovation and commitment
to operational excellence anchor our path forward.”
Tim Stacey
Chief Executive Officer
Growth ambitions
We remain focused on delivering long-term shareholder
value, guided by our financial targets:
Investment case
Well positioned to deliver
sustainable shareholder returns
Complementary brands
dfs and Sofology are two complementary retail brands that are
household names and collectively target the majority of the market.
We have good growth opportunities in our core business through
market share growth, market recovery potential and increasing
the Sofology estate to between 65 and 70 showrooms.
Exceptional people
We have over 55 years of expertise and recruit, train and retain
individuals who we believe are the best in the industry.
The dedication, talent and loyalty of our colleagues who live our
values day in day out are what really drives this business forward.
Well invested platforms
Our sector-leading margins and high free cash flow generation
enable us to reinvest to make our business stronger.
Our well invested websites and modern, well located showrooms
provide inspirational settings resulting in market-leading sales
densities and our investment in technology and data provides
a seamless customer journey across all channels, enabling
operational efficiency and improved decision making.
Unparalleled scale
We are the largest upholstery retailer in the UK, over three times
the size of our nearest competitor.
We gain valuable customer and market insight as well as
significant economies of scale benefits across the value chain.
Vertically integrated
We design, retail, manufacture, deliver and install and provide
after-sales service.
We have full control of the customer journey and capture
value across the supply chain.
Highly cash generative model
The majority of the products we sell are made to order.
We operate with negative working capital and our
maintenance capital requirements of c.2% of revenue
are relatively low, enabling us to reinvest in the business
for growth and return funds to shareholders.
Home market opportunity
The wider Home market of beds, mattresses, dining and other living
room furniture is an attractive opportunity, expanding our total
addressable market by £5bn.
We can utilise our existing assets and relationships, our showrooms,
our websites, our exclusive brand partnerships and our data-led
marketing strategy to gain market share efficiently.
PBT margin
8%
Revenue
£1.4bn
Visit the link to find out more about the reasons to invest.
dfscorporate.co.uk/investors/
investment-case
Annual Report and Accounts 2026 DFS Furniture plc10
Strategic Report
Design and inspire
Integrated Retail Channel
Manufacture Outcomes
Deliver and install
Service
Business model
Our Group USP:
•
Highly skilled design teams
and experienced buyers that
curate innovative and distinct
ranges, including Cinesound
and the Platinum collection
•
Exclusive partnerships with
well known, high quality
brands such as La-Z-Boy,
Ted Baker, Joules, French
Connection, Country Living
and House Beautiful
•
Retail brands that
are household names,
memorable advertising,
and award winning data-
driven marketing
Benefits for customers:
•
Access to high quality,
well known UK brands
•
Experience the latest
technology such as our 4D
immersive cinema sofas and
our patented heated seats
•
We have the ability to
develop a prototype, test,
and put new ranges on our
showroom floors in as little
as six weeks, giving customers
the latest innovations in
upholstered furniture
Our Group USP:
Our installation experts operate
from customer distribution
centres spread across the UK
and Ireland using custom-built
route-mapping technology to
reduce lead times, lower emissions
and optimise efficiency.
Benefits for customers:
•
Market leading technology
ensures our customers
stay informed from the
point of sale right through
to installation
•
Our data-driven approach
and powerful dashboards
enable us to drive performance
across the network resulting
in a great customer experience
Our Group USP:
We manufacture around 20%
of the Group’s sofa orders in
our own British factories, resulting
in shorter lead times and greater
oversight on sustainability.
We source the remainder
from our trusted partners.
Benefits for customers:
•
We are able to offer shorter
lead times to our customers
•
Economies of scale benefits
enable us to offer customers
great value for money
•
Fantastic product quality
Our Group USP:
Occasionally things go wrong
and, if they do, we have our
own teams of upholsterers that
are on hand to visit customers’
homes and address any
after-sales issues.
Benefits for customers:
•
After-sales issues addressed
in customers’ homes
by our highly trained
service upholsterers
Sector leading
operating margins
Scale advantages across
the value chain, from
sourcing and shipping rates
to maximising
delivery and
service fleet utilisation.
A fully integrated customer journey
Investing in
the business
We reward our colleagues
fairly, maintain and enhance
our existing assets and
selectively invest in
growth opportunities
to optimise the returns
for our shareholders.
Strong cash
generation
We aim to deliver high levels
of free cash flow generation,
enabling us to invest for
growth and return funds
to shareholders.
Growing
market share
We have a history of growing
our market share over the
long term in all economic
climates. Our exclusive brands
enable us to target the
majority of the market and
we have a clear opportunity
to grow further.
Our Group USP:
Strong online brand presence
‘DFS’ is searched for
Benefits for customers:
Seamless omnichannel experience
to match customer preferences
The critical ‘sit test’:
90%
of dfs customers visit
a showroom before buying
Purchase online, in the
showroom, over the phone
or build an order in the
showroom and complete
the transaction at home
Customer centric
sales experience
Sofology post-purchase
NPS score
more than the term ‘sofas’
1.5x
86%
Annual Report and Accounts 2026 DFS Furniture plc 11
Strategic Report Corporate Governance Financial Statements Shareholder Information
Key market drivers
Macroeconomic headwinds have driven UK upholstery demand
to record lows. Historically, the Group has strengthened its
market leading position during economically challenging times
and is well positioned to drive growth as the market recovers.
Consumer confidence
– major purchases
Levels of consumer spending, particularly for big ticket items, are
influenced by general consumer confidence. In 2020, consumer
confidence fell due to economic and financial uncertainty around
the pandemic, but recovered slightly in 2021. In 2022 consumer
confidence fell to record low levels due to high inflation and elevated
interest rates putting pressure on consumer budgets. Consumer
confidence levels have recovered slightly, but remain low relative
to the long-term average.
Consumer credit
Upholstered furniture typically has relatively high unit prices, and
the availability of consumer credit continues to facilitate purchases
and upselling. Through the pandemic, UK consumers reduced debt
as government restrictions reduced options for discretionary spending.
Following a steady recovery from 2022 through to 2025, consumer
unsecured lending growth has accelerated in 2026, reaching 8.8%
year to date.
Property transactions
Independent research conducted on our behalf suggests c.20% of
upholstery purchases are triggered by a house move. Following a
sharp contraction in 2020 linked to the pandemic social distancing
measures, the housing market bounced back as a result of a temporary
reduction to the level of stamp duty. Housing transactions declined
in 2022 and 2023 due to Bank of England base rate increases and
the cost of living crisis.
In 2025, transactions recovered to long-term average levels but
are in decline in 2026 reflecting reduced consumer confidence,
elevated inflation and elevated unemployment levels.
Market review
1. GfK UK Consumer Confidence average of individual month scores for
each year.
2. Monthly 12 month growth rate of total (excluding the Student Loans
Company) Sterling net consumer credit lending to individuals (in percent)
seasonally adjusted.
3. HMRC – number of residential property transaction completions with a
value over £40,000 for the UK, seasonally adjusted.
Consumer confidence
1
Net unsecured lending growth
2
(%)
2025 2025 2025
2026 2026 2026
2024 2024 2024
2022 2022 2022
2019 2019 2019
2023 2023 2023
2020 2020 2020
2021 2021 2021
2017 2017 2017
2018 2018 2018
Housing transactions p.a. ('000
3
)
(8.8)
(9.5)
(12.7)
(24.3)
(14.5)
(38.5)
(29.3)
(17.8)
(19.2)
(19.8)
10.0
8.3
6.5
(2.0)
(3.5)
6.1
7.8
7.9
7.0
YTD 8.8
1,123
1,189
1,177
1,040
1,480
1,265
1,024
1,093
1,214
YTD (3.9)%
Annual Report and Accounts 2026 DFS Furniture plc12
Strategic Report
Build and scale
our Home business
Leverage our customer trust,
scale, marketing engine and brand
partnerships to capture more of each
household’s home spend and make
DFS Group relevant more often
Strategy
To build on our market leadership position in the
upholstery market and capture a larger share of
the overall Home market, during FY26 we refreshed
our Group strategy.
While our overarching strategic objectives remain
to grow DFS Group revenue to £1.4bn and achieve
8% PBT margins, we have refined our approach,
structuring it around three core growth pillars:
•
Play to win in the sofa market
•
Build and scale our Home business
•
Leverage and build platforms
Our updated growth strategy
Visit the link to find out more
about our strategic framework.
Play to win in
the sofa market
Protect core business and build
our market leadership position by
penetrating underserved segments
Leverage and
build platforms
Build and enhance the future
foundation of the business. Monetise
Sofa Delivery Company logistics to
serve others – turning scale into a
revenue generating platform
Market share
40%
Home order intake
year on year growth
+11%
Sofa Delivery
Company B2B
customers
3
Strategy in action
dfscorporate.co.uk/
about-us/our-strategy
•
Exclusive brand partnerships: The launch of the Amanda Holden
range successfully elevated our offer in a key customer segment,
generating significant sales and driving 100,000+ website visits
•
New range enhancements: Sofology has launched a strategic
partnership with Calia Italia, offering customers access to premium,
genuine Italian-designed sofas with favourable lead times
•
Innovation: dfs has launched the “On Cloud 9” range; these
vacuum-packed sofas combine foam and pocket springs for
comfort and ease of delivery
•
Showroom expansion: We opened a new Sofology showroom
in Carlisle in August 2026, which is already trading strongly
•
Customer experience: Both brands achieved record established
customer net promoter scores
•
Exclusive ranges: dfs has extended its partnerships with French
Connection, Ted Baker, Country Living, and House Beautiful and
extended our Cinesound technology brand to offer a range of
exclusive bed frames
•
Showroom Enhancements: We have installed a dedicated Home
range mezzanine
at our Stockton showroom, delivering a strong sales
uplift, and commenced
work on installing a mezzanine at our Leeds
Birstall showroom
•
Design and innovation: Our Group Design Studio now serves both
retail brands, leveraging our core expertise and delivering tailored
product segmentation for each brand’s target customers. The studio
will relocate to a new, state-of-the-art facility in 2027
•
UK manufacturing: We continue to invest in domestic manufacturing,
with a new wood mill planned for 2027
•
Monetising The Sofa Delivery Company: We have successfully
onboarded three core commercial partners while advancing our
proprietary technology to enable seamless, enterprise-scale fulfilment
Supported by our key enablers:
Our three key enablers will support the delivery
of our strategy:
•
Scale and vertical integration
•
Data, technology and AI
•
People and culture
By combining data, technology and AI, with a
highly motivated, supportive workplace culture
and our unmatched scale we have created a
unique competitive edge and the ability to
unlock significant growth as we look forward.
3. People and culture2. Data, technology and AI1. Scale and vertical integration
Annual Report and Accounts 2026 DFS Furniture plc 13
Strategic Report Corporate Governance Financial Statements Shareholder Information
Key performance indicators
Financial
FY26 22.1%
16.3%FY25
10.8%FY24
Gross sales
1
£1,420.1m
Underlying profit before tax, excluding
amortisation of brand names
1
£44.9m
Description
Profit before tax from continuing operations
adjusted for non-underlying items and
amortisation associated with acquired brands.
Performance
Increase driven by improved sales performance,
gross margin expansion and good cost control.
Underlying return on capital employed
1
22.1%
Free cash flow
1
£40.3m
FY26
FY25
FY24
£40.3m
£57.8m
(£15.1m)
Description
Underlying return on capital employed (‘underlying
ROCE’) is underlying post-tax operating profit from
continuing operations expressed as a percentage
of the sum of property, plant and equipment,
computer software, right of use assets and
working capital.
Performance
Increase driven by improved profitability
in the period with a lower asset base.
Description
Free cash flow is the change in net bank debt
for the period after adding back dividends and
the cost of purchasing own shares.
Performance
Strong free cash flow performance in FY26.
This was lower than FY25 due to high working
capital inflows associated with improved
trading within that period.
FY26 £1,420.1m
£1,388.3mFY25
£1,311.8mFY24
£44.9m
£30.2m
£10.5m
FY26
FY25
FY24
Description
Gross sales represents the total amounts payable
by external customers for goods and services
supplied by the Group, including the cost
of customer credit and aftercare services
(for which the Group acts as an agent), delivery
charges and value added and other sales taxes.
Performance
Growth driven by increased delivered sales
during the year.
1. Refer to pages 22 and 23 for APM definitions.
Banking leverage
1
0.9x
Description
Ratio of period end net bank debt to bank
covenant (IAS 17) EBITDA for the previous
twelve months.
Performance
Decrease driven by higher EBITDA
and reduced net bank debt.
FY26
1.4xFY25
2.5xFY24
0.9x
Annual Report and Accounts 2026 DFS Furniture plc14
Strategic Report
Key performance indicators continued
Non-financial
FY26 95.5%
92.1%FY25
77.1%FY24
Net Promoter Score (%)
– Post-purchase
93.1%
Suppliers –
Average days to pay
46.7 days
Sofology UK stores
56
Description
Average number of days between receipt
and payment of supplier invoices.
Performance
Decrease year on year due to increased trade
with shorter payment term suppliers.
Description
Number of Sofology stores trading
at the end of the financial period.
Performance
Reduction due to the optimisation of showroom
footprint in the period and investment in the
Sofology web platform.
Net Promoter Score (%) –
Established customer
58.1%
Suppliers –
% paid on time
95.5%
Description
Percentage of supplier invoices paid
within agreed terms.
Performance
Significant year on two-year improvement due
to process changes and detailed monitoring.
Description
Average across all dfs stores based on
post-purchase customer satisfaction surveys.
Performance
A strong performance, achieving record scores.
FY26 58.1%
54.1%
FY25
FY24
FY26 56
57FY25
58FY24
FY26 46.7
49.5FY25
48.5FY24
FY26
93.1%
91.8%FY25
92.8%FY24
Description
Average across all dfs stores based on
established customer satisfaction surveys
(six months after order).
Performance
Record high score, with all elements of our vertically
integrated business model performing well.
28.3%
Annual Report and Accounts 2026 DFS Furniture plc 15
Strategic Report Corporate Governance Financial Statements Shareholder Information
Chief Financial Officer’s introduction
Welcoming Dominique Highfield,
our new Chief Financial Officer
Q: What drew you to the CFO role
here at the DFS Group, and how have
you found your first few months
since joining us?
The DFS Group was an easy yes for me, with
its strong market position, a future-proofed
category, and an ambitious but achievable
strategy. The fact that 90% of our customers still
want to sit on a sofa before they buy it tells you
everything about why bricks-and-mortar retail,
done well, remains key to the customer journey.
I’ve found a business that puts its customers first,
with a strong NPS, a genuinely cost-conscious
culture, and a leadership team I rated the moment
I met them. Tim and the Group Leadership Team
impressed me hugely, and having a Board that’s
this engaged and this experienced is not
something you find everywhere.
A few months in, I can honestly say I’ve found
exactly what I hoped for. The culture here has real
warmth to it, and I’m enjoying immersing myself in
the business and getting to know our colleagues.
I’m energised, and I’m ambitious for what we can
do together. I can’t wait to see where this next
chapter takes us.
Q: We frequently talk about our
people and culture being a core
differentiator for the Group. From a
financial and operational perspective,
how have you seen that unique culture
translate into tangible team engagement
and performance since you joined?
My job now is to help that spread, particularly in
the Finance team. I want our talented teams to
keep finding new applications, to stay close to
what’s emerging in the wider world, and to build
a culture where colleagues feel confident leaning
into these tools.
Q: Looking ahead to our medium-term
goals of £1.4bn in revenue and an
8% PBT margin, what makes you
confident that we can reach those
targets, and how are you thinking
about our investment priorities?
I remain confident in our medium-term goals,
even against a challenging macro backdrop.
That confidence comes from the fundamentals
of the market leading position, resilient operations,
strong governance, real brand strength, genuine
product innovation, and a team that’s driving the
strategy forward every day.
On investment, we’re staying disciplined. We’re
continuing to pay down debt, make considered
investments in our stores and strategic priorities,
and support a sustainable dividend.
That discipline matters because it means when
the market recovers, and it will, we’ll be well placed
to move quickly on the growth opportunities
ahead of us.
You can feel this culture the moment you walk
in, and it’s not just nice to have, it’s a genuine
commercial driver. As one of the UK’s largest
furniture manufacturers and a major regional
employer, we have a unique legacy of developing
talent across generations, built on a deep love of
product and a customer-first mindset.
What’s impressed me equally is how we balance
that heritage with a genuine openness to change.
Ours is a culture of ‘high support, high challenge’,
which allows us to keep evolving while holding on
to what matters, believing that ‘better never stops’.
As CFO, I see the commercial impact of this
directly. In a service-led retail environment,
culture is a clear driver of performance, and our
record NPS and colleague engagement scores
prove the point. I believe this culture is a genuine
competitive advantage, and one that will keep
driving long-term shareholder value.
Q: Looking ahead, what are
your main priorities over the next
12 months and how do you see AI
playing a role in the Group?
Over the next 12 months my priority is simple:
drive performance in what’s still a complex market,
for our shareholders and our people alike. I want
to be a close, honest partner to Tim and the Group
Leadership Team as we do that.
A big part of this is modernising how the business
runs, and AI has a real role to play here. I’ve already
been impressed by what I’ve found, there are some
genuinely excellent AI use cases embedded in
our core operations and pockets of real innovation.
Dominique Highfield
Chief Financial Officer
Annual Report and Accounts 2026 DFS Furniture plc16
Strategic Report
Overview
In FY26, the Group’s performance was characterised
by top line growth, gross margin expansion and
further strengthening our balance sheet. In what
was a turbulent external environment in H2, the Group
upgraded and delivered full year profit guidance.
Despite macroeconomic headwinds, particularly
in the second half, the Group delivered significant
profit growth. Revenue grew by +2.6%, gross
margin progressed by 160 points to reach our
58% target, and continued cost discipline drove
underlying profit before tax and brand amortisation
1
(uPBT(A)) up +48.7% to £44.9m (FY25: £30.2m).
Capital allocation was focused on balance sheet
strength and net bank debt
1
reduction whilst
investing in selective growth opportunities.
Strong cash conversion resulted in net bank debt
reducing by £38.0m to £69.0m (FY25: £107.0m)
and bank leverage
2
reduced from 1.4x to 0.9x.
This improved financial position has enabled the
Board to reintroduce ordinary dividends in FY26.
Growing profit, reducing debt,
restoring dividends
Order intake
Group order intake across the financial year
reflected a resilient performance in a volatile
trading environment. We delivered a strong first
half, with Group year on year order intake up
+2.3%. In the second half of the year, order intake
momentum softened to -4.4% year on year as
ongoing geopolitical events and macroeconomic
pressures weighed on consumer confidence. For
the full year as a whole, Group order intake was
-1.0% lower year on year, slightly ahead of the
market
3
. Assessing our performance on a two year
basis demonstrates the continuing strength of
the Group, with order intake up +9.1% as we built
upon the substantial market share gains captured
in FY25.
Trading across the period highlighted a divide in
how consumers are spending. Customers with
higher household incomes and stronger financial
positions remained active in the market. Conversely,
households more acutely impacted by cost of
living pressures exhibited heightened caution,
deferring big ticket discretionary purchases. Our
multi-brand portfolio provided resilience against
this backdrop, with each brand’s distinct proposition
driving performance through different levers.
Order intake growth:
YoY
H1 2.3%
H2 (4.4%)
Group
(1.0%)
Against this backdrop, dfs delivered full year
order intake of -2.0% year on year. Despite the
subdued demand environment our exclusive brand
partnerships continued to resonate with consumers
generating positive year on year growth and
achieving record sales mix penetration. Order
intake for our non-upholstery Home proposition
grew +10.9% year-on-year to c.£55m, driven by
expanded brand partnerships, marketing
investment,
and capacity expansion via the installation of
a mezzanine at our dfs Stockton showroom.
Sofology outperformed the wider market, delivering
full year order intake growth of +2.6%. This
performance reflects Sofology’s more affluent
customer base, which is less impacted by cost
of living pressures. Growth was underpinned by
strategic range refreshes, its first ever major sale
event, and increasing the duration of interest-free
credit up to four years to support conversion.
Furthermore, continued digital enhancements,
such as expanded ‘Complete at Home’
functionality, enabled store colleagues to
seamlessly build digital baskets for customers
to finalise at home, providing a frictionless experience
that integrates with our physical showroom estate.
Brand order intake growth:
YoY Yo2Y*
dfs (2.0%) 6.5%
Sofology 2.6% 19.3%
Group
(1.0%) 9.1%
* Year on two year order intake growth calculated using
weeks 2-53 of the 53 week FY24 accounting period.
Financial review
The DFS Group delivered
a robust FY26 financial
performance, growing profit
significantly whilst further
strengthening our balance
sheet. This has been achieved
through a resilient trading
performance against a tough
macro backdrop, a strong
operational performance from
our supporting platforms and
good cost discipline.”
Dominique Highfield
Chief Financial Officer
Read more
KPIs on page 14
Dominique’s profile on page 52
Annual Report and Accounts 2026 DFS Furniture plc 17
Strategic Report Corporate Governance Financial Statements Shareholder Information
Financial review continued
The increase in gross sales resulted in an incremental £11.1m of gross margin year on year.
Product margin contributed an incremental £11.9m to gross profit, a 70 basis point improvement in
margin rate. This performance was supported by the successful consolidation of buying teams under
a single DFS Group leadership structure. By unifying buying operations across both dfs and Sofology,
we have reduced costs through consolidation and improved productivity and quality in our own
factories. This builds on the discipline established through the ‘Cost to Operate’ programme in
FY24 and FY25, keeping structural margin improvement central to our strategy.
Freight cost reductions contributed an incremental £5.5m to gross profit, representing a 50 basis point
improvement in the margin rate as a percentage of revenue. This benefit was driven by average
container rates reducing towards longer-term historical levels over the first three-quarters of the year.
For reference, every $1,000 movement in the freight rate per container impacts our annual freight
cost charge by approximately £7m–£8m.
The average USD/GBP exchange rate paid during the period was 3 cents favourable year on year,
providing a £3.8m benefit to gross profit and contributing 40 basis points to the overall margin rate.
The Group maintains a disciplined hedging policy to mitigate currency volatility, hedging 90% of
expected USD requirements nine months in advance, and 50% of the requirement for the subsequent
six month period.
Operating costs
Underlying operating costs which include selling and distribution, administration, depreciation,
amortisation and impairment costs totalled £539.0m, an increase of £24.3m year on year.
Underlying operating costs breakdown:
£m FY26 FY25 YoY
Selling, distribution and admin costs (451.1) (424.5) (26.6)
Depreciation, amortisation and impairment (87.9) (90.2) 2.3
Underlying operating costs (539.0) (514.7) (24.3)
Selling, distribution and administration costs increased by £26.6m year on year, primarily driven
by three core factors: variable volume related costs, inflationary headwinds and strategic marketing
investments. Volume-driven cost growth aligned with higher Group revenue, led to increased delivery
and wage costs as anticipated. Inflationary pressures were largely concentrated in employment costs,
following the increase in National Insurance contributions in April 2025, alongside mandatory National
Living Wage adjustments and annual salary increases.
We continued to make targeted investments in brand and customer acquisition, notably Sofology’s
return to TV advertising during the first half and driving increased market awareness for our growing
Home proposition.
Importantly, the strong cost culture now embedded across the business enabled us to mitigate some
of the inflation. As we look ahead, this disciplined approach provides a clear line of sight to additional
savings, ensuring we remain well positioned to partially mitigate ongoing inflationary headwinds.
Depreciation, amortisation and impairment decreased by £2.3m year on year, reflecting the reduced
capital expenditure incurred over recent years relative to longer-term levels.
Gross sales and revenue
Gross sales, which are recognised on delivery of orders to customers, grew +2.3% year on year,
exceeding the -1.0% decline in order intake. This variance reflects the lag inherent in our made-to-order
model alongside strong order growth in FY25 which resulted in gross sales below the value of orders
taken. By contrast, in FY26, order intake in value terms was broadly in line with delivered sales, reflecting
a more normalised cycle.
Gross sales and revenue growth:
FY26
£m
FY25
£m YoY
dfs 1,113.6 1,091.3 2.0%
Sofology 305.7 297.0 2.9%
Other* 0.8 — —
Gross sales 1,420.1 1,388.3 2.3%
Revenue 1,057.5 1,030.3 2.6%
* Sales generated by The Sofa Delivery Company.
Reported revenue grew +2.6%, marginally ahead of gross sales, reflecting the lower cost of offering
interest-free credit. This reduction was primarily driven by the first-half downward trend in SONIA rates.
Gross margin
Gross margin improved a further 160 basis points year on year to 58.1%. This marks a fourth
consecutive year of gross margin progression and the achievement of our 58% target.
56.5%
+0.7%pts
+0.5%pts
+0.4%pts
58.1%
FY25 Volume Product margin Freight FX FY26
£581.7m £11.1m
£11.9m
£5.5m
+160bps YoY
£3.8m £614.0m
Gross profit and margin FY25 to FY26
Annual Report and Accounts 2026 DFS Furniture plc18
Strategic Report
Financial review continued
Finance costs
Finance costs of £31.5m (FY25: £38.2m) were lower year on year, driven primarily by a reduction in
debt, resulting from strong free cash flow
1
generation over the last two years. In addition the average
funding rate decreased from 8.0% to 7.5%, reflecting both lower SONIA rates and a reduced premium
in our RCF due to the Group’s improved leverage position. Separately, lease interest fell by £2.0m
compared to the previous year, driven by a reduction in the average remaining lease term.
Finance costs breakdown:
£m FY26 FY25 YoY
Lease interest (22.2) (24.2) 2.0
Debt and other interest (9.3) (14.0) 4.7
Finance costs (31.5) (38.2) 6.7
Profit, tax and earnings per share
The Group delivered an underlying profit before tax and brand amortisation
of £44.9m, representing a
year on year increase of £14.7m. Reported profit before tax increased £10.8m to £43.7m. This is lower
than the underlying growth because FY25 included a one-off £4.1m credit in relation to a fair value
lease adjustment (FY26: £0.2m credit).
Underlying profit before tax and brand amortisation to reported profit before tax reconciliation:
£m FY26 FY25 YoY
Underlying profit before tax and brand amortisation 44.9 30.2 14.7
Brand amortisation (1.4) (1.4) —
Non-underlying credits 0.2 4.1 (3.9)
Reported profit before tax 43.7 32.9 10.8
The tax charge recognised in the financial statements is £8.8m (FY25: £8.7m) with a relatively low
reported effective tax rate of 20.1% as a result of a £2.7m non-underlying tax credit. This credit arose
primarily from the successful resolution of a cross-border tax review, unlocking tax losses previously
recognised in the former Netherlands operations. The underlying effective tax rate was 26.4%, higher
than the statutory rate of 25.0% largely due to disallowable depreciation on non-qualifying assets.
Underlying basic earnings per share was 13.8 pence (FY25: 9.2 pence) and basic earnings per share was
15.1 pence (FY25: 10.5 pence). There was no material change in the weighted average number of shares
in issue.
Cash flow, net debt, return on capital and debt facilities
In FY26, the Group delivered another year of strong free cash flow generation of £40.3m.
Summary cash flow and net bank debt:
£m FY26 FY25 YoY
Underlying EBITDA 162.9 157.2 5.7
Capital expenditure (27.6) (20.9) (6.7)
Interest (9.1) (14.0) 4.9
Tax (6.6) (3.7) (2.9)
Principal and interest paid on lease liabilities (86.6) (88.7) 2.1
Working capital 10.2 24.9 (14.7)
Share transactions (3.8) — (3.8)
Other* 0.9 3.7 (2.8)
Underlying free cash flow 40.3 58.5 (18.2)
Non-underlying items — (0.7) 0.7
Free cash flow 40.3 57.8 (17.5)
Shareholder returns (2.3) — (2.3)
Free cash flow after shareholder returns 38.0 57.8 (19.8)
Closing net bank debt (69.0) (107.0) 38.0
* Other of £0.9m for FY26 and £3.7m for FY25 includes gains/losses on disposal of assets, FX revaluations, share
based payments expense and settlements.
Throughout the year, we balanced debt reduction with targeted growth investment. Total capital
investment for the full year increased to £27.6m (FY25: £20.9m). Maintenance capital expenditure was
in line with our baseline of c.2% of revenue and we focused growth expenditure on projects with short
payback periods. Across FY26, growth capital was deployed into strategic initiatives, including a new
Sofology
showroom in Carlisle, store refits across both the dfs and Sofology estates, and a mezzanine
development
at dfs Stockton to expand upholstery ranges and dedicated space for our growing Home
offer. We also invested in new product development bay fit-outs, which successfully supported the
performance of our exclusive brands. Alongside physical estate enhancements, we continued to invest
in systems and data to enrich the customer experience across the buying journey and drive operational
efficiencies. We expect capital investment in FY27 to be between £27m-£32m.
Interest cash flows totalled £9.1m, a year-on-year reduction of £4.9m reflecting the lower average
net bank levels and funding rate referenced above, while the higher profit level increased tax payments
by £2.9m to £6.6m. Both FY25 and FY26 cash flows were positively impacted by non-recurring tax
receipts of approximately £3m. In FY26, these related to a successful cross-border tax review noted
above, while in FY25, the receipt arose from the utilisation of prior year UK tax overpayments.
The £2.1m reduction in lease payments is primarily driven by the exit of warehouse leases as we continued
to optimise our Sofa Delivery Company operations, moving to fewer larger sites, alongside some minor
timing variances across the year end period.
Annual Report and Accounts 2026 DFS Furniture plc 19
Strategic Report Corporate Governance Financial Statements Shareholder Information
Financial review continued
Debt facilities and banking covenants
After two years of debt reduction, the Group’s
financial position has strengthened significantly
with debt reducing almost £100m to £69.0m and
leverage more than halved, reducing to 0.9x from
a peak of 2.5x in FY24.
During the year, the period under which we
temporarily operated with widened covenants
concluded. The banking covenants, which are
tested half yearly, reverted to 3.0x maximum
leverage (net debt/EBITDA) and 1.5x minimum
fixed charge cover
2
(both measured on an IAS 17
basis). Through the period we operated with
significant headroom against each of these.
The Group’s debt facilities support its future
liquidity needs. At the end of the period the
Group had in place £250m of debt facilities
comprising a £200m revolving credit facility
(‘RCF’) and £50m of US private placement notes.
These facilities have a staggered maturity profile
as follows: £250m is available until September
2027 reducing to £225m until September 2028,
£200m until January 2029 and £25m until
September 2030.
The Group generated a working capital inflow
of £10.2m driven by an improvement in and shift
towards suppliers with improved payment terms
and a small timing benefit of payments around
year end. All else being equal, we expect just
under half of this inflow to reverse in FY27. This
was lower than the inflow of £24.9m recorded in
the prior year reflecting normalisation of
customer deposit levels and trade and VAT
creditor balances resulting from improved trading
in that period.
A net cash outflow associated with share
transactions of £3.8m was incurred in FY26
(FY25: £nil), comprising £8.2m utilised by the
Employee Benefit Trust to purchase shares
to satisfy in year and anticipated future employee
share scheme vesting, offset by £4.4m of
proceeds from the sale of own shares.
Reflecting the Group’s strengthened balance
sheet, we were pleased to reintroduce a modest
ordinary interim dividend of 1.0 pence per share
resulting in a £2.3m cash outflow in the second
half of the financial period.
Return on capital employed
Return on capital employed
1
(ROCE)
progressed
strongly during the year to reach
22.1% (FY25: 16.3%).
This increase reflects the
improvement in profitability
and a lower level
of capital employed of £249.6m (FY25: £301.8m)
driven by reductions in tangible, intangible,
and right of use assets and working capital.
We remain confident in delivering sustained
growth in returns over the medium term,
underpinned by market share progression,
growth of our Home offer, market recovery
potential and our cash generative negative
working capital model.
Bank debt and leverage reduction
69.0
107.0
164.7
FY24 FY25 FY26
2.5x
1.4x
0.9x
Annual Report and Accounts 2026 DFS Furniture plc20
Strategic Report
Conclusions and looking forward
FY26 demonstrated the underlying strength of
the Group’s operating model, with organisational
design changes across our platform translating
directly into cost and quality benefits, alongside
continued cost discipline.
Looking into FY27 and beyond, the Group is
well positioned to navigate what is likely to be
a challenging near-term trading environment.
Further debt reduction remains a priority,
and we will balance this with considered
growth investment in our upholstery business,
the Home market opportunity, and continued
improvements in operational efficiency.
Dominique Highfield
Chief Financial Officer
24 September 2026
1. Refer to pages 22 and 23 for APM definitions.
2. Bank leverage calculated as net debt divided by last
12 months’ EBITDA. Net debt is net bank debt plus a
proportion of finance leased assets. Fixed charge
cover is calculated as last 12 months EBITDARent
divided by rent + interest.
3. Proprietary banking data covering 14 specialist
upholstery retailers.
Capital allocation and dividends
The Group’s capital allocation priorities are for the Group to operate with net debt levels (excluding
capitalised lease obligations) of between 0.5x–1.0x of trailing 12 month EBITDA; to invest to maintain
the Group’s asset base and support future growth; and to provide sustainable shareholder returns.
The Group’s financial position has significantly strengthened over the last 24 months with net bank
debt reducing from £165m in FY24 to £69m in FY26 and our leverage improving from 2.5x at FY24 to
0.9x, towards the top of our target range. In light of the improving position, dividends have been
restored, with the Board approved payment of an interim dividend of 1.0 pence per share (total cost
£2.3m) and we are proposing a final dividend of 2.0 pence per share, resulting in a total dividend of 3.0
pence per
share. This represents a dividend cover of 4.6x times, above our policy range of 2.25x-2.75x. In
determining
the appropriate size to reintroduce the dividend, the Board took into account that demand
drivers remain mixed.
Capital allocation
Framework FY26 Commentary
Leverage (excluding property leases)
0.5x-1.0x
•
Making strong progress with the ratio of 0.9x now in target
range. Further reduction remains a high priority.
Organic investment
Strategic organic capital
investment to deliver
attractive returns
•
Our maintenance capital requirements currently represent
c.2% of revenue. Total capital investment was £27.6m and is
expected to be at a similar level in FY27 with a continued
focus on high-confidence growth projects with proven
returns.
Ordinary dividend
Dividend cover ratio
of 2.25x – 2.75x
•
Full year dividend of 3.0 pence per share / 4.6x cover for
FY26. The Board believes that returning to the dividend
register in a measured way is the right course of action to
balance investment in growth, continue deleveraging and
support sustainable shareholder returns.
Supplementary shareholder returns
When the Group is operating
below its target leverage,
it will consider special
dividends / buybacks
•
The Group currently operates within its target leverage
range and so there are no supplementary returns for FY26.
Financial review continued
Annual Report and Accounts 2026 DFS Furniture plc 21
Strategic Report Corporate Governance Financial Statements Shareholder Information
Alternative performance measures
In reporting the Group’s financial performance,
the Directors make use of a number of alternative
performance measures (‘APMs’) in addition to
those defined or specified under UK-adopted
International Financial Reporting Standards (‘IFRS’).
APMs are not IFRS measures, nor are they intended
to be a substitute for IFRS measures.
The Directors consider that these APMs
provide useful additional information to support
understanding of underlying trends and business
performance. In particular, APMs enhance the
comparability of information between reporting
periods by adjusting for non-underlying items.
APMs are therefore used by the Group’s Directors
and management for internal performance analysis,
planning and incentive setting purposes in addition
to external communication of the Group’s
financial results.
In order to facilitate understanding of the
APMs used by the Group, and their relationship
to reported IFRS measures, definitions and
numerical reconciliations are set out below.
Definitions of APMs may vary from business
to business and accordingly the Group’s APMs
may not be directly comparable to similar
APMs reported by other entities.
APM glossary and definitions
APM Definition Rationale
Gross sales Amounts payable by external customers for goods and
services supplied by the Group, including the cost of
customer credit and aftercare services (for which the Group
acts as an agent), delivery charges and value added and other
sales taxes. See note 2 to the financial statements for a
reconciliation from gross sales to revenue.
Key measure of overall sales performance which unlike IFRS
revenue is not affected by the extent to which customers
take up the Group’s customer credit offering.
Brand contribution Gross profit less selling and distribution costs,
excluding property and administration costs.
Measure of brand-controllable profit as it excludes shared
Group costs.
Adjusted EBITDA Earnings before interest, taxation, depreciation and
amortisation adjusted to exclude impairments.
A commonly used profit measure.
Non-underlying items Items that are material in size, unusual or non-recurring
in nature which the Directors believe are not indicative
of the Group’s underlying performance.
Clear and separate identification of such items facilitates
understanding of underlying trading performance.
Underlying EBITDA Earnings before interest, taxation, depreciation and amortisation
from continuing operations, adjusted to exclude impairments
and non-underlying items.
Profit measure reflecting underlying trading performance.
Underlying profit before
tax and brand amortisation
uPBT(A)
Profit before tax from continuing operations adjusted for
non-underlying items and amortisation associated with the
acquired brands of Sofology and Dwell.
Profit measure widely used by investors and analysts.
Underlying earnings
per share
Post-tax earnings per share from continuing operations
as adjusted for non-underlying items.
Exclusion of non-underlying items facilitates year on
year comparisons of the key investor measure of earnings
per share.
Net bank debt Balance drawn down on interest-bearing loans, with
unamortised issue costs added back, less cash and cash
equivalents (including bank overdrafts).
Measure of the Group’s cash indebtedness which supports
assessment of available liquidity and cash flow generation
in the reporting period.
Cash EBITDA Net cash from operating activities before tax, less
movements on working capital and provisions balances
and payments made under lease obligations, adding back
non-underlying items before tax.
Measure of the non-underlying operating cash generation
of the business, normalised to reflect timing differences
in working capital movements.
Free cash flow The movement in cash and cash equivalents, excluding
the impact of drawdowns/repayments of financing
arrangements, dividends and the cost of purchasing
own shares.
Measure of the cash return generated in the period and
a key financial target for Executive Director remuneration.
Leverage (gearing) The ratio of period end net bank debt to cash EBITDA
for the previous twelve months.
Key measure which indicates the relative level of borrowing
to operating cash generation, widely used by investors
and analysts.
Underlying return
on capital employed
(underlying ROCE)
Underlying post-tax operating profit from continuing
activities, expressed as a percentage of the sum of: property,
plant and equipment, computer software, right of use assets
and working capital.
Represents the post-tax return the Group achieves on the
investment it has made in its business.
Annual Report and Accounts 2026 DFS Furniture plc22
Strategic Report
Alternative performance measures continued
Reconciliations to IFRS measures
Adjusted EBITDA Note
FY26
£m
FY25
£m
Operating profit 2 75.2 71.1
Depreciation 3 74.4 71.2
Amortisation 3 13.3 13.0
Impairments 3 0.2 1.3
Adjusted EBITDA 163.1 156.6
Underlying EBITDA Note
FY26
£m
FY25
£m
Adjusted EBITDA 163.1 156.6
Non-underlying operating items 3 (0.2) 0.6
Underlying EBITDA 162.9 157.2
Underlying profit before tax and brand amortisation – uPBT(A) Note
FY26
£m
FY25
£m
Profit before tax 2 43.7 32.9
Non-underlying items 3 (0.2) (4.1)
Amortisation of brand names 10 1.4 1.4
Underlying profit before tax and brand amortisation 44.9 30.2
Net bank debt Note
FY26
£m
FY25
£m
Interest bearing loans and borrowings 18 67.8 105.3
Unamortised issue costs 18 1.2 1.7
Cash and cash equivalents (including bank overdraft) — —
Net bank debt 69.0 107.0
Movement in net bank debt
FY26
£m
FY25
£m
Closing net bank debt (69.0) (107.0)
Less: Opening net bank debt 107.0 164.8
Movement in net bank debt 38.0 57.8
Free cash flow Note
FY26
£m
FY25
£m
Net decrease in cash and cash equivalents — (24.2)
Net repayment of senior revolving credit facility 38.0 82.0
Dividends paid 21 2.3 —
Free cash flow 40.3 57.8
Leverage Note
FY26
£m
FY25
£m
Net bank debt (A) 69.0 107.0
Net cash from operating activities before tax 26 173.4 184.9
Add back:
Pre-tax non-underlying items (0.2) (4.1)
Less:
Movement in trade and other receivables 1.7 3.8
Movement in inventories (3.1) (2.4)
Movement in trade and other payables (7.7) (22.5)
Movement in provisions (1.1) (3.8)
Payment of lease liabilities (64.4) (64.5)
Payment of interest on leases (22.2) (24.2)
Cash EBITDA (B) 76.4 67.2
Leverage (A/B) 0.9x 1.6x
IAS 17 bank covenant difference — (0.2x)
Bank leverage 0.9x 1.4x
Underlying return on capital employed Note
FY26
£m
FY25
£m
Operating profit 75.2 71.1
Non-underlying operating items (0.2) (4.1)
Pre-tax return 75.0 67.0
Effective tax rate 26.4% 26.7%
Tax adjusted return (A) 55.2 49.1
Property, plant and equipment 8 74.3 75.2
ROU assets 9 246.0 276.9
Computer software 10 17.5 19.3
337.8 371.4
Inventories 14 53.5 56.6
Trade receivables 15 11.6 10.5
Prepayments 15 4.7 4.7
Accrued income 15 0.2 0.2
Other receivables 15 1.0 0.4
Payments received on account 16 (47.8) (50.4)
Trade payables 16 (111.4) (91.6)
Working capital (88.2) (69.6)
Total capital employed (B) 249.6 301.8
Underlying ROCE (A/B) 22.1% 16.3%
Annual Report and Accounts 2026 DFS Furniture plc 23
Strategic Report Corporate Governance Financial Statements Shareholder Information
Risks and uncertainties
Our risk management processes
Board
The Board retains ultimate accountability for the DFS Group’s risk architecture, ensuring that exposures are systematically identified, assessed,
and managed across all operations. By defining the Group’s risk appetite, the Board establishes the parameters for strategic decision-making
while maintaining continuous oversight and evaluating the effectiveness of internal control systems.
Audit and Risk Committee
The Audit and Risk Committee, under delegated authority from the Board, monitors the DFS Group’s internal financial controls, internal controls
framework and risk management framework. Furthermore, the Board routinely reviews principal and emerging risks to safeguard organisational resilience
against evolving market conditions. Operating as a critical governance body, the Committee supports the Board’s robust review of these frameworks
while directly approving and overseeing the execution of the internal audit programme.
Our Audit and Risk Committee supports the
Board by continually monitoring the effectiveness
of our risk framework. We maintain a structured
process to define our risk appetite and to identify,
evaluate, and monitor risks across the business.
As the risk landscape naturally evolves, the Board
recognises that our risk framework and internal
controls are designed to manage exposure effectively.
The Board maintains ultimate accountability for
the DFS Group’s risk management frameworks
and internal control systems, including the ongoing
monitoring of their operational effectiveness in
alignment with the UK Corporate Governance
Code 2024 and preparation for the Provision 29
declaration. This oversight is supported by a
continuous identification process designed
to monitor core exposures, surface emerging
threats and evaluate mitigation strategies against
the Group’s defined risk appetite. To ensure full
compliance with Provision 29 requirements, the
Board has oversight of the operational testing
framework in place to support the mandatory
annual declaration on the effectiveness of the
Group’s material internal controls.
While the Board retains strategic oversight,
execution is delegated to the Group Leadership
Team (GLT) and senior management who
implement and maintain the material controls to
protect the Group’s objectives and ensure
delivery of the Group’s strategy. Reflecting the
dynamic nature of the corporate landscape, this
framework is designed to evaluate, manage and
mitigate risk effectively, providing
reasonable
assurance against internal control failures.
The DFS Group continues to evolve our
structured approach to risk management mindful
that in an ever changing environment we need to
be adaptable in our approach, ensuring we fully
integrate risk management into decision making.
First line
Executive and senior management maintain
direct ownership of the DFS Group’s risk
register, working with the Risk team to conduct
regular reviews to ensure all operational
exposures and opportunities are identified,
assessed and, where appropriate, mitigated,
remaining within the DFS Group’s defined
risk appetite.
Furthermore, management is responsible
for the design and implementation of internal
controls. By embedding these robust mitigating
actions into operations, they ensure the Group
maintains a resilient control environment capable
of adapting to evolving strategic risks.
Second line
The Risk team has developed the Board
approved Risk Management Framework and is
responsible for working alongside management
to oversee the ongoing development of risk
monitoring and assessment. They support
with an ongoing focus on horizon scanning
and the identification of emerging risks.
The team is responsible for the administration
and reporting of the DFS Group’s risk register,
partnering with risk owners and risk managers
to challenge constructively, whilst accurately
evaluating any risks and identifying the
necessary internal controls needed to
mitigate the risk effectively.
The DFS Group also has dedicated Compliance
teams to act as SMEs, providing regulatory
guidance and operational support. These
functions work closely with management to
establish robust mitigating actions to ensure
the risk remains within the DFS Group’s
approved risk appetite.
Third line
The Internal Audit team’s primary objective is
to safeguard the DFS Group’s assets,
reputation, and long-term viability by
delivering independent, objective assurance
and consulting services. Utilising a systematic
and disciplined approach, the team focuses on
adding strategic value across the enterprise
by rigorously evaluating the effectiveness of
risk management frameworks, internal control
environments, and core governance processes.
Operationally, the function delivers a rolling
programme of core audits to provide direct
oversight and real-time insights into front-line
business activities. This thematic audit
coverage spans the entire retail footprint of
both the dfs and Sofology brands, alongside
dedicated operational reviews of The Sofa
Delivery Company Customer Delivery
Centres (CDCs).
Annual Report and Accounts 2026 DFS Furniture plc24
Strategic Report
Our framework for risk governance
Changes were made to the Group’s risk, controls
and internal audit structure at the end of our last
financial year to allow the Group to operate a
clear three lines of defence model.
The Risk, Internal Controls and Internal Audit
teams now sit as part of the Group Legal and
Business Assurance function, reporting into the
Chief Legal and Assurance Officer. The function
acts as a core strategic partner to the DFS Group,
deploying subject matter expertise across corporate
governance, legal and regulatory compliance,
health and safety, and enterprise risk management.
This Board approved structural alignment establishes
a comprehensive unified approach to corporate
compliance. By harmonising risk tracking across
our operating teams, this integrated framework
provides robust, data-driven insights that directly
support Internal Audit in delivering an objective,
highly structured and risk-based auditing programme.
In addition, where appropriate, cross-business
risk management is supported by specific committees
and similar oversight functions including product
quality, Environmental, Social and Governance
(ESG), cyber security and data security.
Horizon scanning
and emerging risks
To ensure sustainable success and strategic viability,
the DFS Group uses a continuous process of
horizon scanning to identify and mitigate emerging
threats before they can cause harm.
This includes continuous year round monitoring
of the short, medium and long-term risks with the
business functions. This process is informed by a
combination of external industry knowledge and
internal insights from key stakeholders. By tracking
early-stage shifts, the Group ensures it can proactively
adjust its approach and internal controls before a
vulnerability could be a major issue.
Risks and uncertainties continued
The Board, management, and dedicated Risk and
Compliance teams oversee this continuous
scanning with findings reported back internally
through the Governance and Risk Committee,
GLT and to the Audit and Risk Committee.
Principal risks
The GLT and the Board have conducted a robust,
comprehensive assessment of the principal and
emerging risks facing the Group. This evaluation
explicitly considers uncertainties that could
threaten the Group’s strategic objectives, solvency,
liquidity or future operational performance.
The Group’s principal risks and uncertainties are
identified and evaluated in strict accordance with
our established Risk Management Framework.
These risks are mapped directly to our strategic
pillars and operational platforms ensuring clear
visibility into potential impacts on the achievement
of our long-term business objectives.
The Group undertakes regular risk reviews
designed to:
•
evaluate the evolving nature of identified risks;
•
verify the design and operational
effectiveness of existing internal controls; and
•
identify and implement additional mitigating
actions to further reduce or manage specific
risk exposures.
All mitigation strategies and residual risk
exposures are continuously monitored and
managed in alignment with the Group’s defined
risk appetite.
Changes to principal risks in the year
As part of our risk management process, the
DFS Group’s principal risks are regularly reviewed
with the GLT and the Audit and Risk Committee.
Following this review and a recommendation
made by the GLT the previous principal risk,
‘Supply chain and manufacturing resilience’,
was deemed too broad and the risk has now been
split into two dedicated principal risks, ‘Supplier
and manufacturing resilience’ and ‘Inbound and
outbound logistics’, each assigned to a specific
GLT owner. This restructuring provides enhanced
oversight and ensures that mitigating controls
are highly targeted.
Cyber security, IT infrastructure and data
To reflect the interconnected nature of our
technology estate, the Board has expanded this
risk category to formally integrate IT infrastructure
alongside cyber security and data management.
Our data and IT systems are fundamental to
fulfilling customer obligations and driving
operational efficiency. Consequently, the risk
profile has been updated to address potential
operational disruptions, sales losses, regulatory
penalties, and reputational damage that could
arise from the unavailability of critical systems
or data, regardless of the root cause.
Business transformation
As the DFS Group executes large-scale, strategic
investment and business change projects, the
scope of this risk has been broadened to ensure
comprehensive oversight. Implementing significant
modifications to our data, core processes, and IT
systems introduces inherent delivery risks. The
updated risk definition focuses heavily on mitigating
business interruption during these transitional phases,
ensuring that execution failures do not impede
the delivery of our long-term strategic objectives.
Macroeconomic uncertainty remains a principal
risk to our Group and the delivery of the strategy.
The Group takes mitigating actions to reduce
the impact of external factors on delivery of
the objectives, documented within each of
the individual principal risks.
The Group now has ten principal risks. These are:
1
Financial risk and liquidity
2
Regulatory and compliance
3
Cyber security, IT infrastructure and data
4
Supplier and manufacturing resilience
5
Macroeconomic uncertainty
6
Environmental and sustainability
7
People and culture
8
Brand, proposition and reputation
9
Business transformation
10
Inbound and outbound logistics
The principal risks and their mitigating controls
have been reassessed and the risk movement
trajectory included for each.
Almost certainLikelihoodRare
Minor Impact Catastrophic
FY26 residual risk assessment
FY25 residual risk assessment where the risk
has moved
1
1
6
5
2
4
3
5
9
7
8
6
2
10
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Movement:
Increasing
Decreasing New
Stable
Risks and uncertainties continued
Financial risk and liquidity
What is the risk?
Adequate access to liquidity is key to delivering
the DFS Group’s strategy. The Group is reliant on
the availability of adequate financing from banks
and capital markets to meet its liquidity needs.
What is the impact of this?
Macroeconomic pressures and performance
volatility may cause adverse working capital swings,
depleting liquidity headroom and impacting our
ability to secure or renew financing facilities.
A failure to maintain adequate liquidity or comply
with banking covenants poses an immediate threat
to cash flow and going concern status. This risk
is further compounded if inaccurate financial
reporting or weak fraud protections disrupt
cash management and supplier payments.
How do we mitigate against the risk?
•
Maintained robust, collaborative partnerships
with all financial counterparties, ensuring
comprehensive visibility into the Group’s
financial trajectory and operational performance.
•
The internal Treasury function conducts rigorous,
periodic assessments of capital structures
and financing arrangements to optimise
liquidity management and minimise overall
financing costs.
•
The critical review of regular cash flow
projections to ensure robust liquidity
management and capital adequacy.
•
Mitigated foreign exchange exposure by executing
strategic hedging frameworks aligned with
the Board approved Treasury Policy.
•
Development and embedding of the Internal
Controls over Financial Reporting Framework.
Regulatory and compliance
What is the risk?
We operate in an increasingly complex legal and
regulatory environment and are governed by a
wide range of laws, regulations, standards and
guidance. A failure to consistently deliver against
our legal and regulatory obligations or broader
corporate responsibility commitment would
undermine our reputation as a responsible retailer.
This may result in sanctions and financial loss.
It could negatively impact our ability to operate
and remain trusted by our customers, colleagues,
investors and other stakeholders. It is essential
that the DFS Group is aware of and can fulfil all its
obligations in the regions in which we operate.
What is the impact of this?
Regulatory and compliance failures including;
legislative shifts, liability risks, and poor customer
support for regulated products could severely
impact the Group’s financial position and
its reputation.
How do we mitigate against the risk?
•
Maintained comprehensive training and
monitoring frameworks, (including individual
Net Promoter Scores (NPS) results tracking,
internal audits and mystery shopping) to
ensure high customer service standards
and regulatory compliance.
•
Utilising data and structured management
information (MI) to proactively identify
operational issues and implement
corrective actions.
•
Cultivation of strong relationships with
financial services and insurance providers
to ensure regulatory alignment and
enhance customer support.
•
Enforced rigorous oversight and escalation
protocols to secure and maintain the firm’s
Financial Conduct Authority (FCA) limited
permission status for consumer finance.
•
Conducted continuous reviews of the
regulatory landscape to ensure structured,
timely and sustainable planning for forthcoming
legislative changes.
•
Maintained clear pathways to escalate critical
regulatory and risk matters to the Audit and
Risk Committee for strategic oversight with
regular review at the Governance and
Risk Committee.
•
Data privacy policies anchored by mandatory
annual data protection training for all colleagues.
•
Robust sales principles and compliance
frameworks embedded across all operating
brands alongside integration of the FCA’s
Consumer Duty principles into core
operations, establishing ongoing reviews
to systematically demonstrate and deliver
positive customer outcomes.
1 2
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Strategic Report
Movement:
Cyber security, IT infrastructure and data
What is the risk?
Our data and IT systems and infrastructure
enable us to fulfil our obligations to customers
and manage our operations. Ensuring we both
protect our data and utilise it effectively is necessary
to deliver our strategy. If a critical system, IT
infrastructure or business data was not available,
regardless of the cause, it could impact our
operations, result in a loss of sales, and incur
regulatory penalties and reputational damage.
What is the impact of this?
Whether caused by cyber attacks, system
outages, or poor data management, operational
failures risk severe data loss, reporting errors, and
flawed decision making. The resulting regulatory
fines, legal liabilities, and reputational damage
directly erode customer trust, cash flow, and
long-term competitive advantage.
How do we mitigate against the risk?
•
The DFS Group has completed a comprehensive
review of existing controls and deployed
additional defensive measures where prudent.
•
Partnered with a global enterprise provider to
deliver industry-leading Managed Detection
and Response (MDR) and Security Operations
Centre (SOC) services, expanding AI-driven
detection across our business systems.
•
Vulnerability management tools have been
upgraded to an industry-leading solution to
accelerate threat remediation, whilst core
internal brand IT systems and infrastructure
are undergoing a full update to support
ongoing operational demands and be
able to accommodate future needs.
•
To mitigate the heightened risk of social
engineering attacks targeting IT service desks,
we have strengthened our identity verification
controls to ensure robust authentication prior
to account access.
•
To safeguard against ransomware and operational
disruption, the Group maintains an enterprise-
wide back up solution utilising offsite storage,
regular testing and data immutability.
•
Full IT security back up and business continuity
procedures undergo mandatory annual reviews
and updates.
•
Conducted comprehensive penetration
testing to date spanning internal and external
web applications, physical security and remote
access, establishing a continuous testing
programme for year round resilience validation.
•
Our human firewall capabilities were strengthened
through mandatory annual cyber awareness
training, which is distributed throughout
the year and can be tailored to specific
user groups. This was further supported by
targeted phishing simulation programmes.
•
Implementation of more stringent password
complexity protocols while transitioning away
from scheduled password rotation, aligning
our policy with current National
Cyber Security Centre (NSCS) guidance.
•
The Group maintains continuous data reviews
across the Group to ensure strategic and
operational decision making remains accurate,
informed and effective.
Supplier and manufacturing resilience
What is the risk?
We are reliant on external suppliers, both in
the UK and worldwide, to provide our finished
products to customers or supply raw materials
for our UK manufacturing sites. If that supply
chain is affected by availability, labour shortages,
transport delays or failure of a key supplier, this
could increase the costs to the DFS Group or
impact our ability to fulfil customer orders.
As we continue to develop and broaden our
product range, failure to maintain adequate
procedures and complete the appropriate due
diligence and consistently deliver against our
regulatory obligations would undermine our
reputation as a responsible retailer.
What is the impact of this?
Supply chain, production or transport disruptions
could lead to delayed orders, poor quality, and
increased costs, resulting in lost revenue and
damage to the Group’s brands.
How do we mitigate against the risk?
•
Proactive management of the end-to-end
supply chain across the Group.
•
Ability to source raw materials and finished
goods from suppliers across the UK, Europe
and Asia to mitigate inbound bottlenecks
caused by regional or geopolitical disruptions.
•
Embedding a comprehensive Sustainable
Sourcing Policy and conducting routine
supplier audits to ensure tier-one partners
maintain the operational resilience necessary
to avoid disruptions at sourcing level.
•
Maintain a proprietary UK manufacturing
footprint to buffer against international supply
shocks allowing the Group to fulfil core product
lines internally when global inbound logistics
are disrupted.
•
Use of advanced AI risk analytics platforms
to shift from static assessments to a dynamic,
location-based understanding of physical,
environmental and geopolitical threats across
the supplier network.
•
Selectively expand core “in-stock” lines and
critical raw materials (such as timber and foam)
to absorb unexpected transportation delays
or supplier labour shortages.
•
Require all tier-one finished article and
component suppliers to adhere to a strict
Supplier Code of Practice, verified by mandatory
annual compliance and quality audits.
•
Rigorous Material Traceability Audits conducted
to allow for supply chain mapping back to the
raw material source.
•
Subject all new product ranges, fabric expansions
and design partnerships to robust compliance
requirements to systematically verify product
safety, fire retardancy and sustainability
standards before market launch.
•
Integration of all supply chain due diligence
activities into the Group’s ESG Committee
framework ensuring emerging compliance
and reputational risks are regularly escalated
to the Board.
Risks and uncertainties continued
Increasing
Decreasing New
Stable
3 4
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Risks and uncertainties continued
Macroeconomic uncertainty
What is the risk?
Volatility in global economic conditions,
inflationary pressures, changes in interest rates,
currency fluctuations and ongoing geopolitical
tensions may adversely impact market confidence,
supply chains, customer demand and overall Group
performance. Unpredictable policy responses,
trade restrictions or regional instability could
further disrupt operations, increase costs and
affect strategic decision making.
What is the impact of this?
Global economic pressures including high
inflation, high interest rates, and increasing
freight costs alongside geopolitical conflicts,
could severely suppress consumer demand
and inflate operating costs and impact margin.
How do we mitigate against the risk?
The uncertain environment that the DFS Group
operates in requires each function to identify
and consider the emerging risks that impact
the Group. As a result of this, each function puts
controls in place to mitigate the impact of events
linked to the current macroeconomic uncertainty.
Therefore the mitigating actions are documented
as part of the other principal risks.
Environmental and sustainability
What is the risk?
Failure to anticipate and respond to the
environmental, regulatory and climate impacts
of our operations could fall short of stakeholder
expectations causing reputational and financial
damage. Poor management of sustainability and
climate risks may disrupt supply chains, limit
access to key materials and reduce revenue
through production delays or rising costs. Over
time, a lack of innovation and slow transition
to circular business models could weaken
competitiveness and long-term resilience.
What is the impact of this?
Issues such as declining product appeal,
environmental changes, the financial burden of
technological shifts and unethical supply chain
conduct pose significant risks. These could lead
to substantial operating costs, regulatory fines
and lasting brand damage ultimately impacting
consumer trust, financial stability and long-term
value for our shareholders.
How do we mitigate against the risk?
•
Secured Science Based Targets initiative
(SBTi) endorsement for our net zero roadmap
establishing firm goals for reducing emissions
across Scopes 1, 2 and 3 and launching a
structured supplier engagement programme.
•
Allocated ongoing capital for the transition
of our property portfolio and service vans
to low-carbon alternatives, aiming to lower
direct operational impact.
•
Initiated biodiversity net gain initiatives at
select UK locations to protect natural capital.
•
Created a closed-loop operational model ready
for the trial phase to enable net zero initiatives
•
Enhanced our visibility across the value chain
and rolled out the DFS Group’s sustainable
procurement standards across all business units.
•
Deployed high-level AI-driven analytics to
move towards real-time monitoring of various
environmental and regional risks within our
network of providers.
Movement:
Increasing
Decreasing New
Stable
5 6
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Strategic Report
People and culture
What is the risk?
We aim to create an inclusive workplace with
a positive contribution to the communities we
serve as well as all our stakeholders, including
our customers, colleagues, communities and
suppliers, creating a ‘great place to work’. We
need to ensure we have the right skills for today
and the future.
What is the impact of this?
Inadequate investment in colleague development,
competitive compensation, and an inclusive
culture risks driving talent attrition, which directly
threatens our operational performance, profitability,
and ability to effectively serve customers.
How do we mitigate against the risk?
•
Launch of a DFS Group purpose, values, and
leadership behaviours framework to drive
operational consistency across all brands,
fostering a supportive culture that
accelerates performance.
•
Conducted annual Group-wide salary reviews
and function-specific benchmarking to ensure
remuneration remains competitive and aligned
with market standards.
•
Invested in structured training and development
frameworks to drive internal mobility and
career progression across the Group.
•
Utilised regular engagement surveys and
colleague-led network groups to actively
monitor culture across the Group and capture
the colleague voice.
•
Maintained a proactive health and safety
framework to ensure a secure, compliant,
and hazard-free working environment.
•
Continually reviewed and harmonised the
colleague wellbeing proposition to ensure
equitable access to benefits across all teams.
•
Maintained memberships with Diversity in
Retail to benchmark best practices, build
peer connections, and strengthen the Group’s
overarching inclusion strategy.
•
Provided GLT level sponsorship and
governance for internal inclusion networks,
amplifying community engagement through
external partnerships like Pride events.
•
Extended the Group’s partnership with BBC
Children in Need to include the Sofology
brand, ensuring all collective fundraising
is directly channelled towards eradicating
furniture poverty.
•
Developed a Group Employee Value
Proposition, ‘Room for More’.
Risks and uncertainties continued
Brand, proposition and reputation
What is the risk?
The reputation of and value associated with the
DFS Group’s brands and product offering is central
to the success of the Group. Failure to maintain a
well designed, high quality product range that is
priced attractively could compromise the success
of the Group. Over time, a failure to meet the
product design, quality and customer experience
expected by our customers will have an adverse
effect on the reputation of the Group.
What is the impact of this?
Failure to anticipate shifting market trends,
match competitor innovations or maintain strict
product quality and customer service standards
risks severe reputational damage eroding both
market share and profitability.
Failure by our suppliers to uphold our standards
regarding business ethics, regulatory compliance,
human rights (including safety and modern slavery)
and environmental sustainability may undermine
our reputation as a responsible retailer, leading
to a loss of stakeholder confidence in the Group.
How do we mitigate against the risk?
•
Market-led innovation, combining the
capabilities of the in-house product design
team and external design partners to deliver
an innovative, high-value, and attractive
product range.
•
Attended global furniture industry shows to
monitor emerging trends, while strategically
piloting new styles and fabrics in select
showrooms throughout the year.
•
Maintained continuous oversight of products
and services to ensure they meet stringent
quality, sustainability, and competitive
pricing standards.
•
Utilisation of internal manufacturing
infrastructure and a made-to-order model
to rapidly identify and remediate product
quality issues.
•
Embedded individual Net Promoter Score
(NPS) tracking and tied colleague incentives
to these metrics to foster customer-centric
behaviours across the entire buying journey.
•
Conducted continuous competitor analysis,
including mystery shopping and online
assessments, to safeguard the Group’s
market positioning.
•
Expanded the “in-stock” product range across
dfs and Sofology to satisfy demand for rapid
delivery, while dynamically adjusting customer
lead-time communication during transit
disruptions to protect the brand experience.
Movement:
Increasing
Decreasing New
Stable
7 8
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Risks and uncertainties continued
Inbound and outbound logistics
What is the risk?
Our distribution operations are key to the running
of the DFS Group and any factors that impact
the ability to operate has a direct impact on our
supply chain and our customers. This could be
as a result of challenges to both inbound logistics
from suppliers to our distribution centres as well
as disruption to outbound deliveries to our customers
.
What is the impact of this?
Inflated freight and operational costs compress
profit margins, whilst a delay on shipments will
impact order fulfilment and revenue recognition.
This in turn can result in missed and delayed
deliveries, failing to meet customers’ expectations,
negatively impacting NPS, and strain customer
service infrastructure during peak trading periods.
How do we mitigate against the risk?
•
Annual review of our Shipping Strategy
resulting in awards being made across a panel
of carriers provides a level of surety on pricing
and capacity availability to manage uncertainty
of prices and volumes in the container shipping
industry, particularly in relation to deliveries
from the Far East.
•
Long-standing relationships backed by
contracts with our key suppliers supported by
an increase in stock models across the brands.
•
Utilise internal manufacturing capabilities and
our internal distribution network to maintain
end-to-end operational control, reducing
reliance on third-party logistics providers.
•
Maintaining a dedicated, Group-owned
delivery fleet operating on a flexible,
seven-days-a-week schedule to absorb peak
customer demand and quickly reroute around
domestic transit disruptions.
Despite the challenges noted, the mitigating
actions already in place have meant the situation
has been well managed, evidenced by strong
customer NPS scores.
Movement:
Business transformation
What is the risk?
The DFS Group undertakes a number of
significant investment or business change
projects that are key to successfully executing its
strategy. As the Group looks to make changes to
the data, processes and IT systems, it is imperative
that any risk of business interruption is managed.
Failure to successfully implement these changes
could mean the Group fails to deliver its strategy.
What is the impact of this?
Unsuccessful execution of transformation
projects and technology adoption, driven by
strategy misalignment, internal resistance, or lack
of proper training and support, risks failing to
deliver expected benefits on time and on budget.
Consequently, the inability to effectively integrate
new systems, processes, and organisational
changes will degrade operational efficiency,
erode market leadership, and impair the Group’s
capacity to adapt to evolving customer
behaviours and sustain long-term growth.
How do we mitigate against the risk?
•
Accountability of business transformation sits
with the Chief Operating Officer (COO) as the
executive sponsor for transformation, supported
by a structured Business Change team and
dedicated project management resources.
•
Maintained rigorous risk management
protocols, with all critical workstreams subject
to regular review, challenge, and evaluation by
the Board and the Audit and Risk Committee.
•
Advanced the programme to streamline
operations, consolidate Group-wide systems,
and build a simpler, scalable foundation for
future growth with robust oversight and
governance in place.
•
Utilised an agile delivery model by leveraging
external subject matter experts (SMEs) to
support complex initiatives while maintaining
a lean internal fixed headcount.
•
Robust oversight of all business change
across functional areas with GLT governance.
9 10
Increasing
Decreasing New
Stable
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Strategic Report
Viability reporting
Approach
The Directors established a ‘base case’ model
of financial performance over the three year
assessment period which reflected prudent
expectations of future customer demand and
the execution of the Group’s strategic plans.
The Directors then made a robust consideration
of the key risks and uncertainties that could
impact the future performance of the Group
and the achievement of its strategic objectives,
as discussed on pages 24 to 30 of this Annual
Report. The primary impacts of those risks with
higher residual impact which could therefore
significantly affect the future viability of the
Group are:
•
a decrease in customer orders, resulting
in a reduction in revenue;
•
an increase in the Group’s costs, including
those resulting from the impacts of climate
change on the cost of materials, reducing
profitability; and
•
the impact of a cyber incident.
The effect of potential lost revenue and margin
on profit before tax and cash was applied to
the base case model using an expected ‘drop
through’ rate, based on expected gross margins
and variability of costs. Cost increases were
modelled on general and specific assumptions
for inflation. The analysis considered a range
of severe but plausible scenarios impacting
customer demand and product costs ultimately
impacting revenue and margin. The analysis also
considered these items in combination and the
impact of a hypothetical cyber attack on the Group.
For each scenario, sensitivity and stress testing
analysis was performed to model the impact on
the Group’s profitability and cash flows. The
assessment considered how risks could affect
the business now, and how they may develop
in future based on output of the Group’s risk
assessment process.
Key assumptions
The base case forecast assumes low single-digit
growth throughout the assessment period and a
cautious assessment of the anticipated growth in
the Group’s market share driven by delivery of our
strategic initiatives. Revenue is assumed in line with
order intake, keeping order bank levels relatively
consistent across the assessment period.
Gross margin percentage for FY27 is expected to
be below FY26 as a result of cost inflation and
investment in the Group’s customer credit
proposition. Other costs reflect anticipated
inflationary increases and benefits from specific
cost saving initiatives. Capital expenditure is
assumed to be broadly flat year on year, in line
with planned investments and strategic initiatives.
In sensitising the base case for lower revenue
scenarios, the rate of drop through to profit
is assumed to be consistent throughout the
assessment period.
The viability assessment reflects the continued
availability of the Group’s debt facilities, comprised
of a £200.0m revolving credit facility maturing
in September 2027, of which £175.0m has been
extended to January 2029, and £50.0m of fixed
rate private placement debt notes, £25.0m
maturing in September 2028 and £25.0m
maturing in September 2030.
Results
The range of severe but plausible scenarios
includes a market decline of up to 7% in FY27
compared to the base case, a sustained reduction
in gross margin, and the potential impact on trade
of a cyber incident.
These impacts were modelled individually and in
certain combinations, in conjunction with a range
of mitigating actions that could be taken to preserve
the Group’s profitability and cash flows. Mitigating
actions included reductions in discretionary costs
and capital expenditure and a reduction or pause
in dividend payments. Reverse stress testing was
also performed on the scenarios.
The DFS Group is expected to maintain both
covenant compliance and sufficient liquidity in all
these scenarios. Based upon this assessment the
Directors have a reasonable expectation that the
Group and Company will be able to continue in
operation and remain commercially viable over
the three year period of assessment.
In accordance with the UK Corporate Governance Code, the
Directors have assessed the prospects of the DFS Group over a
period significantly longer than 12 months from the date of approval
of the financial statements. The period assessed was the three
years from 28 June 2026 as in the opinion of the Directors this
reflects the longest period over which the impact of key risks
can be reasonably assessed within a big-ticket retail business
given the potential volatility of the trading environment.
Annual Report and Accounts 2026 DFS Furniture plc 31
Strategic Report Corporate Governance Financial Statements Shareholder Information
Stakeholder engagement and Section 172
Active engagement
A
The likely consequences of
any decision in the long term
Why we engage
The Board knows that understanding its
stakeholders and what matters to them is
key to the Group’s long-term success.
How we engage
Throughout the year the Board reviews the
progress made against DFS Group’s strategy, the
principal risks faced by the DFS Group, and how
we deliver on our purpose and create the right
culture in line with our values. Together the Board
and the Group Leadership Team work to ensure
we balance investing for the future with the way
we reward our people and how we provide a
return on investments to our shareholders.
Outcomes of engagement
During the year working with the wider leadership
team we reviewed and evolved our purpose and
our values, to support the long-term future of
the DFS Group. Our customer propositions are
in great shape across our retail brands with both
brands gaining market share. All of this has led to
revenue and profit growth with underlying
PBT(A) up £14.7m year on year to £44.9m. In
addition we have generated good levels of free
cash flow enabling us to reduce our net bank
debt by a further £38.0m and further strengthen
our balance sheet. In April we returned to the
register with an interim dividend of 1p per share
and we are recommending a final dividend for
FY26 of 2p per share.
Where to find it
•
CEO report
•
Our purpose
•
Our strategy
•
Financial review
•
Risks
•
Corporate governance report
B
The interests of
our colleagues
Why we engage
One of our refreshed Group values is ‘Everyone
together’. We remain committed to ensuring a
culture where everyone feels welcome, valued
and respected and can be at their best, supporting
each other to achieve our shared purpose.
How we engage
Visits to showrooms, manufacturing facilities,
and customer distribution centres provide
Directors with direct insight from operational
teams. Additionally, the Board receives regular
briefings on colleague engagement activities,
including the Voice Forum, led by Tony Buffin,
Designated Non-Executive Director, alongside
results from the bi-annual Your Say survey,
designed to gather open and constructive
feedback across the workforce.
Outcomes of engagement
During the year, we further strengthened
colleague engagement through the launch
of the Carers Network in partnership with Carers
UK, providing targeted support for colleagues
with caring responsibilities alongside our wider
colleague inclusion networks.
These initiatives maintain an engaged, inclusive
workforce supported by strong retention. Detailed
enhancements to the colleague value proposition
are set out in the Directors’ Remuneration Report.
Where to find it
•
Chair’s statement
•
Chief Executive’s report
•
Responsible business report
•
Corporate governance report
•
Directors’ Remuneration report
This section describes how the Directors consider the varied interests of each stakeholder
when making decisions, working to promote and protect the Company’s long-term success.
This responsibility is set out in Section 172(1)(a) to (f) of the Companies Act 2006 (the “Act”).
Stakeholder engagement is a key part of helping our Directors understand a range of perspectives
and make well-informed decisions that align to the DFS Group’s purpose, values and strategic goals.
S172 Non-Financial and Sustainability Information Statement
The table below sets out where the information required to be disclosed under sections 414CA
and 414CB of the Companies Act 2006 can be found in this Annual Report.
Reporting requirement Relevant information Policies and standards
The Company’s
employees
Section 172 statement – Engaging our
colleagues – page 32
Responsible business report – pages 34
to 43
Directors’ Remuneration report – pages 70
to 83
•
Diversity and Inclusion Policy
•
Equal Opportunities Policy
•
Whistleblowing Policy
•
Group Health and Safety Policy
Business
conduct matters
Responsible business report – pages 34
to 43
Directors’ report – pages 84 to 87
•
Group Code of Conduct
•
Anti-Bribery Policy
•
Supplier Code of Practice
•
Corporate Criminal Offences Policy
•
Whistleblowing Policy
•
Tax Strategy
Respect for
human rights
Responsible business report – pages 34
to 43
Directors’ report – pages 84 to 87
•
Anti-Slavery and Human Trafficking Policy
•
Modern Slavery Statement year ended
29 June 2025
•
Group Human Rights Policy
Social matters
Responsible business report – pages 34
to 43
•
Group Code of Conduct
•
Giving Back Policy
Environmental
matters
Section 172 statement – Company’s
operations on the community and the
environment – page 33
Responsible business report – pages 34
to 43
•
Environmental Policy
•
Group Timber Policy
•
Group Leather Policy
•
Group Water Policy
•
Sustainable Sourcing Policy
•
Biodiversity Policy
Copies of the Committees’ terms of reference and our policies are available at
www.dfscorporate.co.uk/governance/policies-statements
Annual Report and Accounts 2026 DFS Furniture plc32
Strategic Report
Stakeholder engagement and Section 172 continued
C
Building strong, beneficial
relationships with our
customers and suppliers
Why we engage
Through our passion for style and comfort,
we are focused on our mission of helping our
customers create spaces they love to live in.
Collaborating with our suppliers enables us
to bring new exciting, and innovative products
to market.
How we engage
The Board receives regular updates on customer
insights, including the data from our customer
satisfaction survey (NPS) to understand what
matters to our customers. Our long-standing
partnerships with suppliers are vitally important
in delivering great quality products for our
customers. As part of our in-depth review of
our strategy the Board receives regular updates
on our approach to manufacturing and sourcing.
Outcomes of engagement
The Group achieved improved customer NPS
metrics across both core retail brands. Building
on customer feedback in conjunction with
supplier collaboration, we have enhanced our
product innovation, expanded exclusive brand
partnerships, and refined our interest-free credit
and insurance offerings. These advancements
have fortified our competitive positioning within
the sector.
Where to find it
•
Chair’s statement
•
Business model
•
Chief Executive’s report
•
Key performance indicators
•
Financial review
•
Responsible business report
D
The impact of the Group’s
operations on the community
and the environment
Why we engage
The Board remains dedicated to minimising
our environmental footprint and actively
supporting the local communities where
we conduct our business.
How we engage
The Board, through the work of the Responsible
and Sustainable Business Committee, receives
regular updates on our progress against our key
targets.
Outcomes of engagement
Throughout the year, we advanced our net zero
strategy by implementing detailed capital
expenditure (CAPEX) planning focused on
operational decarbonisation, aligning with our
Science Based Targets initiative (SBTi) goals.
In FY26, aligned with our executive remuneration
structure, our primary focus was on developing
a comprehensive Scope 1 emissions reduction
model tied to science-based targets. This initiative
successfully achieved an 8.5% reduction in Scope
1 emissions over the year and established a
definitive reduction pathway through to 2030.
Guided by our refreshed Group purpose, we
restructured our charitable initiatives during FY26
to combat furniture poverty, primarily through our
enduring partnership with BBC Children in Need.
Additionally, we advanced our commitment to
diversity and inclusion by strengthening the
representation of our communities within our
leadership teams and rolling out inclusion training
for all leaders.
Where to find it
•
Chair’s statement
•
Chief Executive’s report
•
Responsible business report
•
Directors’ report
E
The need to maintain a
reputation for high standards
of business conduct
Why we engage
The Board is committed to ensuring good
governance and maintaining high standards of
business conduct. We are committed to acting
professionally, fairly and with integrity in all our
dealings and relationships.
How we engage
We ensure transparency through our Annual
Report and public disclosures, including the
Group Code of Conduct, Modern Slavery
Statement, Tax Strategy, and Gender Pay Gap
Report, all accessible on our corporate website.
Outcomes of engagement
Colleagues undergo mandatory training
on the Group Code of Conduct, Anti-Bribery
and Corruption, and key regulatory standards.
All product suppliers are required to adhere to
ethical standards set out in our Supplier Code
of Practice. Compliance with our obligations is
monitored by the Audit & Risk Committee,
the Internal Audit team and the Governance
and Risk Committee.
Where to find it
•
Responsible business report
•
Corporate governance report
•
Directors’ remuneration report
F
The need to act fairly
between members of
the Company
Why we engage
The Board seeks to maintain transparent dialogue
with shareholders to understand key priorities
and ensure long-term value creation.
How we engage
The Board maintains active engagement with
institutional investors, analysts, and advisers
throughout the year, and welcomes shareholder
participation at our Annual General Meeting
in Doncaster.
Outcomes of engagement
This engagement provides us with a clear
understanding of our shareholder priorities and
their views on how we are progressing. We take
their views into consideration when making
decisions on balancing investment, leverage
and shareholder returns.
Where to find it
•
Chair’s statement
•
Financial review
•
Investment case
•
Business model
•
Corporate governance report
•
Directors’ Remuneration Report
Annual Report and Accounts 2026 DFS Furniture plc 33
Strategic Report Corporate Governance Financial Statements Shareholder Information
Purpose in action
Driving meaningful change within an organisation,
community or global context is hard. But the
commitment and determination of the DFS Group
team to make life better for their communities,
for their colleagues and for the environment
shines through.
The Committee was pleased to see how the new
purpose ‘Furnishing better lives, together’ was
created by senior leaders, working collaboratively.
They have defined how and why the Group can
make a positive difference, particularly for colleagues
through an inclusive, collaborative and supportive
culture where we bring ‘Everyone together’.
The new purpose reflects how the team deliver
beyond their roles, from raising money for BBC
Children in Need to waving rainbow flags for
Pride. I have been particularly delighted to see
how the colleague networks have gone from
strength to strength this year as they look to
support each other in all aspects of their lives.
This is also true of our communities. We’d like to
thank our customers who have again shown their
incredible support for BBC Children in Need
through generous donations. These donations
Responsible business report
Furnishing better lives, together
* www.endfurniturepoverty.org/research-
the-extent-of-furniture-poverty-2026.
Key activities during 2026
•
Created a new brand purpose focused on
improving lives, not only for colleagues
but also for our communities
•
Established a new charity partnership
to tackle furniture poverty across the UK
•
Awarded ‘Most improved’ in the Diversity
in Retail programme
•
Created a 2030 CAPEX carbon
reduction roadmap
•
Achieved 8.5% reduction in scope
one emissions in FY26
The commitment and
determination of the DFS
Group team to make life
better for their communities,
for their colleagues and for the
environment shines through.”
Alison Hutchinson
Chair of the Responsible and Sustainable
Business Committee
can make a difference for so many families and
alleviate furniture poverty, which affects up to
6 million* people around the UK.
Collective actions can also protect the wider
world we all share. We’ve seen temperature
records broken in Europe this year and recognise
that climate action will only ever succeed through
collaboration. The ‘In This Together’ supplier
campaign, launched in 2024, has continued to
deliver engagement and action throughout the
value chain, while colleagues have continued
to reduce the impact of our operations through
decarbonisation, possible only through teamwork.
Looking ahead
Driven by a new purpose, the energy within
the Group to be a positive force for change
is palpable. I’d like to thank every one of our
colleagues for their commitment to making DFS
Group a diverse and inclusive place to work and
supporting our local communities so they may
flourish too. I’d also like to thank the Committee
members for all their support and time dedicated
to such important topics.
In FY27, as climate-related considerations become
increasingly central to the Group, we expect them
to become business as usual within our strategy
and operations. Change is challenging, but a clear
purpose can galvanise momentum.
Thank you to everyone who continues to work
with us. I look forward to more of our progress
in the year ahead.
Alison Hutchinson
Chair of the Responsible and Sustainable
Business Committee
Annual Report and Accounts 2026 DFS Furniture plc34
Strategic Report
Responsible business report continued
Our contribution to the UN Sustainable Development Goals
Goal 1 –
No Poverty
Goal 8 – Decent Work
and Economic Growth
As Lead Furniture Partner for BBC Children in
Need’s Emergency Essentials programme, we are
helping families among the up to 6 million people
living in furniture poverty in the UK.
New supply chain degree apprenticeships and
expanded Trainee Hubs are growing skills for the
future, with 88% of all new starters within the
Group staying beyond their first three months.
Goal 3 – Good Health
and Well-being
Goal 10 –
Reduced Inequalities
Our Help@hand app gives colleagues and
their families 24/7 access to a remote GP,
physiotherapy and mental health support, and
the Sofa Delivery Company continues to support
the men’s suicide prevention charity Andy’s
Man Club.
83% of colleagues feel they can bring their whole
self to work, with the strongest gains among
marginalised groups, recognised by our move
to ‘Strategic’ on the Diversity in Retail Inclusion
Maturity Curve.
Goal 5 –
Gender Equality
In FY26, women hold 43% of our senior leadership
roles and make up 38% of the Group.
Our success relies on an inclusive, collaborative culture
where we bring ‘Everyone together,’ empowering our
people to thrive and drive meaningful, sustainable growth.
Key activities
Evolved our DFS Group values to include
‘Everyone together’
78%
of colleagues strongly agreeing with the
statement ‘I feel included at DFS Group’
Delivered inclusive leadership and
recruitment training to over 400 leaders
Satisfaction score
88%
Launched ‘Room for More’, our DFS
Group Employee Value Proposition, and
embedded ‘The Hub’, our digital home
for colleagues
Received industry recognition for our
progress on the Diversity in Retail Inclusion
Maturity Curve
Refocused our charity and community work
on furniture poverty, partnering with BBC
Children in Need as Lead Furniture Partner
for its Emergency Essentials programme
Reduced RIDDOR reportable injuries in
FY26 in The Sofa Delivery Company, from
0.96 per 10,000 deliveries in FY25 to 0.75
0.75 per 10,000
Our people and culture
Annual Report and Accounts 2026 DFS Furniture plc 35
Strategic Report Corporate Governance Financial Statements Shareholder Information
Responsible business report continued
Our people and culture continued
Performance against our planOur approach
Our success depends on our people, and
sustainable growth relies on an inclusive,
collaborative and supportive culture. Our People
Strategy keeps us focused on building a great
place to work, with our ‘Everyone welcome’
culture at its core and a commitment to bring
‘Everyone together’. We are giving teams better
tools and simpler systems with a ‘Better never
stops’ mentality, keeping the ‘Customer at our
heart’, and connecting our people to a Group
purpose that offers real opportunities to give
back. This continuous improvement has a clear
commercial benefit too: people at their best
drive a better experience for customers.
Leadership development is now aligned with
clear behaviours, with inclusion integrated into
every stage of the colleague journey through
ongoing consultation with our active colleague
networks. Over 400 leaders received training
through ‘Leading for Inclusion’ and ‘Inclusive
Recruitment’ (88.1% satisfaction), while new
leaders participated in pilot inclusion training
(90%). Connecting the Board and leaders to
colleagues remains a priority, driven by the
‘Your Say’ survey and Voice Forum, and our
‘You Said, We Did’ approach to local listening.
Supporting the wellbeing of our colleagues is
paramount. In FY26, we launched the Help@hand
app, a total health and wellbeing service giving
colleagues and their families access to a 24/7
remote GP, physiotherapy, mental health support,
second medical opinions, lifestyle coaching and
expert guidance for anyone affected by a cancer
diagnosis, alongside our wider mental, physical
and financial wellbeing offer.
Leadership and talent
In May 2026, we launched a group-wide
framework for leadership behaviours. We
piloted a new Leadership Academy for new
leaders (90% satisfaction), engaged our third
Senior Leadership Development Programme
cohort of 23 leaders, and supported nine
colleagues through the WiTHL and Diversity in
Retail Ethnic Leaders and Women’s Leadership
Programmes, whilst continuing to develop and
nurture our future talent pipelines.
Our inclusion networks
Our seven colleague networks have grown
organically over the past few years, connecting
like-minded people and strengthening our
colleagues’ collective voice. Anyone can join
as an ally or community member, and each is
sponsored by an Executive team member and
senior leaders. Mankind, our newest network,
supports positive mental health among male
colleagues, while Sofabulous, our LGBTQ+
network, remains central to DFS Group’s support
for Doncaster Pride. Rebranding the networks has
underlined their importance to our culture.
Visit the link below
to see more about
our new inclusion
networks.
Network
Black Heritage
Carers’
Network
Asian Inclusion
Celebrating Culture
Sofabulous
LGBTQ+ Network
Mankind
Men’s Network
The Bridge
Connecting Diverse Abilities
Women’s 364
Network
www.dfscorporate.co.uk/
responsible-business/our-people
Colleague experience
In addition to launching the new Group
Employee Value Proposition, we have improved
the candidate experience, introduced Total
Reward Statements so colleagues can see the
full value of their package, and begun activating
our employer brand externally through new
LinkedIn and Instagram channels and a cohort
of colleague ‘Storytellers’.
https://www.linkedin.
com/company/dfs-
group-corporate/home/
Skills and capabilities
During the year, we expanded our Manufacturing
Trainee Hubs and launched a Supply Chain
Degree apprenticeship in The Sofa Delivery
Company. Over 50 colleagues took part in
change management training, and we launched
a toolkit, ‘Supporting people to thrive at work’,
to help colleagues navigate life stages and events.
Annual Report and Accounts 2026 DFS Furniture plc36
Strategic Report
Responsible business report continued
Our people and culture continued
Board
GLT*
Senior leaders
Total
Male – FY26: 4 (57%), FY25: 4 (50%)
Female – FY26: 3 (43%), FY25: 4 (50%)
Male – FY26: 3 (60%), FY25: 3 (75%)
Female – FY26: 2 (40%), FY25: 1 (25%)
Male – FY26: 56 (63%), FY25: 51 (59%)
Female – FY26: 33 (37%), FY25: 35 (41%)
Male – FY26: 2,861 (62%), FY25: 2,966 (63%)
Female – FY26: 1,772 (38%), FY25: 1,744 (37%)
FY26
FY26
FY26
FY26
FY25
FY25
FY25
FY25
Gender mix by role as at 28 June 2026
* Group Leadership Team excludes the CEO and CFO.
Health and safety
Keeping each other safe by making safety a
shared responsibility, backed by better data
and practical training, is always a priority. This
year we tracked injuries by volume of deliveries
for the first time, giving a fairer picture of our
performance. On this measure, RIDDOR reportable
injuries across the Group have reduced further
this year from 1.32 per 100 employees in 2025
to 1.23 in the like-for-like period in 2026.
In 2026, we have redesigned our manual handling
training with an external specialist to suit each
business area, incorporating techniques from
world-renowned specialist Pristine Condition,
with the first course delivered in June 2026 and
Group-wide rollout in FY27. Other training initiatives
included ‘Be Curious’ incident investigation training
for the Sofa Delivery Company, an internal H&S
Leadership course for all Branch General Managers
and Area Managers, as well as annual H&S e-learning
for every colleague. Certification to ISO 45001:2018
remains in place across all Group operations.
Colleague landscape: key metrics
We track our colleague metrics as carefully as our financial results, moving from simple reporting
to using data to proactively manage our culture.
% of colleagues took part in our
March 2026 ‘Your Say’ survey
73%
Engagement
Colleagues that feel included
at DFS Group
78%
Colleagues that feel they
can be themselves at work
83%
with significant improvement across
marginalised groups.
Our ‘proud to work here’ measure rose to
+45
a significant increase observed amongst our
LGBTQ+ community, minority ethnic groups
and colleagues of religion.
Inclusion
% of new starters that stayed with
us past their first three months
88%
Retention
Annual voluntary turnover is
17%
within our healthy 15 to 20% target range.
Turnover
Reducing noise in our
manufacturing operations
As part of Group’s continual improvement
strategy, we continue to monitor noise and
investigate ways to reduce it in higher noise
areas. The noise reduction project reduced
noise in the bench area by up to 5dB, bringing
it below the upper Exposure Action Value
and better protecting people’s hearing. From
over 400 entries and 12 finalists, this project
was commended in the Safety and Health
Excellence (‘SHE’) Awards 2026.
Annual Report and Accounts 2026 DFS Furniture plc 37
Strategic Report Corporate Governance Financial Statements Shareholder Information
Responsible business report continued
Future focus: helping to
end furniture poverty
In May 2026, the Group charity strategy evolved
to focus on our charity and community work
supporting up to 6 million people in the UK living
in furniture poverty, without the basic household
essentials they need to make a home. we are
collaborating with BBC Children in Need, the UK’s
most trusted children’s charity, and are proud to
be Lead Furniture Partner for its Emergency
Essentials programme. All funds raised and
furniture gifted across the Group going forward
will be dedicated to this programme, which
delivers home essentials to families in crisis.
Our giving in FY26
During the year, we donated profit and product
to our charity partners and enabled colleagues
to give their time through their Volunteering Day,
alongside the continued generosity of customers
donating in our stores.
This year, we continued to Give Back while reviewing our charity
and community activities to create a brand new approach for
the future. It is a direction that fits our business perfectly, and
it brings everyone together behind a single, powerful cause.
Our customers continued their incredible support
for BBC Children in Need raising £479,761
through our ‘Give me five’ initiative, and
colleagues raised £40,370 for the charity in FY26.
Total donations to Children in Need in FY26
£528,684
Additionally, in FY26, the Sofology team continued
their support of Home-Start UK through customer
donations & colleague fundraising, funding volunteers
to help families through challenging times. The
Sofa Delivery Company supported Andy’s Man
Club, involving our newest colleague network,
Mankind, who commissioned a set of 7.5 tonne
trucks to advertise the charity’s support services
on roads around the UK.
We are incredibly proud that
DFS Group is the lead furniture
partner for our BBC Children
in Need Emergency Essentials
programme. This exciting
new chapter builds on our
successful 13 year partnership,
and whilst we are immensely
proud of everything we have
achieved together, we are
delighted by this renewed
approach, which will enable
us to make an even greater
impact for children and
families facing crisis.”
Clare Hoyle
CEO, BBC Children in Need
Our community
and social impact
Our Matched Giving schemes added a further
£11,188 to the sums colleagues raised, and our
product donations, for a wide range of charities,
nominated by colleagues, totalled £41,710. This
included furniture for The Seashell Trust and
for two of The Royal Foundation’s Homeward
projects, in Sheffield and Cornwall.
The Seashell Trust
The Seashell Trust in Stockport supports
children and young adults with the most
complex disabilities from across the country.
Through our relationship with BBC Children
in Need, we donated furniture and
accessories to furnish a residential facility
where families can stay while visiting their
young person, and some of our team used
their Volunteering Day to decorate the
home, alongside contract partners who
donated the paint.
Annual Report and Accounts 2026 DFS Furniture plc38
Strategic Report
Responsible business report continued
Our contribution to the UN
Sustainable Development Goals
Goal 12 – Responsible
Consumption and Production
The Sofa Cycle guides how we design out waste
and use materials responsibly, with 64% of our
total waste now being recycled.
Goal 13 –
Climate Action
Our SBTi-validated targets commit us to cutting
absolute Scope 1, 2 and 3 emissions by 90%
before FY50.
Goal 15 –
Life on Land
We require FSC
®
* and PEFC** certification so our
timber comes from responsibly managed forests,
reaching 96% of products this year.
We are determined to reduce our environmental impact
across our supply chain and operations, achieving our
ambition of reaching Net Zero before 2050 and becoming
a business built around the circular economy.
Key activities
We measure our environmental impact with the same rigour as our financial performance,
using robust data to focus our effort where it matters most.
Scope 1 and 2 emissions
Reduction against our FY23 baseline
16%
FY26: 12,870 tCO
2
e.
Certified sustainable materials
FSC*- and PEFC**-certified timber
96%
and 93% of leather is LWG certified.
Scope 3 emissions
264.1 ktCO
2
e
the large majority of our total footprint.
Waste
99%
of our 11,417 tonnes of waste diverted from landfill.
Supplier engagement
20%
of our manufacturing suppliers have set their
own science-based targets.
Water
Reduction year on year
8%
62,098,000 litres total consumption.
Our environment
Building on progress,
evolving for the year ahead
We are proud of the progress the Group has
made this year, and over the five years since
launching the Sofa Cycle. In FY26 we have
reduced our Scope 1 footprint by 8.5% against
our SBTi-validated science-based targets, and
deepened the supplier engagement at the heart
of our Net Zero journey.
That momentum is real, and it is the foundation
on which everything else is built.
We are also clear-eyed. Reducing the environmental
impact of making, delivering and living with furniture
is hard, and the pace and scale of change now
needed cannot rest on the efforts of a few individuals.
That is why our strategy for FY27 will look a little
different. ‘Furnishing better lives, together’ is our
purpose, and the last word matters most: from
next year, we will deliver it through five cross-
functional working groups, each sponsored by a
member of our Executive team and accountable for
driving a key area. It is a shift that turns
collaboration from a value into our operating
model, guided by a simple, honest principle:
change is hard, but we’re in this together –
colleagues and suppliers.
* DFS Furniture plc incorporating DFS Trading Ltd T/A DFS and Sofology Ltd T/A Sofology. FSC
®
Licence holder FSC-C192921.
** PEFC/16-44-2518.
Annual Report and Accounts 2026 DFS Furniture plc 39
Strategic Report Corporate Governance Financial Statements Shareholder Information
Responsible business report continued
Our environment continued
Decarbonisation:
our path to Net Zero
Decarbonisation is the heart of our
environmental strategy, and our targets
are grounded in climate science.
In November 2024, the Science Based Targets
initiative (SBTi) approved our goal to cut absolute
Scope 1, 2 and 3 emissions by 90% before FY50,
against a 2023 baseline. It also validated two
near-term targets: to reduce our own absolute
Scope 1 and 2 emissions by 54.6% by FY33, and
to ensure that suppliers covering 73% of our
Scope 3 emissions set their own science-based
targets by FY28.
Developing credible carbon reduction pathways
to achieve our near-term targets was incorporated
into the FY26 bonus structure for our Group
Leadership Team.
Most of our footprint
sits with our suppliers
The majority of our emissions are Scope 3, in
the goods and services we buy, so we cannot
get to Net Zero without our suppliers.
The launch of the ‘In This Together’ campaign
in FY24 secured support covering 59% of our
Scope 3 emissions, well beyond our original 20%
ambition. We have since worked one to one with
suppliers on carbon accounting and their own
path to Net Zero.
In 2026, 65% of our manufacturing partners
had calculated their Scope 1 and 2 footprints and
47.5% their Scope 3 emissions. Our total Scope 3
emissions were 264.1 ktCO
2
e this year.
Scope 3 emissions (ktCO
2
e) FY26 FY25
3.01 – Purchased goods
and services 211.1 212.4
3.02 – Capital goods 4.1 1.3
3.03 – Fuel and energy-related
activities 4.4 4.7
3.04 – Upstream transportation
and distribution 30.5 27.1
3.05 – Waste generated
in operations 0.2 0.2
3.06 – Business travel 0.7 1.1
3.07 – Employee commuting 9.0 9.0
3.11 – Use of sold products 0.3 0.3
3.12 – End-of-life treatment of
sold products 3.8 3.5
Total Scope 3 264.1 259.6
Purchased goods and services (3.01) remains
by far our largest category. We use spend-based
calculations to ensure consistent, auditable
data, and plan to move to verified activity
data in future.
FY26 Scope 3 emissions by category –
share of emissions
Total emissions
264.1
ktCO
2
e
The Sofa Cycle
Launched in 2020, the Sofa Cycle remains the
backbone of our strategy. It assesses the impact
of every stage of the product lifecycle, from
material extraction and responsible sourcing
to end of life.
Because materials are the largest contributor
to our carbon footprint, reducing our use of
them by moving to a circular approach is critical
to our Net Zero ambition.
Scope 3.01 – 80%
Scope 3.04 – 12%
All other categories – 8%
Annual Report and Accounts 2026 DFS Furniture plc40
Strategic Report
Our suppliers are on a journey with us
to create more sustainable products and
use materials more responsibly, and we
expect them to act ethically and protect
human rights at all times. Our approach
to human rights and ethical trade is
covered in Sustainable Governance
on page 43.
Our Sustainable Sourcing Policy sets out seven
principles and the minimum standards we expect
across our entire global supply chain, and all our
timber and leather value chains are audited and
risk assessed by our partner Track Record Global.
We have several targets for our value chain,
focusing on the environmental aspects of the raw
materials and their processing. We use dates by
which suppliers are asked to meet these targets
to secure momentum within the supply chain and
provide fair warning. Upon the target date, the
requirements move from ambition to expectation,
providing time to consult and adapt.
Read more about our Sustainable Sourcing Policy.
Timber
Requirement: Forest Stewardship Council (FSC
®
) or
Programme for the Endorsement of Forest Certification
(PEFC) accreditation to ensure responsible sourcing
from sustainably managed forests.
Target: FSC and PEFC certified timber used in all
products by December 2025.
FY26 progress:
96%
A few components, in some ranges,
have proven difficult to source
through certified chains.
Textiles
Requirement: Textiles mills are required to have
OEKO-TEX STEP certification so that we know they have
responsible environmental management systems and
ethical labour practices. The Global Recycled Standard
(GRS) or equivalent is required for any recycled content
in textiles.
Target: 20% of all new textiles contain recycled content
by June 2027.
FY26 progress:
4%
Recycled textiles have both a cost
and quality
consideration, which has
proven a barrier for customers.
Packaging
Requirement: Recycled content certified by the Global
Recycle Standard (GRS) or equivalent as single-use
plastic is an important issue for the environment and
our stakeholders.
Target: 50% of all plastic packaging contains 50%
recycled content by June 2026.
FY26 progress:
14%
Suppliers found that shortened
fibre structures in recycled plastic
diminished quality, requiring
more material to compensate and
offsetting the benefit of increasing
the recycled content.
Responsible products
and materials
Leather
Requirement: Leather Working Group (LWG) certification
for all tanneries and curers to ensure they follow best
practice in water and chemical management.
Target: Leather used in all products sourced
from LWG-certified supply chains by December 2024.
FY26 progress:
93%
https://www.dfscorporate.co.uk/
media/3r4llsfy/dfs-group-sustainable-
sourcing-policy.pdf
Ethical supply chain
and business practices
We are committed to eradicating all forms
of modern slavery and human trafficking, and
we report our progress annually in our Modern
Slavery Statement. Our Sustainable Sourcing
Policy and our Supplier Code of Practice set
the standards we expect of every supplier,
whatever their size or turnover, and we work
with them to manage risks within their own
supply chains. Our policy clearly states the
actions to take in case modern slavery is
discovered or suspected. We work with our
suppliers to ensure they take appropriate steps
and manage risks within their own supply chains.
We have a robust governance structure
in place to ensure we conduct ourselves
honestly, ethically, and sustainably.
See Sustainable Governance on page 43 for
further details.
Read more in our Modern Slavery Statement.
https://www.dfscorporate.co.uk/
slavery-and-trafficking-statement/
Read more in Modern Slavery Policy.
https://www.dfscorporate.co.uk/
slavery-and-trafficking-statement/
Responsible business report continued
Annual Report and Accounts 2026 DFS Furniture plc 41
Strategic Report Corporate Governance Financial Statements Shareholder Information
Operations data: energy, emissions and water
Scope 1 and 2 emissions in tCO
2
e by region
The tables below show our energy use and associated greenhouse gas emissions in line with the UK government’s Streamlined Energy and Carbon Reporting
requirements. Scope 1 and 2 have been externally assured by DNV Business Assurance Services Ltd. Details of the methodology applied are set out in our
Basis for Reporting, available at:
www.dfscorporate.co.uk/responsible-business/our-environment/sustainable-governance
Absolute emissions (tCO
2
e)
UK
Rest of the
world (ROI)
Total FY26
(tCO
2
e) FY25
% Increase/
(decrease) FY24 FY23 FY22 FY21
Scope 1 emissions 12,518 308 12,826 14,013 (8.5) 14,441 15,297 16,215 18,058
Scope 2 emissions
- Market based 44 — 44 61 (28.1) 64 104 223 1,697
- Location based 4,645 144 4,789 4848 (1.2) 5,529 5,684 5,828 5,797
Scope 1 + Scope 2 market based 12,562 308 12,870 14,074 (8.6) 14,505 15,401 16,438 19,755
Emission intensity tCO
2
e/£m gross sales
FY26 FY25
% Increase/
(decrease) FY24 FY23 FY22 FY21 FY20 FY19
Scope 1 emissions 9.0 10.1 (10.5) 11.0 10.7 11.0 13.3 18.6 14.5
Scope 2 emissions
- Market based 0.03 0.04 (29.8) 0.1 0.1 0.2 1.2 5.6 5.3
- Location based 3.4 3.5 (3.4) 4.2 4.0 4.0 4.3 5.6 5.3
Scope 1 + Scope 2 market based 9.1 10.1 (10.6) 11.1 10.8 11.2 14.5 24.2 19.8
Gross sales (£m) 1,420.1 1,388.3 1,311.8 1,423.6 1,474.6 1,359.4 935.0 1,165.0
Energy consumption in MWh – by region
UK
Rest of the
world (ROI)
Total FY26
MWh UK
Rest of the
world (ROI)
Total FY25
MWh
% increase/
(decrease)
Scope 1
Heating 17,252.8 227.5 17,480.4 19,225.9 420.2 19,646.1 (11.0)
Transport fuels 34,641.6 1,011.7 35,653.3 36,709.6 1,768.8 38,478.4 (7.3)
Total 53,133.7 55,935.5 2,189.0 58,124.5
Scope 2
Purchased electricity 26,241.9 586.5 26,828.4 26,605.4 564.0 27,169.5 (1.3)
Total energy consumption 78,136.3 1,825.8 79,962.1 82,540.9 2,753.0 85,294.0 (6.3)
We are decarbonising what we directly control:
moving to electric heating across our stores,
warehouses and factories, decarbonising our
fleet, and improving the energy efficiency
of our sites and vehicles.
This year, 33% of our company car and van fleet is
now all-electric, with new hybrid vehicles issued
only by exception, expanded EV charging across
key sites and an established electric service
vehicle replacement cycle going forward.
One of our most significant projects in FY26
was the CAPEX roadmap planning to decarbonise
our estate, both across our retail sites and our
customer distribution centres (CDCs) by 2030.
Within FY26 we replaced gas with HVAC systems
in ten sites and plan to introduce targeted heating
with infrared panels across the majority of our
CDCs in FY27.
Our electricity use will rise as a consequence
of moving from gas heating to HVAC. We are
therefore investigating site monitoring, employee
education and, where feasible, solar and battery
solutions. A trial at a small number of our stores in
the coming months will pair colleague
communications on energy awareness and
accountability with simpler, more reliable lighting
and heating controls, such as last-man-out
switches and occupancy-based HVAC standards.
We remain honest about the challenges, such as
sourcing low-carbon solutions for 7.5 tonne and
HGVs where few solutions yet exist, and we plan
to trial new technology where we can.
Our operational impact
Responsible business report continued
Annual Report and Accounts 2026 DFS Furniture plc42
Strategic Report
Our operations are not a significant contributor
to Group water use, but freshwater is finite and
good governance is expected of us. This year
our total water consumption was 62,098 cubic
metres (4.6 million litres). Digital metering
now covers 67% of the estate, and we will fit
submeters at the remaining sites in FY27 to
close the gap. Once we have a robust baseline,
we will review our governance and targets.
Closing the loop
Our long-term ambition is to become a business
built for the circular economy; however, a truly
circular model will require redesigning our
furniture, changing what it is made from and
how it is made. It will not be quick or simple,
because it requires collaboration and innovation
across the entire value chain.
Rather than overclaim, we are building the
foundations stage by stage, making sure each
step is operationally and commercially viable
before we scale it.
End-of-life processing for upholstery remains an
industry-wide challenge, particularly for legacy
products that may contain restricted substances.
In FY26, we built out an operational plan to
enable the take-back of sofas for refresh, repair
and resale. However, potential changes to fire
retardancy (FR) regulations may mean this
operational solution might not be suitable. We
need to better understand consumer appetite for
legacy sofas once the regulations are confirmed.
Responsible business report continued
Our operational impact continued
Our Digital Product Passport (DPP) pilot captures
details of our refresh and repair service and
end-of-life guidance for customers. Although it is
not yet customer facing, it is teaching us what it
will take to roll DPPs out across our range within
a few years, as required by the EU’s Ecodesign
for Sustainable Products Regulation (ESPR).
Waste
Our total waste in FY26 was 11,417 tonnes, of
which 65% was recycled and 34% converted to
energy. Most of our waste is product packaging,
which we remove from customers’ homes at the
point of delivery and recycle responsibly through
our waste partner, Biffa.
At The Sofa Delivery Company, we have
completed the first phase of a new waste
management programme, ensuring every site has
the right infrastructure for different waste types.
Our Waste and Packaging Working Group is now
examining the key drivers of waste, designing
circular systems and reducing the material we
use where we can.
A Basis for Reporting document is published on
our corporate website to provide transparency
and consistency with descriptions of our data
sources, boundaries, and calculation methodologies
used for key performance indicators.
https://www.dfscorporate.
co.uk/media/xxdbqi4j/
basis-for-reporting.pdf
Sustainable governance
Governance of climate risks and opportunities
The Board recognises that addressing climate
change is critical to the Group’s long-term
success and holds overall responsibility for
monitoring progress against climate-related
goals and targets.
The Board has delegated responsibility to
the Responsible and Sustainable Business
Committee (RSC), which meets at least three
times a year to review sustainability strategy
and performance, approve related policies,
and ensure the Group meets its legal, regulatory
and reporting obligations. The RSC’s terms of
reference are available at dfscorporate.co.uk.
Climate-related risk is monitored by the Audit
and Risk Committee (ARC) and the Board
through regular meetings. The ARC also has
oversight of non-financial metrics; in FY26 the
business conducted a further internal review
of environmental data control systems.
The Sustainability Steering Committee (SSC)
meets six times a year and reports to both
the Group Leadership Team and the RSC. Its
responsibilities include updating the RSC on
climate and sustainability developments and
driving delivery of climate-related strategy.
Management is kept informed of climate-related
matters through: regular updates from the SSC
and Sustainability team on risk, strategy and
financial implications; external input from
advisers to ensure alignment with evolving
regulatory requirements; and collaboration with
industry bodies including FSC, Leather Working
Group, FIRA, BFA, and the BFC on circularity,
deforestation and decarbonisation.
Annual Report and Accounts 2026 DFS Furniture plc 43
Strategic Report Corporate Governance Financial Statements Shareholder Information
Task Force on Climate-related Financial Disclosures
TCFD
From this year’s record heatwaves, wildfires and
floods, the impact of climate change has never been
more apparent, and we’re committed to building a
more sustainable business that limits our impact on
the environment and ensures our long-term success.
Summary
Our progress in FY26 Areas of focus in FY27
Refreshed our climate scenario analysis
in partnership with Risilience, translating
physical and transition risk into quantified
earnings-at-risk outputs for the first time
See page 45 for further details
Establish new climate working groups,
supported by an education and
engagement programme to upskill
colleagues, beginning with the
Executive team and senior leadership
to lead the working groups successfully
Delivered a strong reduction in Scope 1
emissions, driven by CAPEX-mapped
decarbonisation of our property portfolio
See page 42 for further details
Undertake a new financial materiality
assessment to support alignment with
the UK Sustainability Reporting
Standards (UK SRS)
Established a definitive Scope 1 reduction
pathway through to 2030, integrated into
our capital planning cycle
See page 42 for further details
Continue to optimise and build
reduction strategies within our own
operations, with a particular focus
on waste
Developed the trial phase of a closed-loop
operational model, a key step on our net
zero journey
See page 43 for further details
Build consumer awareness of the
sustainable materials within our
products and our operational
endeavours
This section outlines how we have complied with
the requirements of UKLR 6.6.6R (8) by including
climate-related financial disclosures consistent
with the Task Force on Climate-related Financial
Disclosures (TCFD) recommendations and
recommended disclosures. This information also
complies with the requirements of the Companies
Act 2006 as amended by the Companies (Strategic
Report) (Climate-related Financial Disclosure)
Regulations 2022.
Climate-related risks and opportunities
continuously evolve, as do those associated
with the transition to a lower-carbon economy.
Managing them effectively is fundamental to
our sustainability approach.
This disclosure sets out the climate-related
risks and opportunities we face, their potential
financial impact, and our response to mitigate
risk and capture opportunity. We note the
ongoing integration of the TCFD framework into
the International Sustainability Standards Board’s
(ISSB) IFRS S1 and S2 standards, and we continue
to build our reporting towards alignment with the
UK Sustainability Reporting Standards (UK SRS).
Our approach to climate risk also informs our
Section 172(1)(D) statement on page 33, covering
the impact of the Group’s operations on the
community and the environment.
Annual Report and Accounts 2026 DFS Furniture plc44
Strategic Report
Disclosures index
Pillar CA 2006 requirement Recommended disclosures Location within this report
Governance Section 414CB (2A)(a) (a) Board oversight of climate-related risks
and opportunities
Page 43
(b) Role of management in assessing and managing
climate-related risks and opportunities
Page 46
Strategy Section 414CB (2A)(d) (a) Climate-related risks and opportunities Page 47 to 49
Section 414CB (2A)(e) (b) Impact on the organisation’s business, strategy
and financial planning
Page 47 to 49
Section 414CB (2A)(f) (c) Resilience of strategy under different climate
scenarios, including a 2°C or lower scenario
Page 45
Risk
Management
Section 414CB (2A)(b) (a) Processes for identifying and assessing
climate-related risks
Page 28 and 46
(b) Risk management process Page 28 and 46
Section 414CB (2A)(c) (c) Integration into overall risk management Page 28 and 46
Metrics and
Targets
Section 414CB (2A)(h) (a) Metrics used to assess climate-related risks
and opportunities
Page 40, 42 and 46
N/A (b) Scope 1, Scope 2 and Scope 3 greenhouse gas
(GHG) emissions
Page 40 and 42
See www.dfscorporate.co.uk for our Basis for
Reporting
Section 414CB (2A)(g) (c) Targets used to manage climate-related risks,
opportunities and performance
Page 40, 41 and 42
Task Force on Climate-related Financial Disclosures continued
Our approach
Scenarios
We assess our risk and opportunity exposure
using two scenarios, consistent with TCFD
guidance and drawing on IPCC, IEA and NGFS
pathway data.
Net Zero Scenario (1.5°C)
A low-carbon scenario assumes the
implementation of policies and technologies that
support circular economies, material efficiency
strategies, and the promotion of alternative fuels
and technologies within a reasonable timeframe
to limit global warming to below 1.5°C, with global
net zero CO
2
emissions achieved around 2050.
Current Policy Alignment Scenario
(3.6°C)
A current policy scenario assumes ineffective
policies and low infrastructure investment to
support sustainability, with little to no adaptation
of resource- and energy-intensive behaviours.
Economies fail to transition to a low-carbon
world, and the physical impacts of climate
change become increasingly severe.
Partnering with Risilience
In FY26 we refreshed our scenario analysis in
partnership with Risilience, moving beyond the
qualitative assessment conducted in FY23 to a
quantified view of financial exposure. Risilience’s
modelling is used by institutional investors and
corporates to translate climate scenarios into
decision-useful financial metrics, including
earnings at risk for multiple scenarios.
This work gives the Board a credible,
third-party-validated basis for understanding
where climate risk could translate into financial
impact, rather than relying on qualitative risk
ratings alone. It also allows us to stress-test
our net zero investment case against the same
methodology used by external capital providers
assessing our transition credentials.
Net Zero strategy
Our Sofa Cycle framework underpins our Net
Zero ambition, evolving the business towards
a circular model by mitigating environmental
impact at each stage of the product life cycle,
from sustainable sourcing to end of life, in
partnership with our value chain.
See page 40 for more detail
Annual Report and Accounts 2026 DFS Furniture plc 45
Strategic Report Corporate Governance Financial Statements Shareholder Information
Task Force on Climate-related Financial Disclosures continued
Risk management
Climate-related risks were originally identified
through the FY23 scenario analysis exercise and
refreshed in FY26 with Risilience, incorporating
both internal stakeholder input and value chain
consultation. We use a percentage of profit before
tax as a benchmark for assessing the materiality
of climate-related risks and opportunities.
Climate change is included in our Principal Risks
(ESG risk, PR6). The CFO owns the risk and is
supported by the Sustainability Director and
relevant Risk Managers. The CFO is accountable
for ensuring controls and mitigation strategies
are effective and in place, while the Board holds
oversight responsibility for Principal Risks.
We continuously monitor risk factors and the
effectiveness of controls. Climate change is
currently rated a medium risk overall, requiring
quarterly review of controls and mitigation
effectiveness, notwithstanding the low
absolute risk levels identified within individual
scenario categories.
Based on the results of the scenario analysis
performed to date, our view is that DFS Group’s
business model and strategy remain resilient in
the face of the considered climate scenarios.
Metrics and targets
Greenhouse gas metrics
Addressing our carbon footprint, and modelling
best practice for our value chain, is a Group
priority. The scenario analysis helped us identify
several metrics used to monitor our climate risks,
as described in Table 1. We continuously quantify
and measure these metrics internally.
Addressing our carbon footprint and modelling
best practices for our value chain is a priority for
the Group. The Scope 1 reduction 2030 CAPEX
roadmap was considered a performance metric
and part of the bonus structure. See Directors’
remuneration on page 70. This work will now be
integrated into our four year capital planning
cycle rather than treated as a discretionary
OPEX cost. We expect this trajectory to continue
through FY27 as further sites move through the
programme. Our Scope 1 and 2 intensity metrics
are externally assured; see page 42.
Our FY26 Scope 3 footprint is reported to the
SBTi framework, which varies slightly from the
GHG Protocol standard; exclusions and full
methodology are detailed in our Basis for
Reporting at dfscorporate.co.uk. We use
spend-based calculations to ensure consistency
with our industry and suppliers.
See page 40 for further details
A Basis for Reporting document is published on
our corporate website to provide transparency
and consistency with descriptions of our data
sources, boundaries, and calculation methodologies
used for key performance indicators.
Timeframes
Throughout our analysis, we have defined the time frames as follows:
Short
1-5 years
Aligned with our business strategy
and financial forecasting.
Medium
5-10 years
Aligned to the strategic
plan timeframe.
Long
10+ years
Aligned with our Net Zero
ambition by 2050.
https://www.dfscorporate.
co.uk/media/xxdbqi4j/
basis-for-reporting.pdf
Annual Report and Accounts 2026 DFS Furniture plc46
Strategic Report
Task Force on Climate-related Financial Disclosures continued
Policy and legal
P
Technology
T
Market
M
Reputation
R
Physical
Ph
Risk type: Risk rating:
High LowMedium
Scenarios:
Transition risks – 1.5ºC
Physical risks – 3.6ºC
Table 1: Summary of our climate risks and opportunities
Short-term risks and opportunities
Risks
Mandates and regulations
on our products
Climate change litigationCarbon pricing Decarbonisation alignment
Risk type
P
Risk rating
Indicator
Production cost and taxes
Risk/opportunity
Regulatory pressure is applied to the materials
used in the manufacturing of our products, leading
to increasing production and operational costs.
This includes the infrastructure for due diligence
such as EUDR, taxes for packaging EPR and the
possibility of introducing broader product design
and disclosure requirements, carbon footprint
labelling, plastic taxes or bans on single-use
plastics.
Our response
We review our Sustainable Sourcing Policy
regularly to keep pace with regulation. Beyond
compliance, we ask suppliers to keep improving,
including raising recycled content in textiles
and cutting single-use plastics from packaging.
Our supplier contracts are aligned
to the requirements in the policy.
Risk type
P
R
Risk rating
Indicator
Compliance cost/non-direct operating cost
Brand value
Risk/opportunity
Investors, insurers, shareholders, and public
interest organisations could bring climate-related
litigation claims against DFS. Reasons for claims
could include failure to adapt to climate change,
greenwashing for overstating positive environmental
impacts and understating risks, and insufficient
disclosure on material financial risks.
Our response
Senior leadership receives regular updates on the
changing legislative landscape, ensuring we meet
all relevant disclosure requirements. Sustainability
reporting rules and stakeholder expectations
continue to mature, and we are tracking both.
Risk type
P
Risk rating
Indicator
Maintenance cost/CAPEX/OPEX
Risk/opportunity
Meeting tighter building codes across our stores,
distribution centres and manufacturing sites
increases maintenance costs.
Our response
Property decarbonisation has moved from OPEX
to planned CAPEX with a planned approach
aligned to our SBTi near-term target, alongside
other energy saving measures at refit.
Risk type
P
Risk rating
Indicator
Direct operating cost
Risk/opportunity
Carbon pricing already exists in some of the
jurisdictions where we operate. Under both
scenarios, the pricing of GHG emissions is
expected to increase, which could impact
our direct operating costs.
Our response
We continue to monitor developments
in this area.
Annual Report and Accounts 2026 DFS Furniture plc 47
Strategic Report Corporate Governance Financial Statements Shareholder Information
Task Force on Climate-related Financial Disclosures continued
Table 1: Summary of our climate risks and opportunities continued
Risk type
R
Risk rating
Indicator
Cost of capital
Investment appeal
Risk/opportunity
A credible, deliverable strategy has the potential
to unlock lower-cost capital through instruments
such as sustainability-linked loans and attract
ESG investment funds.
Our response
Our strategy is reviewed by our leadership
team and our Board, in the context of the wider
market and the regulatory demands, and the
materiality of our strategy to the wider
investment community.
Risk type
T
Risk rating
Indicator
CAPEX to increase energy efficiency
CAPEX to increase recycling capability
CAPEX/OPEX for transitioning to an electric
vehicle fleet
Risk/opportunity
Innovation, especially in technology, will be
essential to achieving our Net Zero ambition.
The technology transition costs could include:
•
energy infrastructure across our estate
•
switching our logistics fleet to
low-emission vehicles; and
•
investing in technology to improve
the lifecycle of products
Our response
Our integrated strategic planning introduces
low-carbon technology across property,
manufacturing and logistics in line with our net zero
trajectory. Anticipated replacement cycles for legacy
infrastructure and vehicles are mapped against
that trajectory, with projected costs built into our
four year budget and longer-term requirements
reviewed annually. Where transition moves faster
than asset life cycles, accelerated replacement would
bring forward capital expenditure, and we monitor
this through the Sustainability Steering Committee.
Risk type
M
Risk rating
Indicator
Production cost
Risk/opportunity
Suppliers facing carbon pricing and other
sustainability-driven costs may pass them on
to us, raising raw material and product costs.
Our response
Phased adjustments to pricing and margin absorb
cost changes in the near term, balancing margin
against customer price sensitivity. Over the longer
term, supporting suppliers to cut their own emissions,
through the requirements in our Sustainable
Sourcing Policy and our supplier engagement
programme, lowers their carbon pricing exposure
and drives efficiencies on both sides. Progress
depends on sustained supplier engagement.
Risk type
M
Risk rating
Indicator
Revenue
Risk/opportunity
Customers align with brands that reflect their
values, and failing to keep pace could see them
switch to alternative products or competitors.
The same shift works in our favour: rising climate
awareness and changing consumer priorities
offer a route to a wider customer base and to
growth in revenue, profit and market share.
Our response
‘Customer at our heart’ is one of our Group values,
so we track customer expectations rather than
assume them. Regular consumer monitoring
tells us how appetite for sustainable brands
and products is shifting, and customer research
validates the Sofa Cycle against commercial as
well as environmental criteria. That research
also tells us the higher price point of sustainable
goods remains an ongoing barrier.
Investment risk Increased cost of raw
materials and products
Transition to lower-emission
technology and maintaining
a circular system
Shift in customer/
consumer value
Medium to long-term risks and opportunities
Risks
Policy and legal
P
Technology
T
Market
M
Reputation
R
Physical
Ph
Risk type: Risk rating:
High LowMedium
Scenarios:
Transition risks – 1.5ºC
Physical risks – 3.6ºC
Short-term risks and opportunities continued
Risks continued
Annual Report and Accounts 2026 DFS Furniture plc48
Strategic Report
Policy and legal
P
Technology
T
Market
M
Reputation
R
Physical
Ph
Risk type: Risk rating:
High LowMedium
Scenarios:
Transition risks – 1.5ºC
Physical risks – 3.6ºC
Task Force on Climate-related Financial Disclosures continued
Table 1: Summary of our climate risks and opportunities continued
Medium to long-term risks and opportunities continued
Risks continued
Risk type
M
Risk rating
Indicator
Cost of capital
Risk/opportunity
As credit ratings begin to incorporate
climate change considerations, there is a risk
that the cost and availability of capital would
increase/decrease.
Our response
We support ESG inquiries and disclosures to
third-party and credit rating agencies as well
as engaging shareholders.
Risk type
Ph
Risk rating
Indicator
Asset value located in an area of material climate
hazard intensity
Risk/opportunity
Damage or loss of value to our facilities due
to climate hazards.
Our scenario analysis considers heat stress,
flooding, drought, fire weather, and windstorms
as climate hazards.
Our response
Therefore, the overall risk to our facility is
considered low to moderate within the short
to medium-term horizon. Our own facilities
including manufacturing and distribution are
leased with an average of five years remaining;
they are unlikely to see long-term climate
changes in 2050 unless renewed.
Risk type
Ph
Risk rating
Indicator
% of supply from supplier facilities that are
in high-risk areas
Risk/opportunity
The climate hazards considered in our scenario
analysis are heat stress, flooding, drought, fire,
weather, and windstorm. Any of these hazards
could cause disruption in our value chain and
disrupt production and delivery.
Our response
Our supplier facilities are spread across the
UK, Europe, and Asia. The overall exposure
of our suppliers’ facilities to drought, heatwaves
and windstorms is moderate, whilst the exposure
to flooding is considered very high in Asia. We
have addressed this with our key partners and
have contingency plans in place.
Our key materials, such as leather, are exposed
to a more moderate risk due to heat waves and
drought which will likely diminish the supply
available in key sourcing areas. We will undertake
efforts to source from lower-risk areas and pivot
to alternative material types.
Physical riskCost of capital Supply chain
This Strategic Report was approved by the Board
on 24 September 2026.
Tim Stacey
Chief Executive Officer
Dominique Highfield
Chief Financial Officer
Annual Report and Accounts 2026 DFS Furniture plc 49
Strategic Report Corporate Governance Financial Statements Shareholder Information
Corporate
Governance
Welcome to the Governance section
of our 2026 Annual Report.
In this section
51 Chair’s introduction to governance
52 Directors and officers
54 Corporate governance report
63 Audit and Risk Committee report
68 Nomination Committee report
70 Directors’ Remuneration report
84 Directors’ report
88 Statement of Directors’ responsibilities
in respect of the annual report and the
financial statements
Annual Report and Accounts 2026 DFS Furniture plc50
Corporate Governance
Chair’s introduction to governance
On behalf of the Board, I am pleased to present
our Corporate Governance Report for the financial
year ended 28 June 2026. This report details the
DFS Group’s corporate governance framework.
The Board recognises that robust corporate
governance is essential to support resilience,
agility and innovation and enable the Board
to operate effectively in supporting and
challenging management.
Our Board in 2026
Having an effective, collegiate and balanced
Board is vital for the future of the DFS Group
and diversity at Board level and within the Group
Leadership Team remains a key priority. Following
the appointment of Dominique Highfield as Chief
Financial Officer, the Board aligns with the FTSE
350 Women Leaders Review recommendations,
achieving 50% female representation in senior
Board positions. Our priority as a Board is always
to ensure that the Board has the right combination
of skills, experience and knowledge in the room,
but achieving a better gender balance is always
worth celebrating.
Supporting our strategic ambition, the Board
met in November 2025 and again in April 2026
to review progress against our strategic goals.
These sessions provided the time to consider
our short, medium and longer-term strategy
and growth ambitions and the likely impact
of further global instability given the hostilities
in the Middle East.
During the year the Board spent time with the
Group Leadership Team reviewing key areas of
risk and the DFS Group’s material controls. While
robust operational controls are well established
within the Group, our material controls project has
refined our focus, providing enhanced assurance
in the assessment and monitoring of principal
risks. Readiness activities for compliance with the
new Provision 29 of the UK Corporate
Governance Code 2024 (which will apply to the
Company from the financial year commencing 29
June 2026
and will be reported on in next year’s
Annual Report),
is detailed in the Audit and Risk
Committee report on page 66.
The annual Board effectiveness review was
conducted internally by the Company Secretary,
with support from myself and the Senior
Independent Director (SID). The review
concluded that the Board is functioning
effectively. Furthermore, positive progress has
been noted following the integration of the
Internal Audit and Risk functions into the Group
Legal and Business Assurance team. The review
once again helped to form the basis of the Board
action plan. More details on this can be found on
page 61 of this report, and a summary of Board
activities throughout the year can be found on
page 56.
Board activities during 2026
•
Assessing long-term financial planning,
budgeting, operating performance and Group
strategy amidst continued global economic
uncertainty and lower consumer confidence.
•
Evaluating strategic developments
•
Overseeing stakeholder communications
•
Evaluating options for IT strategy.
•
Reviewing our approach to capital allocation
and balancing shareholder returns with the
need to invest in our business and continue
to deleverage the Group
•
Appointment of the new
Chief Financial Officer
•
Succession planning for the Board
and Executive team
On page 56, we provide an overview of
the Board’s annual calendar to illustrate the
alignment between the Board’s agenda and
key business priorities. Our reporting aims to
be concise and proportionate, ensuring full
compliance while safeguarding the clarity
of our key strategic messaging.
ESG
Environmental, social and governance
considerations continue to be an important area
of focus. The DFS Group remains committed to
achieving its environmental targets, working
closely with the communities in which we
operate and supporting our charity partners to
help to end furniture poverty.
Our commitment
to good governance
The UK Corporate Governance Code 2024
(the Code) (available at frc.org.uk) is the
standard against which we measured ourselves in
FY26. The Board confirms that the DFS Group
complied with the provisions set out in the Code
for the period under review. Details on how we
applied the Code’s principles and how
governance operates at the Group, can be found
throughout this Governance section and
elsewhere in this Annual Report as detailed
below. This report provides the disclosure required
by UKLR 6.6.6R(5). Details of how the Directors
have fulfilled their duties in accordance with
Section 172 of the Companies Act 2006 are
contained in the Section 172 statement on
pages 32 and 33.
2026 AGM
This year our AGM will be held on 13 November 2026
at 2.30pm at our Group Support Centre in Doncaster.
The meeting arrangements and the resolutions
can be found in the Notice of AGM available on
our website: www.dfscorporate.co.uk.
Steve Johnson
Chair of the Board
24 September 2026
Robust corporate governance
is essential to support
resilience, agility and innovation.”
Steve Johnson
Chair of the Board
Read more
Read Steve’s profile on page 52
Annual Report and Accounts 2026 DFS Furniture plc 51
Strategic Report Corporate Governance Financial Statements Shareholder Information
Non-Executive Directors
Directors and officers
Chair and Executive Directors
Steve Johnson
Non-Executive Chair
S
N
Appointed
December 2018
Experience
Steve has 30 years’ experience in the
retail sector, in both public and private
equity businesses.
Steve previously served as CEO of
Focus Wickes DIY Group and Woolworths
,
as well as working with several other
retailers. Prior to this Steve spent
eight years at ASDA having started
his career with Bain & Company.
Steve is an experienced Independent
Non-Executive Director, was on the
Board of Big Yellow plc until 2020 and
was the Senior Independent Director
of Lenta Limited until March 2022.
Steve has significant retail and M&A
experience. Most recently he held the
position of Executive Chairman at the
Matalan Group before stepping down
in July 2022.
Qualifications
•
BA (Engineering) MEng
(University of Cambridge)
External appointments
No external appointments
Independent
Yes
Tim Stacey
Chief Executive Officer
Appointed
November 2018
Experience
Tim has been with DFS Group for over
15 years and has an in-depth knowledge
of all aspects of the business. Prior to
being appointed CEO in November 2018,
Tim served as the Chief Operating Officer,
and was responsible for the showrooms,
supply chain and customer service in
addition to online operations and
international development.
Tim has significant experience in digital
retail having joined DFS as Director of
Online and Business Development and
having led the multi-channel transformation
of DFS. He was previously the
Multi-Channel Director for Boots.com
and Director for Online and Business
Development for Alliance Boots.
Tim also has significant experience
in M&A, operations, customer services
and marketing.
Qualifications
•
BA (Hons) Accounting and Finance
(Nottingham Trent University)
•
Member of the Institute of Chartered
Accountants in England and Wales
External appointments
No external appointments
Independent
Not applicable
Dominique Highfield
Chief Financial Officer
Appointed
May 2026
Experience
Dominique joined DFS Group as Chief
Financial Officer in May 2026, with
executive responsibility for the
Group’s Finance function.
Prior to DFS, Dominique served as CFO
of Bloom & Wild Group, and previously
held CFO and COO roles at Purplebricks
plc. Earlier in her career she held senior
finance leadership positions at Pentland
Brands, Amazon, J Sainsbury’s and
PwC, spanning e-commerce, retail and
consumer goods across both public
and private businesses.
Qualifications
•
BSc (Hons) Business Management
(University of Surrey)
•
Member of the Institute
of Chartered Accountants
in England and Wales
External appointments
No external appointments
Independent
Not applicable
Alison Hutchinson CBE
Senior Independent
Non-Executive Director
A
R
N
S
Appointed
May 2018
Experience
Alison has a background in both digital
and retail financial services. Over the
last 12 years Alison, as the CEO of
The Pennies Foundation charity, has
worked with the retail industry to
establish the fintech charity the Pennies.
Alison was previously a Non-Executive
Director of Liverpool Victoria Friendly
Society Ltd and Senior Independent
Non-Executive Director of Yorkshire
Building Society. She was previously
Group CEO of Kensington Group plc
and held several senior management
positions, having started her career at
IBM. In 2016, Alison received a CBE for
her services to the Economy and Charity.
Qualifications
•
BSc Technology and Business
Studies (Strathclyde University)
External appointments
•
CEO of The Pennies Foundation charity
•
Senior Independent Non-Executive
Director of Foresight Group
Holdings Limited
Independent
Yes
Gill Barr
Non-Executive Director
A
R
N
S
Appointed
March 2023
Experience
Gill is an experienced Chair of
Remuneration Committees and has
held positions as Senior Independent
Director and Employee Engagement
Director. Gill was previously a
Non-Executive Director of Morgan
Sindall, PayPoint, McCarthy & Stone,
N Brown and Wincanton plc. Gill’s
earlier career was spent in multi-site
retail organisations including Kingfisher
plc, The Co-operative Group and John
Lewis.
Qualifications
•
BSc Psychology
(Aberdeen University)
•
MBA London Business School
External appointments
•
Chair of the Remuneration
Committee and Non-Executive
Director of Bellway plc
Independent
Yes
Committee membership
Bruce Marsh
Non-Executive Director
A
R
N
S
Appointed
August 2024
Experience
Bruce has been the Chief Financial
Officer of Currys plc since July 2021.
Prior to that, Bruce was UK Finance
Director of Tesco where he was involved
in the business turnaround and the
acquisition of the wholesaler Booker.
Earlier in his career he held senior
finance and general management
positions within Kingfisher plc,
Dixons Retail plc and McDonald’s.
Qualifications
•
BSc Operational Research
(Lancaster University)
•
Member of the Institute of Chartered
Accountants in England and Wales
External appointments
•
Chief Financial Officer of Currys plc
Independent
Yes
Chair of Committee
S
Responsibility and Sustainable Business Committee
N
Nomination Committee
R
Remuneration Committee
A
Audit and Risk Committee
Annual Report and Accounts 2026 DFS Furniture plc52
Corporate Governance
Directors and officers continued
Tony Buffin
Non-Executive Director
A
R
N
S
Appointed
February 2025
Experience
Tony is the Executive Chair of Tecsa,
a software and consumer analytics
provider that he founded in 2019.
Prior to founding Tecsa, Tony served
as Chief Executive Officer of Holland
& Barrett, the UK’s leading alternative
health and beauty retailer, as Chief
Operating Officer and Chief Financial
Officer at Travis Perkins plc, and Chief
Financial Officer at Coles Group, a top
25 ASX-listed retailer.
Qualifications
•
MA Cambridge University
(Geography)
•
FCA Institute of Chartered
Accountants in England and Wales
External appointments
•
Executive Chair Tecsa Group
•
Chair of Highbourne Group
•
Non-Executive Director
Applied Nutrition plc
Independent
Yes
Liz McDonald
Chief Legal and
Assurance Officer
Appointed
October 2018
Experience
Liz has extensive legal and governance
experience across a broad range of
industries. Joining the DFS Group in
2018 as the Company Secretary, she
has executive responsibility for the
Legal and Business Assurance function.
Earlier in her career Liz held leadership
roles at My Dentist, The Peel Airports
Group, KCOM Group plc, and Yorkshire
Electricity, having started her legal
career with the Halifax.
Qualifications
•
LLB (Hons) in Law (Manchester
Metropolitan University)
•
Solicitor
•
Admitted by the Law Society
in 1996
External appointments
No external appointments
Independent
Not applicable
Company Secretary
Gender diversity
Male – 4
Female – 3
Ethnicity
White – 7
Balance of the Board
Chair of the Board – 1
Executive Directors – 2
Non-Executive Directors – 4
Retail – 19
Governance and regulatory – 20
Finance – 19
Mergers and acquisitions – 18
Customer services and marketing – 18
People, diversity and inclusivity – 18
Operations – 17
International – 15
Digital – 19
Environmental – 14
Logistics – 17
Manufacturing – 12
Board skills and experience (weighted)
The Board comprises Directors with a broad range of skills
and experience. The chart below provides an overview of the
experience around the Board table as at 28 June 2026. The
competencies highlighted in the matrix will be considered in
relation to the appointment of any new Directors to the Board.
The Directors considered the level of experience in each area
identified as key to the success of the Group.
1 yr
Tony Buffin
Steve Johnson
8 yrs
8 yrs
Tim Stacey
8 yrs
Alison Hutchinson
3 yrs
Gill Barr
2 yrs
Bruce Marsh
5 months
Dominique Highfield
Board tenure
The period each of the Directors has served on the Board
at the date of the report, is shown below.
Board diversity
and balance
(28 June 2026)
The Board Equity, Diversity and
Inclusion Policy was updated
in June 2026 and is available
on the corporate website at
www.dfscorporate.co.uk.
Annual Report and Accounts 2026 DFS Furniture plc 53
Strategic Report Corporate Governance Financial Statements Shareholder Information
Corporate governance report
Governance at a glance
Governance framework
Our framework enables agile and effective decision making, while ensuring we have established and robust governance
practices in place. The Board is responsible for providing leadership to the Group’s business, including setting the Group’s
purpose, strategy and values and promoting its long-term sustainable success.
Our Board
Independent Non-Executive Chair | 4 Independent Non-Executive Directors | 2 Executive Directors
The Board is responsible for setting the DFS Group strategy and ensuring the Company has a clear purpose, vision and mission, and the culture needed to achieve
that purpose. It oversees our conduct and operations to ensure we deliver long-term value for the benefit of DFS’s shareholders and broader stakeholders.
Board reserved matters
The formal schedule of matters reserved for the
decision of the Board is regularly reviewed by the
Directors. It was last approved on 8 July 2026 and
the Directors agreed that the balance of matters
reserved and matters delegated remains appropriate.
The matters reserved for Board decision are
available in full on the Company’s website:
www.dfscorporate.co.uk.
Matters reserved for Board decision include:
•
approval of published financial statements,
dividend policy and other disclosures
requiring Board approval;
•
declaration of interim and recommendation
of final dividends;
•
approval of budget and Group strategy
and objectives;
•
appointment and remuneration of the
Directors, the Company Secretary and other
senior executives;
•
approval of major acquisitions and disposals;
•
approval of authority levels for expenditure; and
•
approval of shareholder communications.
The terms of reference for each Committee
are approved by the Board and are available
on our website:
Board Committees
The Board delegates certain matters to its four main Committees. More information on meeting attendance,
Committee members, and their skills and experience can be found on pages 52 to 54 and 58.
www.dfscorporate.co.uk/
about-us/governance/
board-committees
Audit and Risk Committee
Oversees financial reporting,
internal controls, risk management,
compliance and audit.
See Committee report
on pages 63 to 67
Remuneration Committee
Oversees linking remuneration
with strategy and determines
the levels of remuneration.
See Committee report
on pages 70 to 83
Nomination Committee
Oversees the composition of the
Board and succession planning.
See Committee report
on pages 68 and 69
Responsible and Sustainable
Business Committee
Oversees the delivery of our
Environmental and social strategy.
See Committee report
on pages 34 to 43
Our Board is comprised of the following: Chairman | Chief Executive Officer (CEO) | Chief Financial Officer (CFO)
Senior Independent Director (SID) | Non-Executive Directors (NEDs)
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.
Chief Executive Officer
Established and led by the Chief Executive Officer,
the Group Leadership Team is our internal leadership
team responsible for delivering our strategy and the
operational performance of the business.
See our GLT members and their biographies at
www.dfscorporate.co.uk/about-us/our-leadership
Group Leadership Team (‘GLT’)
Our Group Leadership Committees support specific
business needs or strategic priorities. These include:
•
Group Governance and Risk Committee
•
Capital Allocations Committee
•
Group Operating Committee
•
Group ESG Committee.
Group Leadership Committees
Annual Report and Accounts 2026 DFS Furniture plc54
Corporate Governance
Corporate governance report continued
Role of the Chair and Chief Executive Officer
As Chair, Steve leads the Board, ensuring its effectiveness in all aspects of its role. Tim, our CEO, is
responsible for managing the operation of the Group to create value over the long term. There are clear
divisions of accountability and responsibility that have been agreed and documented by the Board.
Role of the Chair
Leading the Board and ensuring its effectiveness.
Facilitating effective Board relations; the effective
contributions of the Non-Executive Directors
and ensuring constructive relations between
the Non-Executive Directors and the Group
Leadership Team (GLT).
Ensuring that effective strategic planning
for the Group is undertaken.
Ensuring effective communication between
the Board and its investors; promoting a culture
of openness and debate.
Overseeing a rigorous Board review and the progress
of the Board against the subsequent action plan.
Ensuring the submission to the Board by the
Chief Executive Officer of objectives, policies,
and strategies for the Group, including the
Group business plan and annual budget.
Role of the Chief Executive Officer
Setting the Group’s purpose, culture, and
values in line with the views of the Board.
Leading and motivating the GLT, focusing
on talent acquisition and retention.
Planning and ensuring the effective execution
of the Group’s strategy.
Ensuring the effective implementation
of the Board’s decisions.
Maintaining an effective framework of
internal controls and risk management.
Leading the climate change and sustainability
objectives of the Group.
Leading the senior management in
managing the performance of the Group.
Managing the Group’s relations with all of
its stakeholders, the public and the media.
Role of the Senior Independent
Director (‘SID’)
Providing a sounding board for the Chair.
Serving as an intermediary between the Executive
Directors and Non-Executive Directors.
Meeting with the Non-Executive Directors annually,
to collate feedback on the Chair’s performance as
part of the annual Board review process.
Being available to the shareholders to consider
matters where it may be inappropriate to
have those discussions with the Chair and/or
Executive Directors.
Role of the Company Secretary
Advising the Board and its Committees on
corporate governance policies and procedure,
and for the management of Board and
Committee meetings.
Managing the provision of timely, accurate
and considered information.
Advising the Board and representing
the Company in legal matters.
Ensuring that the Directors receive accurate,
timely and clear information.
Board activities
The Board’s key areas of focus during the year are set out on page 56, along with significant decisions
taken and the resulting outcomes.
Board meeting agendas are agreed in advance by the Chair, CEO and Company Secretary and are
structured to cover all matters relevant to delivering the Group’s strategy and long-term sustainable
success. All members of the Board can propose items for inclusion in future agendas.
Regular standing items are set out below.
Executive
updates
Executive Directors provide high-level operational and financial updates, summarising the
key challenges and actions taken, and a look forward to priorities for the coming period.
These include consideration of headwinds and macroeconomic events facing the business
and updates on competitors and the market as a whole, and any actions required.
Strategy
and business
change
The Board receives regular updates of progress against key strategic and business
change initiatives.
In November and April the Board met with the Group Leadership Team to review the Group’s
strategy and 4 year growth plan.
Deep dives
Throughout the year members of the Group Leadership Team and other senior leaders and
business unit heads regularly present deep dive sessions on key areas of importance and focus,
giving the Board an opportunity to challenge and provide feedback.
Investor
relations
The Board supports the initiatives set out in the Code and the UK Stewardship Code and
encourages regular engagement with both existing and potential shareholders. The Board
believes that it is important to both explain business developments and financial results to the
Company’s shareholders and to understand and respond to shareholder concerns. The principal
communication methods used to impart information to shareholders are results announcements,
news releases, investor presentations and updates on the Company’s website.
The Chair of the Board and Non-Executive Directors are available to meet with major shareholders
as required.
The Annual General Meeting provides an opportunity for the Company to engage with shareholders
and for the Board to provide an account of the progress made by the business during the year,
along with a synopsis of current issues facing the business
Governance
updates
The Company Secretary provides a summary of the legal and regulatory activities from the
period, along with any upcoming changes to law or regulation. The Board receives bi-annual
updates on progress against the Group Health and Safety Strategy.
Contracts or leases for approval beyond the Board-approved delegated authorities are
presented for consideration, as well as year end statutory reporting for publication.
All Board decisions are recorded and any Board decision made outside of a meeting is made by written
resolution. If a Director is unable to attend a meeting, they are consulted prior to the meeting and their
views shared with the other Directors.
Annual Report and Accounts 2026 DFS Furniture plc 55
Strategic Report Corporate Governance Financial Statements Shareholder Information
Corporate governance report continued
September 2025
Announcement: publication of the FY25 full
year results
Approval: agreement of the approach to the 2025
AGM and approval of the shareholder resolutions
Deep dive: presentation to the Board of the
updated Group purpose, mission, values and
leadership behaviours
Deep dive: update on progress of the project to
align processes and systems across the Group
Announcement: publication of the half year
trading update
Announcement: appointment of Dominique
Highfield as Group CFO, effective 5 May 2026
Approval: DFS Group Modern Slavery Statement
reviewed and approved
January 2026
March 2026
Announcement: publication of the half year results
Deep dive: consideration of the appropriate level
of interim dividend, striking an appropriate
balance between internal and external priorities,
and the return to the register
Approval: £2.5m gift to be made to the Group
Employee Benefit Trust, to satisfy future share
plan obligations
Deep dive: update on health and safety progress
across the Group
Deep dive: update on progress of the project to
align processes and systems across the Group
Deep dive: update on Group finance
transformation programmes
Announcement: publication of the post-close
trading update
Deep dive: leadership succession planning
July 2025
Event: FY25 Annual General Meeting
Announcement: publication of the AGM
trading update
Event: two day Board strategy session to review,
refresh and approve the Group strategy
Approval: DFS Group whistleblowing strategy
reviewed and approved
Approval: transfer of all shares held in treasury
to the Group Employee Benefit Trust, to satisfy
future share plan obligations
Deep dive: update on the Group health
and safety three year plan
November 2025
Event: an extended Board strategy session
including an external view of the potential impact
of the current geopolitical landscape
Deep dive: update on progress of the project to
align processes and systems across the Group
April 2026
Approval: following the completion of the Board
evaluation, Board action plan for FY27 reviewed
and approved
Deep dive: first impressions from the new CFO
Deep dive: a briefing on the Group’s AI strategy
Deep dive: leadership succession planning
Deep dive: discussion and challenge to
management on draft FY27 budget
Approval: DFS Group tax strategy reviewed
and approved
June 2026
Board activities continued
Annual Report and Accounts 2026 DFS Furniture plc56
Corporate Governance
Corporate governance report continued
Diversity compliance statement
Our gender identity and ethnicity data in accordance
with UKLR 6.6.6R (10) as at 28 June 2026 is set
out to the right. The Board and Group Leadership
Team (GLT) members are asked to complete a
diversity disclosure to confirm which of the
categories set out below they identify with.
The table below sets out the range of gender
and ethnicity as they relate to our Board, senior
Board positions (CEO, CFO, SID, and Chair)
and executive management as at 28 June 2026.
In line with the Listing Rule definition, executive
management consists of the GLT.
With the appointment of Dominique Highfield as
CFO, the Company continues to meet the targets
in the UKLRs of having at least 40% female
representation on the Board (43%), and two of
the senior positions on the Board are held by
women. In accordance with UKLR 6.6.6R (9)(b)
we disclose that the Board does not currently
include any Directors from a minority ethnic
background. In considering succession plans
for our Board positions, due attention will be
given to the target in UKLR 6.6.6R (9)(b)(iii).
Independence
The Board reviews the independence of its
Non-Executive Directors annually. The Board
considers that the Chair was independent on
appointment and that all of the Non-Executive
Directors are independent.
The Company maintains clear records of the
terms of service of the Chair and Non-Executive
Directors to ensure that they continue to meet
the requirements of the Code. The Non-Executive
Directors’ appointment letters anticipate a
minimum time commitment of two days per
month, recognising that there is always the
possibility of an additional time commitment
and ad hoc matters arising from time to time,
particularly when the Company is undergoing a
period of increased activity. The Board considers
that each of the Non-Executive Directors has
sufficient time to devote to their role and that
each Director’s contribution is important to the
long-term sustainable success of the Company.
The Directors’ profiles can be found on pages 52
and 53
Appointment, election
and re-election
The Board may appoint any person to be a Director,
and any Director appointed will then be eligible
for election by shareholders at the next AGM.
Non-Executive Directors’ appointments are for an
initial period of three years. All Directors stand for
annual re-election in compliance with the Code.
Neither the Chair nor any Non-Executive Director
has been in their position for more than nine
years in accordance with the recommendations
of the Code.
Board diversity
The Board Equity, Diversity and Inclusion Policy ensures all Board and Committee appointments
are made on merit, in the context of skills and experience. The Group is committed to maintaining
a Board
of talented and dedicated Directors with a diverse mix of sector expertise, experience, skills
and backgrounds
. The Board considers that it has appropriate policies in place to promote inclusivity
and attract talent from the full range of diverse groups to its talent pipeline. In identifying suitable
candidates for appointment to the Board, the Committee considers candidates on merit against
objective criteria to ensure that it continues to have an appropriate mix of skills and experience
and fosters a diversity of thought in its decision making.
The Board Equity, Diversity and Inclusion Policy was updated in June 2026 and is available on the
corporate website at:
www.dfscorporate.co.uk
Gender identity/sex of members of the Board and executive management (28 June 2026)
Category
Number of
Board Directors
Percentage of
the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
1
Percentage of
executive
management
1
Men 4 57% 2 3 60%
Women 3 43% 2 2 40%
Other categories — — — — —
Not specified/prefer not to say — — — — —
1. Executive management excluding the Chief Executive Officer and Chief Financial Officer.
Ethnic background of members of the Board and executive management (28 June 2026)
Category
Number of
Board Directors
Percentage of
the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
1
Percentage of
executive
management
1
White British or other white
(including minority white groups) 7 100% 4 5 100%
Mixed/multiple ethnic groups
— — — — —
Asian/Asian British — — — — —
Black/African/Caribbean/
Black British — — — — —
Other ethnic group, including Arab — — — — —
Not specified/prefer not to say — — — — —
1. Executive management excluding the Chief Executive Officer and Chief Financial Officer.
Annual Report and Accounts 2026 DFS Furniture plc 57
Strategic Report Corporate Governance Financial Statements Shareholder Information
Corporate governance report continued
Board meetings
During the year, the Board held seven scheduled meetings and the Board strategy day in April, with additional ad hoc in person meetings/conference calls being held as required. The Chair and the Non-Executive
Directors met on three occasions without the Executive Directors present, and the Non-Executive Directors met privately with the CEO twice.
The Board has a full programme of Board meetings planned for the year ahead and intends to meet seven times, with additional meetings being held to review important trading periods or strategic matters, as required.
All Directors have the right to have their concerns over, or opposition to, any Board decision noted in the minutes. All Directors have access to the Company Secretary and may take independent legal advice.
Name
Meetings
attended
Maximum
meetings Independent Responsibility and role during 2025/26 Date of appointment
Chair
Steve Johnson 8 8 6 December 2018
Executive Directors - At each Board meeting, the Board receives and discusses reports from each of the Executive Directors.
Tim Stacey (CEO) 8 8 —
Leading and managing Group performance and strategy to ensure the long-term profitable operation of the Group.
1 November 2018
Marie Wall (Interim CFO) 5 5 — Leading, managing, and maximising Group financial performance and investor relations.
20 January 2025
Resigned 2 April 2026
Dominique Highfield (CFO)³ 1 1 — Leading, managing, and maximising Group financial performance and investor relations. 5 May 2026
Non-Executive Directors
Alison Hutchinson (SID) 8 8
Overseeing the implementation of the strategy and development of the Group whilst maintaining a system of
internal controls and risk management. Board Committee members also have further specific responsibilities in
relation to reviewing the integrity of financial information, dealing with succession planning and Board diversity,
and setting remuneration.
1 May 2018
Jo Boydell 3 3
6 December 2018
Resigned 14 November 2025
Bruce Marsh 8 8 1 August 2024
Gill Barr 8 8 1 March 2023
Tony Buffin 8 8 24 February 2025
Standing attendees
Liz McDonald (Company Secretary) 8 8 — Advising the Board on all legal, corporate governance and compliance issues. 30 September 2018
Attends by invitation
The Group Leadership Team led by the CEO is responsible for executing strategy and the day-to-day management of the business. Their attendance at Board and Committee meetings along with that of the
other senior leaders assists the Directors in gaining a clearer insight into the Group’s operations.
Committee meetings
Name
Audit and Risk
Committee
1
Remuneration
Committee
Nomination
Committee
Responsible and Sustainable
Business Committee
2
Steve Johnson 3/3 3/3 3/3 3/3
Tim Stacey 3/3 3/3 3/3 3/3
Alison Hutchinson (SID) 3/3 2/3 3/3 3/3
Marie Wall 2/3 1/3 1/3 2/3
Dominique Highfield3 1/3 — — 1/3
Jo Boydell 2/3 1/3 1/3 1/3
Bruce Marsh 3/3 3/3 3/3 3/3
Gill Barr 3/3 3/3 3/3 3/3
Tony Buffin 3/3 3/3 3/3 3/3
1. All Directors are invited to Audit and Risk Committee meetings and the Responsible and Sustainable Business
Committee meetings, and the Chair of the Board is invited to attend Remuneration Committee meetings. The
Chief Executive Officer and Chief Financial Officer are invited to attend both the Remuneration and Nomination
Committee meetings where appropriate to do so.
2. The Responsible and Sustainable Business Committee (‘RSC’) comprised Alison Hutchinson, Gill Barr, Jo Boydell,
Bruce Marsh, and Tony Buffin.
3. Dominique Highfield was appointed as a Director in May 2026. She attended all the Committee meetings during
her tenure.
Annual Report and Accounts 2026 DFS Furniture plc58
Corporate Governance
Corporate governance report continued
How the Board operates
The Chair, CEO and Company Secretary meet
to plan the structure of meetings and the agenda
for the year. At the start of the year a schedule
of key strategic topics is agreed between the
CEO and Chair after a discussion with the wider
Board. These enable the Board to gain a deeper
understanding of the strategic direction of the
business, exchange views and robustly debate
elements of the Company’s performance, specific
projects, or areas of strategic significance. If a
Director is unable to attend a meeting, they are
consulted prior to the meeting and their views
made known to the other Directors. All Board decisions
are recorded and any Board decision made outside
of a meeting is made by written resolution.
Directors and their interests
The names of the Directors in office during the
year, together with their relevant interests in the
share capital of the Company at 28 June 2026,
and details of the Directors’ share options are
set out in the Directors’ Remuneration Report
on page 80.
External appointments
The Executive Directors may accept outside
appointments provided that such appointments
do not impact their ability to perform their duties
as Executive Directors of the Company. Details
of all external appointments held by members
of the Board are set out in their profiles on
pages 52 and 53.
Directors’ indemnities
and conflicts
As at the date of this report, indemnities are in
force under which the Company has agreed to
indemnify the Directors, to the extent permitted
by law, in respect of losses arising out of, or in
connection with, the execution of their duties,
powers or responsibilities as Directors of the
Company. The indemnities do not apply in
situations where the relevant Director has been
guilty of fraud or wilful misconduct. Under the
authority granted to them in the Company’s
Articles of Association, the Board has considered
carefully any situation declared by any Director
pursuant to which they have or might have a
conflict of interest and, where it considers it
appropriate to do so, has authorised the
continuation of that situation.
In exercising their authority, the Directors have
had regard to their statutory and other duties
to the Company. The duties to avoid potential
conflicts and to disclose such situations for
authorisation by the Board are the personal
responsibility of each Director. All Directors are
required to ensure that they keep these duties
under review and to inform the Company
Secretary on an ongoing basis of any change
in their respective positions. The Company
maintains a related party register to record any
conflicts, which is updated annually. Additionally,
the Group has purchased Directors’ and Officers’
liability insurance.
Induction of new Directors
New Directors undergo a detailed, tailored
induction programme including meetings
with the Company’s external advisers and with
colleagues from across the Group to familiarise
the Director with all operations, including those
in showrooms, manufacturing sites, distribution
centres and our Group Support Centres.
Summary of induction programme
Understand their duties
•
One-to-one meetings with the rest of the
Board, including the Chair, Executive
Directors, and other Non-Executive Directors
•
Review previous Board and Committee
papers, Committee terms of reference and
investor presentations
•
Meeting with external advisers, including the
auditor, brokers and external legal advisers
•
Review the corporate governance materials
available on Diligent Boards – including
Committee terms of reference and the
schedule of matters reserved to the Board
•
One-to-one meeting with the Company
Secretary to understand the governance
issues which apply to the business
Meet the colleagues
•
One-to-one meetings with the members of
the GLT and senior management to familiarise
the new Directors with how the Group
operates on a day-to-day basis
•
Presentations from key functions within
the Group
Visit the business
•
Visiting operational locations including
showrooms, factories, the design centre,
support offices and customer distribution
centres and meeting with our colleagues
from these areas
During the year, Dominique Highfield went
through a detailed induction programme,
following her appointment.
Dominique Highfield’s
induction process
Since joining the Group in May, Dominique
has completed an in-depth induction
programme designed to ensure a seamless
transition into the business. The programme
was structured across several key pillars:
•
Establishing relationships: Dominique
held comprehensive meetings with the
Chair, Non-Executive Directors, the
outgoing interim CFO, the Group
Leadership Team (GLT), and senior leaders
across all functional areas of the Group.
•
Understanding the business and culture:
To gain a thorough understanding of the
end-to-end customer journey, Dominique
spent time in our showrooms and Customer
Distribution Centres (CDCs). This immersion
also included visiting factories to observe
our furniture manufacturing processes
and joining delivery teams to visit
customers in their homes.
•
Corporate governance: A core
component of the induction focused on
Group strategy, investor relations, and
CFO accountabilities. This included
reviewing key policies such as risk
management, compliance, and health
and safety.
•
Finance function and strategy:
Dominique conducted deep dives
into the wider Finance function, procurement
,
and transformation priorities.
•
External engagement: The itinerary
included formal introductions to the
Group’s external advisers, brokers,
and the external auditor.
Annual Report and Accounts 2026 DFS Furniture plc 59
Strategic Report Corporate Governance Financial Statements Shareholder Information
Corporate governance report continued
Compliance with the UK Corporate Governance Code 2024 (the ‘Code’)
The Board confirms that throughout the year ended 28 June 2026 and at the date of this report, the Company applied the principles and complied fully with all the provisions of the Code. A copy of the Code
is available from the website of the Financial Reporting Council, www.frc.org.uk. This Corporate governance report explains how the Company has applied the relevant provisions and principles of the Code,
the Companies (Miscellaneous Reporting) Regulations 2018 (‘the Regulations’) and the Financial Conduct Authority’s Listing Rules and Disclosure and Transparency Rules during the year ended 28 June 2026.
Further information on compliance with the Code can be found throughout this Corporate governance report, the Strategic report and Committee reports signposted as follows.
Board leadership Division of responsibilities
Composition, succession
and evaluation
Audit, risk and
internal controls
Remuneration
An effective and entrepreneurial
Board which promotes the
long-term sustainable success
of the Company
Directors’ profiles – pages 52 and 53
s.172 statement – pages 32 and 33
The role of the Chair
Role of the Chair and Chief Executive
Officer – page 55
Directors’ profiles – pages 52 and 53
Board review – page 61
Formal, rigorous and
transparent appointment
procedure and effective
succession plans
Nomination Committee report
– page 68
Board review – page 61
Formal and transparent procedure
to ensure independence and
effectiveness of auditors and
integrity of the Annual Report
and Accounts
External auditor – page 67
Internal audits – page 66
Policies and practices designed
to support strategy, long-term
success and aligned to culture
and values
Diversity compliance statement
– page 57
Directors’ Remuneration report
– pages 70 to 83
Alignment of our purpose, values,
culture and strategic objectives
Our purpose and values – pages 4
and 5
Our strategy – page 13
Chief Executive’s report
– pages 6 to 9
Board activities – pages 55 to 56
Composition of the Board and
division of responsibilities
Directors’ profile – pages 52 and 53
Roles and responsibilities – page 55
Director independence – page 57
A combination of skills,
experience and knowledge
on the Board and Committees
Directors’ profiles – pages 52 and 53
Board Skills – page 53
Fair, balanced and
understandable assessment
of position and prospects
Fair, balanced and understandable
– page 64
Formal and transparent
procedure for developing policy
Directors’ Remuneration policy
– page 70 to 83
In respect of 2026 outcomes – page 73
Our people and alignment of
our policies to support long-
term sustainable success
Active engagement – page 32
NFSIS – page 32
Exercise of independent
judgement
Board activities – pages 55 and 56
Governance framework – page 54
Annual Board review
Board review – page 61
Internal controls and
management of risk
Risk management process and
principal risks – page 24 to 30
Effective engagement by
the Board with stakeholders
Active engagement – page 32
Board activities – pages 55 to 56
Shareholder engagement – page 62
Non-Executive Directors’
external commitments and role
Directors’ profiles – pages 52 and 53
Time commitment – page 57
Effective and efficient
functioning of the Board
Time commitment – page 57
Board review – page 61
Annual Report and Accounts 2026 DFS Furniture plc60
Corporate Governance
Corporate governance report continued
Board review
The Board conducted an internal review of its effectiveness this year, led by the Chair and
the Senior Independent Director and supported by the Company Secretary.
Stages of our Board review
Stage 1
Formal online questionnaire provided
by Gould Consulting (an independent
management consultant) to the Directors
and Company Secretary.
Stage 2
Individual conversations with each Director
to discuss reflections and identify potential
opportunities. Senior Independent Director
provided feedback to the Chair on his
performance following a discussion with
each of the Non-Executive Directors.
Stage 3
Board review findings presented to the Board
by the Company Secretary on behalf of the
Chair. Board discussion of key learnings from
the review. Action plan prepared by the
Company Secretary.
Progress made against FY26 actions
Action Progress
NEDs continue to maintain their high levels of
engagement, strengthening relationships with
employees and other key stakeholders.
Designated Non Executive Director has met with
groups of employees from across the business to
seek a greater understanding of employee wellbeing
issues.
The Committee considered the Board’s
composition, shifting focus to a longer-term
view, evolving the Board’s expertise for the
business’ future strategic priorities.
The Nomination Committee and the sub-committee
played a pivotal role addressing succession needs,
recommending to the Board the appointment of
Dominique Highfield as CFO.
Review the structure, reporting lines and remit
of Internal Audit and Internal Control.
Significant improvement over the year in the quality
of the reporting by Internal Audit. Restructured
Internal Audit, moving to a co-sourced model.
Recruitment to strengthen the internal team.
Review the induction plan for the CFO New in-depth induction plan developed for the CFO
focused on increasing the NEDs knowledge around
the core business.
Strategy days held in November and April Deep dives took place into the Group’s strategy in
light of the ongoing economic challenges facing
the business.
Highlights of the Board
action plan FY27
Documentation:
To facilitate more efficient decision making,
there is a recommendation for more succinct
Committee papers that move extensive
background detail into appendices.
Communication:
Review how to improve communication
between the Directors who expressed a desire
for more frequent, informal communication
between the Chair, NEDs, and the management
team between scheduled meetings.
Board agenda:
Review the scheduling of Board and
Committee meetings and the strategy days.
Review insights
The Board and its Committees worked effectively
to provide oversight and constructive challenge,
with a focus on the business’ key strategic,
multi-year transformation programmes. Recent
appointments have enhanced the overall capabilities
of the Board. A high level of management focus
on risk and internal controls has generated some
positive improvements. The conclusion overall
was that the Board continues to operate effectively
and that all Board members can contribute freely
and play an active role in Board meetings.
The review covered the following areas:
•
Board
•
composition and expertise;
•
dynamics;
•
time management; and
•
stakeholder focus and strategic oversight.
•
Committees
•
effectiveness of how the Committees
operate, their agendas and composition.
•
Individuals
•
time management;
•
preparedness at meetings;
•
relationships, knowledge and experience; and
•
overall contributions.
•
Chair
•
relationships and communication with
the Board and Group Leadership Team;
•
meeting management; and
•
shareholder interactions.
The last external evaluation took place in FY24;
therefore, the FY27 Board review will be
externally facilitated in accordance with the
UK Corporate Governance Code 2024.
Annual Report and Accounts 2026 DFS Furniture plc 61
Strategic Report Corporate Governance Financial Statements Shareholder Information
Shareholder engagement
The Board actively seeks and encourages
engagement with major institutional shareholders
and other stakeholders. The Chief Executive Officer
and Chief Financial Officer regularly meet with
analysts and institutional shareholders to keep
them informed of significant developments and
to develop an understanding of their views which
are discussed with the Board.
In addition to the extensive engagement carried
out by the CEO and CFO, the Chair and the
Non-Executive Directors met with major shareholders
several times throughout the year. The Chair and
the Senior Independent Non-Executive Director
make themselves available to all major shareholders
so that any issues and concerns can be
communicated to the Board.
To maintain a clear understanding of market
perceptions the Directors regularly review
investor relations activity, comments by analysts,
communication from major shareholders and
advice from the Group’s brokers. This includes:
•
interaction with all shareholders;
•
presentations of full-year and interim results
to analysts and shareholders (available on the
corporate website);
•
the Annual Report detailing the Group’s
strategy, business model and performance
over the past financial year and plans for
future growth;
•
the Annual General Meeting, which all
shareholders are encouraged to attend
and put any questions to the Board; and
•
the Company’s corporate website
(www.dfscorporate.co.uk), where
investor information is regularly updated.
External auditor
Our external auditor is KPMG LLP and our
engagement partner is Ailsa Griffin. We
continually assess the independence and
expertise of KPMG LLP. Our non-audit services
policy can be found on our website and further
details are on page 67.
Internal audit
Further details relating to the Internal Audit
function are contained within the Audit and
Risk Committee report on pages 63 to 67.
DTR disclosure
The disclosures required under DTR 7.2 of the
Disclosure and Transparency Rules are contained
in this report, and the Audit and Risk Committee
and Nomination Committee reports, except for
information required under DTR 7.2.6 which is
contained in the Directors’ report on pages 84
to 87.
Signed on behalf of the Board of Directors.
Elizabeth McDonald
Company Secretary
24 September 2026
Corporate governance report continued
Annual Report and Accounts 2026 DFS Furniture plc62
Corporate Governance
Read more
Read Bruce’s profile on page 52
The Committee continues
to play an important role in
ensuring the integrity of
financial reporting, the
effectiveness of the internal
control environment and
the operation of our risk
management processes.”
Bruce Marsh
Chair of the Audit and Risk Committee
Audit and Risk Committee report
Committee members during FY26
Bruce Marsh
Jo Boydell (to November 2025)
Alison Hutchinson
Gill Barr
Tony Buffin
During the year, the Committee continued to
formalise and monitor the control environments
across the business to strengthen our existing
arrangements and to ensure we are well placed
to meet the requirements of future changes to
the Corporate Governance Code.
The Committee continues to conduct regular
assessments of the quality and effectiveness of
the internal and external audit processes and we
have considered a variety of matters aligned with
the DFS Group’s principal risks. The key risks that
could materially impact the financial statements
remain consistent with prior years. These include
the assessment of the going concern basis
of accounts preparation, the recoverability of
the carrying value of goodwill in the DFS Group
accounts and the recoverability of the Parent
Company’s investment in subsidiaries from
other DFS Group companies.
I thank my fellow Committee members for their
valuable contribution and support during the
year, and I welcome any comments or questions
from shareholders.
Composition
The members of the Committee are all independent
Non-Executive Directors who, together, have
extensive commercial, financial and operational
experience and skills relevant to the DFS Group
and are all independent in character and judgement
and free from any relationship or circumstance
which may, could or would be likely to, or appear
to, affect their judgement.
On behalf of the Board I am pleased to present
the Audit and Risk Committee Report for the year
ended 28 June 2026. This report is intended to
provide shareholders with an insight into key
areas considered by the Committee and an
overview of how the Committee has discharged
its responsibilities during the year. The Committee
plays an important role in ensuring the integrity
of financial reporting, the effectiveness of the
internal control environment and the operation
of our risk management processes.
There have not been any significant changes
to the responsibilities and role of the Committee
during the year. The Committee continues to
ensure that the financial reporting is aligned
with the latest requirements and guidance
from regulators and that it is fair, balanced
and understandable and that all matters
disclosed and reported upon meet the
needs of our stakeholders.
As part of an orderly succession plan I was
appointed Chair of the Committee in April 2025
to ensure a smooth transition from Jo Boydell
in advance of her retirement from the Board in
November 2025. The Board considers that, by
virtue of my current and recent executive roles,
details of which are set out on page 52, I have
recent and relevant financial experience and that
the Company complies with the requirements of
the Code in this respect. Other Committee members
who served during the year are Jo Boydell (until
November 2025), Gill Barr, Tony Buffin and
Alison Hutchinson.
Profiles of the Independent Non-Executive
Directors are included on pages 52 and 53 and a
summary of their principal skills and experience
is shown on page 53.
Regular attendees at Committee meetings
include the Chair of the Board, Chief Executive
Officer, Chief Financial Officer, Group Head of
Internal Audit, Head of Risk, Internal Controls and
Compliance, Group Finance Director, Company
Secretary and the external auditor. The Committee
held three scheduled meetings in the year. Details
of attendance at scheduled Committee meetings
can be found on page 58. The Committee Chair
also meets with the CFO, Group Finance Director,
Group Head of Internal Audit, Head of Risk,
Internal Controls and Compliance and external
auditor prior to each Committee meeting and on
an ad hoc basis. The Committee members also
meet without management present after each
Committee meeting. The Group Head of Internal
Audit and representatives of external audit are
also invited to these private discussions to allow
discussion of matters which they may wish to
raise in the absence of management.
Key activities during 2026
•
Oversight of the DFS Group financial
statements and review of the key
accounting judgements and estimates
•
Review of work underway to formalise
and monitor the control environments
across the business
•
Review of the risk management
processes and outputs
•
Oversight of the Internal Audit team
and approval of the Internal Audit plan
Annual Report and Accounts 2026 DFS Furniture plc 63
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Audit and Risk Committee report continued
Performance review
The review of the performance of the Audit and
Risk Committee was carried out as part of the
wider review of Board effectiveness, further
details of which can be found in the Corporate
governance report on page 61. There were no
significant concerns raised from this review
and the Committee was deemed to be
operating effectively.
Roles and responsibilities
The Committee’s responsibilities include,
but are not limited to:
•
oversight of the integrity of the DFS Group
financial statements;
•
review of the half-yearly and annual
financial statements (including clarity
and completeness of disclosure);
•
review of non-financial statements
and Responsible business report;
•
oversight of risk management
and internal control arrangements;
•
oversight of compliance with legal
and regulatory requirements;
•
oversight of the external auditor’s performance,
objectivity, qualifications and independence;
•
the approval process of non-audit services;
•
recommendation to the Board of the
nomination of the external auditor
for shareholder approval, and approval
of its fees; and
•
oversight of the Internal Audit function
and approval of the Internal Audit plan.
All relevant matters arising are brought
to the attention of the Board.
Financial reporting
The ultimate responsibility for reviewing and
approving the Annual Report and Accounts and
the half-yearly reports remains with the Board.
The Committee reviews the content of the
Annual Report and Accounts and advises the
Board on whether, taken as a whole, it is fair,
balanced and understandable and provides the
information necessary for shareholders to assess
the Group’s and Company’s position and performance
,
business model and strategy. This review includes
an assessment of the adequacy of the disclosure
with respect to going concern and viability reporting
and due consideration to laws and regulations,
the Task Force on Climate-related Financial
Disclosures (‘TCFD’), the provisions of the UK
Corporate Governance Code and the requirements
of the Listing Rules.
In reviewing the Annual Report for the 52 weeks
ended 28 June 2026, the Committee considered
the balance of the Strategic report with respect
to proportional focus on positive and negative
results and events, adequate disclosure of risks
and the consistency of reporting of financial and
other measures. The Committee also considered
the extent and prominence of alternative
performance measures presented. This additional
review by the Audit and Risk Committee assisted
the Board in determining that the report was fair,
balanced and understandable at the time that it
was approved.
The Committee also reviews the content of the
Annual Report to ensure the impacts of climate
related risks and opportunities are explained and
that, taken as a whole, the Annual Report provides
a coherent and connected view of climate reporting.
Further detail on climate reporting is included in
the Responsibility and sustainability report and
also outlined in the Risks and uncertainties
section of this Annual Report.
Significant items considered in relation to the financial statements
During the year the Committee reviewed items relating to going concern and viability, impairment, and
business transformation accounting. The Committee considered the significant matters below in relation
to the financial statements and how these were addressed. This included reviewing papers prepared
by management detailing the basis of and rationale for the treatments adopted. The Committee also
received reports from and held discussions with the external auditor to ensure that a robust level of
challenge had been made to management’s assessments and to confirm that there were no significant
differences of opinion between management and the auditor.
Area of focus How the risk was assessed by the Committee
Presentation of
financial statements
Pages 22 and 23
The DFS Group uses
Alternative Performance
Measures (“APMs”) and
includes additional disclosures,
including reconciliations
to statutory measures.
In ensuring that the DFS
Group’s reporting is fair,
balanced and understandable
the Committee reviewed the
prominence of APMs and
statutory measures and the
classification of underlying
and non-underlying items.
The Committee considers it important to consider statutory measures
and the APMs when reviewing these financial statements. The Committee
has reviewed the APMs and the financial statements as a whole to
ensure the DFS Group’s reporting is fair, balanced and understandable.
The Committee gave due consideration to the integrity and sufficiency
of information disclosed in the Annual Report and Accounts to ensure
that they explain the DFS Group’s position, performance, business
model and strategy.
Items excluded from underlying results were reviewed by the
Committee and it is satisfied that the presentation of these items
is clear and that there is adequate disclosure of these material
non-recurring items. The net underlying credit for the year before tax
was £0.2m (FY25: £4.1m).
Going concern and
viability reporting
Page 31
In addition to the going
concern statement, the DFS
Group is required to make an
assessment of its longer-term
viability. This requires the
application of a number of
judgements and estimates,
particularly given the continuing
macroeconomic uncertainty.
The Committee, along with the DFS Group’s external auditor,
has reviewed management’s assessment of the financial liquidity
prospects of the Group for the three years from 29 June 2026
to June 2029, being a reasonable period for the assessment of key
risks for a retail business given continuing political and economic
uncertainties. This review included challenging the base case
assumptions and reviewing the downside scenarios and stress tests.
The Committee reviewed and challenged management’s assessment
of expected compliance with the banking covenants and concluded
that the going concern assumption remains appropriate and that the
Board is able to make the viability statement on page 31 of the
Strategic report.
Annual Report and Accounts 2026 DFS Furniture plc64
Corporate Governance
Audit and Risk Committee report continued
Area of focus How the risk was assessed by the Committee
Impairment of goodwill Note 10 to the consolidated financial statements
As a result of business
acquisitions, the DFS Group has
recognised significant balances
for goodwill. Goodwill must be
tested annually for impairment.
The assessment of potential
impairment requires a number
of judgements and estimates
to be made in determining the
relevant future cash flows and
the discount rate to be applied.
The Committee reviewed and challenged the approach taken by
management to impairment testing, and assessed the reasonableness
of the underlying assumptions including discount rates, long-term
growth rates and cash flow forecasts used. Specific attention was
given to cash flow forecasts in light of uncertainties such as market
demand, inflation and interest rates and the level of sensitivities
applied by management in determining reasonably possible
changes to cash flows.
No impairment of goodwill was noted in the period. The Committee
considered the appropriateness of the conclusions reached, and
disclosures made, and also reviewed the external auditor’s report
and discussed its observations and findings in this area.
The Committee will continue to review the carrying value of
goodwill at least annually, or in the event of any significant
changes to the structure or circumstances of the DFS Group.
Parent company investments Note 2 to the Company financial statements
The ultimate parent company of
the DFS Group, DFS Furniture
plc, holds a significant value
of investments in subsidiary
companies in the DFS Group.
The carrying value of these
investments and related
intra-group borrowings is
supported by the estimated
value in use of the underlying
trading entities. Assessment
of the estimated value in
use requires a number of
judgements and estimates
to be applied.
The Committee reviewed management’s assessment of the
recoverability of the parent company investments, including
the underlying judgements and estimates, and considered the
consistency of these with the assessment of the impairment of
intangible assets as noted above. The Committee considered the
appropriateness of the conclusions reached, and also reviewed
the external auditor’s report and discussed its observations and
findings in this area.
The Committee will continue to review the carrying value of the
parent company investments at least annually, or in the event of
any significant changes to the structure or circumstances of the
DFS Group.
In addition to existing requirements, the Committee monitors and considers future corporate
reporting developments in order to develop the DFS Group’s approach to meet any new requirements.
During the year the DFS Group has continued to monitor developments and to work towards anticipated
requirements on UK Corporate Governance Code 2024 reform and this will be an ongoing area
of focus for FY27.
Risk management
The Audit and Risk Committee reviews the
principal risks and the actions taken to mitigate
them on an annual basis. We review the risk profiles
for each business area in relation to their strategic
risks, and the controls in place to mitigate them.
As required the Committee can invite the functiona
l
lead to attend the Committee for a discussion
on the risks identified and their mitigations.
As the DFS Group continues to develop and
improve its risk management strategy the
Committee has oversight of any risks that are
defined as significant to the Group and the
delivery of its strategy, as well as any risks that
are operating outside of the agreed risk appetite
and any risks where the controls in place have
been found to be insufficient to adequately
mitigate the risk.
Maintaining a strong risk and controls culture
and environment is key to the DFS Group’s
governance framework.
Throughout the year the Risk function has continued
to work alongside management to consider the
risks identified. This work will continue with regular
reviews in place to challenge and refine the
risk register.
The GLT conducts a quarterly risk review and
a Governance and Risk Committee comprising
senior management meets monthly to review
changes in the regulatory/legal landscape, with
key points forming the basis of the Audit and Risk
Committee discussion. The Risk team regularly
assesses and highlights new and emerging
risks, changes in rating of principal risks and
developments on risk management to the GLT.
Internal controls
As the DFS Group continues to evolve its control
environment an Internal Controls Steering Committee
has been created, chaired by the Chief Legal and
Assurance Officer, and focusing on Internal Controls
over Financial Reporting (‘ICOFR’), IT general
controls and the wider control environment.
To ensure that the DFS Group continues to
strengthen the internal controls environment,
the Internal Controls function has been created,
and following recent restructuring, sits alongside
the DFS Group Risk function. This will allow for
the creation of a robust and aligned Risk Managemen
t
and Internal Controls strategy to support the
business as it ensures compliance with the UK
Corporate Governance Code 2024.
Alongside our risk management processes, key
components of the DFS Group’s internal controls
environment include:
•
Clearly defined lines of accountability via a
Group delegation of authority and underlying
business area delegations.
•
The DFS Group’s Code of Conduct and
suite of policies setting the floor of minimum
commitments for our business conduct. These
commitments are linked to the DFS Group’s
principal risks and uncertainties and ensure
we act in line with relevant legal and regulatory
requirements, as well as industry standards
and stakeholder expectations.
•
Procedures, operating standards and colleague
training for each of our business and key functional
areas as appropriate, to support the management
of key risks and establishing ways of working
within the Board’s approved risk appetite.
These cover areas including financial reporting,
corporate compliance, information security,
credit compliance, modern slavery, anti-bribery
and ethical sourcing.
Annual Report and Accounts 2026 DFS Furniture plc 65
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Audit and Risk Committee report continued
Internal controls continued
•
Relevant business areas and functions own
these underlying components of our internal
controls environment, and are responsible for
ensuring control processes and activities are
maintained and operate effectively. The
Internal Controls team will continue to support
the business to demonstrate the effectiveness
and efficiency of the control environment.
•
Functional assurance activity also takes place
across the business to target key risk areas,
overseen by relevant business experts or
specialist functional teams, including our
Financial Controls, Cyber Security, Financial
Conduct Authority Compliance and Internal
Audit teams.
The framework of internal controls is designed
to manage and mitigate rather than eliminate the
risk of failure to achieve business objectives and
can only provide reasonable and not absolute
assurance against material misstatement or loss,
or fraud.
In respect of the DFS Group’s financial reporting,
the Finance department is responsible for
preparing the DFS Group financial statements
using a well established process and ensuring
that accounting policies are in accordance with
International Financial Reporting Standards. All
financial information published by the DFS Group
is subject to the approval of the Audit and Risk
Committee and the Board.
There have been no failings in the operation
of the DFS Group’s internal controls during the
financial year under review that have materially
affected the Group’s control over financial
reporting. The Committee has maintained
oversight of key processes and controls
development in the DFS Group.
Provision 29 readiness
Progress continues to be made to formalise
alignment to the existing corporate governance
requirements, and to ensure we meet upcoming
changes to the UK Corporate Governance Code
2024, including the introduction of Provision 29
of the Code. A project to enhance the structure,
monitoring and reporting of the Group ICOFR
and on wider internal controls has progressed
during the year and the Committee has reviewed
progress on the key project milestones designed
to formalise, enhance and monitor the control
environment underpinning future disclosures
on material controls. This project gives us a
structured framework to document, enhance
and remediate control gaps that although not
significant to the financial statements are an
opportunity to mature our control environment.
The DFS Group continues to adopt a thorough
and orderly approach to compliance. In line with
FRC expectations, and to assess compliance
with the revised Provision 29, management has
undertaken a review of the risk management and
internal control framework and has carried out a
structured ‘dry run’ of the effectiveness of the
material finance controls. The dry run review was
designed to strengthen governance and embed
detailed understanding of the financial controls
with the control owners. The outcomes of this
review were presented to the Committee in July
2026 and further progress updates on all material
controls will be presented during FY27.
The Board, with advice from the Audit and Risk
Committee, is satisfied that there is an effective
system of internal controls and risk management
in place which enables the Group to identify,
evaluate and manage key risks and which accords
with the guidance published by the FRC. These
processes have been in place since the start of
the financial year and up to the date of approval
of the accounts.
Oversight of Internal Audit
The Committee considers the resources,
strategy, and plans of the Internal Audit function
at each meeting. The role of Internal Audit, its
reporting line, and key responsibilities are governed
by an Internal Audit Charter, which is reviewed
and approved annually by the Committee, and
was last reviewed and approved in November 2025.
During the year the reporting lines for the Internal
Audit, Risk, and Internal Controls teams were
brought together under the Chief Legal and
Assurance Officer, reflecting updates to
management’s ownership and accountability
for risk, internal control, and assurance activities.
Concurrently, we welcomed a new Group Head
of Internal Audit to lead the function. Following
their appointment, a comprehensive assessment
of the function was undertaken. This review
focused on scope, methodology, resources,
and stakeholder feedback to ensure the function
continues to operate as an independent, objective
third-line assurance provider and trusted adviser
to the business.
The insights from the assessment culminated in
the development of a new long-term strategy
designed to mature the Internal Audit function.
This strategy establishes a clear roadmap for
enhancing our assurance framework, updating
methodologies to reflect the Institute of Internal
Auditors’ updated professional standards, and
delivering deeper value to the business.
The Internal Audit plan is risk based, structured
around the Group’s principal risks, and developed
with direct input from both management and the
Committee. To execute this maturing strategy
effectively, the DFS Group is refreshing its
co-source arrangements to supplement our
in-house capabilities, allowing us to flex capacity
and utilise specialist technical expertise in complex
areas such as Technology and Cyber Security.
A core pillar of the new strategy was the
reintroduction of targeted, front-line operational
audits. These reviews allow the team to evaluate
the execution of core processes on the ground
across our retail and delivery operations, ensuring
that internal controls are operating effectively
in day-to-day business activities.
All work performed by Internal Audit is summarised
and reported to the Audit and Risk Committee
at each meeting, along with regular updates
provided to the GLT and the Governance, Risk
and Compliance Committee. This includes the
status of all agreed management actions resulting
from audits, as well as common themes and
insights emerging from Internal Audit’s work
to ensure management accountability and
drive continuous process improvement.
Following its annual review of the function,
including evaluating its scope, resources, and the
execution of the new strategy, the Committee
concluded that the Internal Audit department
operated effectively during the year and maintained
the adequate resources necessary to discharge
its duties.
Annual Report and Accounts 2026 DFS Furniture plc66
Corporate Governance
In any event, within each of the DFS Group’s legal
entities, the cumulative total of non-audit fees
paid to the external auditors within each financial
year must not exceed 70% of the average audit
fee for the last three financial years. The above
policy has been adhered to throughout the
financial year, during which the only non-audit
services provided by the DFS Group’s external
auditor were an interim review, which is closely
related to the audit and is permissible assurance
work under the policy. The audit and interim
review fees for the year in respect of the DFS
Group and its subsidiaries were £1.0m.
Whistleblowing
The DFS Group remains committed to the
highest standards of openness, honesty,
integrity, and accountability. Our whistleblowing
policy empowers all employees, contractors, and
third parties to confidentially and anonymously
report suspected wrongdoing, such as fraud,
bribery, modern slavery, or health and safety
breaches, via an independent hotline and various
digital channels, without fear of retaliation. In
April 2026, the policy was updated to explicitly
incorporate new legislative protections against
sexual harassment.
During FY26 the DFS Group has further
strengthened the whistleblowing process
with a cross-functional Whistleblowing team
(comprising the Group Head of Internal Audit,
Group Head of Shared Services, and Group
Employee Relations Manager) who apply a
robust ‘Qualification Assessment’ to triage all
whistleblowing submissions and to ensure an
objective operational distinction between public
interest whistleblowing and personal grievances.
Detailed outcomes, tracking trends, and
framework highlights are reviewed monthly
by the Group Governance and Risk Committee,
with strategic oversight shared with the Audit
and Risk Committee.
During the year, there were 26 (FY25: 21) reports
received through the whistleblowing process.
All cases raised were investigated and fully
addressed in accordance with our policy
guidelines, with no material systemic issues
or financial impacts identified.
Fraud risk
The DFS Group maintains a zero-tolerance
approach to fraudulent activity and the Committee
notes that no frauds that would have a material
impact on the Group’s financial results were
identified during the year.
Following the development of our fraud risk
framework and the initial design of proportionate
procedures in response to the Economic Crime
and Corporate Transparency Act (ECCTA)
last year, our focus remains on maturing and
embedding this to ensure it meets evolving
regulatory expectations.
Building upon the work in FY26, Group Internal
Audit is partnering with the Risk and Legal
teams during the first half of FY27 to undertake
a comprehensive maturity assessment of our
current fraud risk framework. This will benchmark
our controls against statutory guidance, ensuring
we have a robust defence against the ‘Failure to
Prevent Fraud’ offence.
Bruce Marsh
Chair of the Audit and Risk Committee
24 September 2026
Audit and Risk Committee report continued
Oversight of external audit
Assessment of effectiveness and
quality of the external audit process
The Audit and Risk Committee oversees the
relationship with the external auditor and considers
the re-appointment of the DFS Group’s auditor,
before making a recommendation to the Board
to be put to shareholders.
As part of this responsibility to assess the
effectiveness of the external auditors, the
Committee approved the audit plan for the
financial reporting period of 52 weeks ended
28 June 2026 and reviewed the auditor’s
findings and management representation letters.
In addition to consideration of the audit process,
responses to questions from the Committee and
the audit findings reported to the Committee, a
structured feedback exercise was again undertaken
during the year. This exercise collated feedback
on a wide range of factors from Non-Executive
Directors, senior managers and relevant colleagues
from the Finance, Internal Audit and Risk, Legal
and Compliance teams. The results of this feedback
identified strengths in culture, governance,
skills and knowledge, and judgement. A relative
opportunity remains in fees. These results
supported the Committee in its conclusion that
KPMG LLP continues to be effective, objective
and independent in its role as external auditor.
Appointment of the external auditor
The DFS Group’s external auditor was re-appointed
in FY22 following a competitive tender process.
The re-appointment was unanimously recommended
by the Committee to the Board. Under current UK
corporate governance requirements the external
audit provision will be subject to another tender
no more than ten years later. To ensure an orderly
transition, the Committee plans to initiate the
next competitive tender process within the next
five years, ahead of the start of the FY32 audit.
The Committee has recommended to the Board
the reappointment of KPMG LLP as auditor for
the FY27 audit.
Independence and objectivity
The external auditor is required periodically to
assess whether, in its professional opinion, it is
independent and those views are shared with the
Audit and Risk Committee. The Committee has
authority to take independent advice as it deems
appropriate in order to resolve issues on auditor
independence. No such advice has been required
to date. There are no contractual obligations in
place that restrict the choice of statutory auditor.
Non-audit services and fees
The Committee regularly reviews the DFS
Group’s policy on non-audit services, which
governs the provision of non-audit services
provided by the auditor and, in summary,
categorises the types of non-audit services as:
•
prohibited – services that have the potential
to impair or appear to impair the independence
of their audit role;
•
permissible (subject to approval limits) –
services which primarily relate to work that
is outside the required scope of the statutory
audit, but is consistent with the role of the
external statutory auditor; and
•
services to be considered on a case-by-case
basis – all other services of an advisory or
other nature that do not compromise the
independence of the external auditor.
Annual Report and Accounts 2026 DFS Furniture plc 67
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Over the past year the
Committee has focused on
reviewing the talent across
the Group to ensure that
both the Board and the Group
Leadership Team have the
necessary skills, experience
and diversity of thinking to
support the strategy of the
Group going forward.”
Steve Johnson
Chair of the Nomination Committee
Committee members during FY26
Steve Johnson (Chair)
Alison Hutchinson
Gill Barr
Jo Boydell (to 14 November 2025)
Tony Buffin
Bruce Marsh
Appointments to the Board, as with other
positions within the Group, are made on merit
according to the balance of skills, experience,
diversity, and inclusion offered by prospective
candidates. The Committee adopts a formal
and transparent procedure for the appointment
of new Directors to the Board.
Appointments
In 2025 the Board commenced a search for a
permanent CFO. This exhaustive process resulted
in the Nomination Committee recommending
the appointment of Dominique Highfield to the
Board. Dominique joined as an Executive Director
and Chief Financial Officer on 5 May 2026.
Previously, she served as CFO at Bloom & Wild
and held senior finance and operational roles at
Purplebricks, Pentland, and Amazon and I look
forward to her bringing her experience, energy
and enthusiasm to DFS.
New Board members are always welcomed into
the business through a comprehensive induction
programme, co-ordinated by the Company
Secretary. There are a number of crucial areas
that all inductions cover. New Directors meet
with all the members of the GLT and other senior
managers from across the Group as well as key
advisers to the Group (such as the Group’s
brokers, financial advisers, and the external audit
partner). In addition, all new Directors complete
a comprehensive series of site visits covering
all aspects of the business including retail,
manufacturing and The Sofa Delivery Company.
Overview
Over the past year the Committee has focused
on reviewing the talent across the Group to
ensure that both the Board and the Group
Leadership Team have the necessary skills,
experience and diversity of thinking to support
the strategy of the Group going forward, recruiting
and appointing a new Chief Financial Officer, the
appointment of an additional Non-Executive
Director and the internal Board evaluation.
Composition
The Code recommends that the majority of the
Nomination Committee consists of Non-Executive
Directors, independent in character and judgement
and free from any relationship or circumstance
which may, could or would be likely to, or appear
to, affect their judgement. Each of the Non-Executive
Directors is a member of the Nomination Committee.
The Board considers that each of the Non-Executive
Directors is independent. The Chair was independent
upon appointment and, as such, the Company
complies with the Code.
The Committee’s terms of reference are
available on the Company’s corporate website
at www.dfscorporate.co.uk. Although only
members of the Committee are entitled to attend
Committee meetings, the Chief Executive Officer
and the Chief Financial Officer are invited to
attend meetings where appropriate. The Committee
will meet as often as it deems necessary but,
in accordance with its terms of reference,
at least twice a year.
Principal duties
The purpose of the Committee is:
1. to assist the Board by keeping the
composition of the Board under review;
2. to make recommendations to the Board within
agreed terms of reference on the appointment
of Executive and Non-Executive Directors
ensuring the Board is sufficiently diverse and
has the correct blend of skills, knowledge and
experience required to support the Group;
3. to oversee the succession plans for the Board
and GLT; and
4. to ensure that there are processes in place
to secure a diverse pipeline of potential
candidates for succession to key management
positions and to the Board.
Key activities during 2026
•
Assessing the composition of the Board
to ensure it remains well placed to
discharge its responsibilities
•
Conducting the appointment of
the new Chief Financial Officer
•
Reviewing the pipeline of talent within
the Group Leadership Team and
assessing their development needs
•
Conducting the internal Board review
process and outcomes
•
Updating the Board Equity, Diversity
and Inclusion strategy and policy
•
Post year end completing the appointment
of an additional Non-Executive Director
to the Board
Read more
Read Steve’s profile on page 52
Nomination Committee report
Annual Report and Accounts 2026 DFS Furniture plc68
Corporate Governance
Nomination Committee report continued
The Nomination Committee regularly updates
a matrix of the skills brought to the Board by all
Directors, both Executive and Non-Executive.
‘Everyone together’
DFS Group lives its values and is committed
to having a positive culture with a diverse and
inclusive workforce throughout the organisation.
We believe that every one of our colleagues
should feel respected, supported, and be free
to bring their whole self to work every day. By
ensuring inclusion is central to decision making,
we believe we can continue to attract, retain and
develop diverse talent, helping our teams and
business to thrive.
Our objective of driving the benefits of a diverse
Board, leadership, and senior management team
as well as our wider workforce is underpinned by
our Board Equity, Diversity and Inclusion Policy,
which can be viewed on our corporate website
at www.dfscorporate.co.uk.
The Committee takes an active interest in the
quality and development of talent and capabilities
of the GLT ensuring that appropriate opportunities
are in place to develop high-performing individuals
across the Group.
Board review
As required by the Code, the Board undertakes
an annual evaluation of its activities and those of
its Committees. This year the internal review was
led by our Company Secretary with support from
Gould Consulting, which provided the detailed
questionnaire to ensure consistency year on year.
Between April and June 2026, a three-stage
process was followed. More information on the
process and outcomes is detailed on page 61
of the Corporate governance report.
The annual Board effectiveness review was
conducted internally by the Company Secretary,
with support from the Chair and Senior Independent
Director (SID). The review concluded that the
Board is functioning effectively. Furthermore,
positive progress has been noted following the
integration of the Internal Audit function into
the Group Legal and Business Assurance team.
The performance of the Nomination Committee
was reviewed as part of the evaluation process,
and I am pleased to report that the evaluation
concluded that the Committee continues to
operate effectively.
Steve Johnson
Chair of the Nomination Committee
24 September 2026
Annual Report and Accounts 2026 DFS Furniture plc 69
Strategic Report Corporate Governance Financial Statements Shareholder Information
The Remuneration
Committee carefully
considered the experiences
of all key stakeholders, as well
as overall Group performance,
when making decisions on
executive remuneration.”
Gill Barr
Chair of the Remuneration Committee
Read more
Read Gill’s profile on page 52
Part A: Annual statement by the Remuneration Committee Chair
Key activities from 2026
•
Determining outturns for incentives in
respect of FY26, taking into consideration
the experience of key stakeholders over
the period
•
Agreeing the remuneration arrangements
relating to the appointment of the new CFO
•
Setting performance targets for the FY27
annual bonus and performance underpins
for the FY27 DFS Group Share Plan awards
•
Considering the appropriate level of
salary increase for the CEO for FY27
•
Overseeing pay and conditions across
the wider workforce
Contents of this report
70 Part A: Annual statement by the Remuneration
Committee Chair
73 Part B: Remuneration at a glance
74 Part C: Our remuneration philosophy and
workforce reward
76 Part D: Annual Report on Remuneration
Committee members during
FY26
Gill Barr (Chair)
Jo Boydell (to 14 November 2025)
Tony Buffin
Alison Hutchinson
Bruce Marsh
On behalf of the Board, I am pleased to present
the Remuneration Committee report for the
financial year ended 28 June 2026. The Remuneration
Report provides a comprehensive overview of
our remuneration framework, its implementation
and its alignment with the business strategy.
The Remuneration Committee carefully considered
the experiences of all key stakeholders, as well as
overall Group performance, when making
decisions on executive remuneration.
Pay outcomes in FY27
Annual bonus in FY26
The bonus for FY26 was based 50% on profit before
tax, 20% on cash flow, 7.5% on customer, 7.5% on
culture, 5% on ESG and 10% on individual
strategic objectives. We started the year with a
strong first half, with Group order intake up 2.3%
year on year for this period, before trading conditions
softened in the second half. Despite the challenging
market conditions facing the Group, we delivered
a resilient trading performance and achieved revenue
growth of 2.6%. Our ongoing efforts to maintain
cost discipline have contributed to 160 points of
gross margin progression to reach our gross margin
target of 58%. In combination, this resulted in
significant profit growth of 49% to achieve
underlying profit before tax and brand amortisation
of £44.9m (FY25: £30.2m). Our continued focus
on cash conversion resulted in strong free cash
flow generation of £40.3m allowing us to further
cut our bank debt (reducing leverage to 0.9x from
a peak of 2.5x in FY24) and recommence our dividend
payments in respect of FY26. This impressive
financial performance was complemented by
progress on our key strategic enablers and we
have maintained our strong shared culture which
has been enhanced by our new employee value
proposition titled ‘Room for More’. These achievements
resulted in a bonus payout of 97% of maximum
for the CEO and 96% of maximum for the CFO
and former interim CFO, reflecting their efforts in
continuing to steward the business through the
challenging geopolitical environment.
Directors’ Remuneration report
Remuneration in context
The Group delivered strong underlying profit before
tax and brand amortisation growth (up 49% YoY)
to £44.9m in a relatively weak and volatile
macroeconomic landscape (in line with the upgraded
profit guidance issued in January 2026) despite
market demand softening considerably in H2.
Through continued focus on disciplined cost
control, we realised a 160 basis point expansion
in gross margin to 58.1% (FY25: 56.5%), reaching
the Group’s medium-term target of 58%. The
balance sheet was also further strengthened
with net bank debt reducing by £38.0m to £69.0m.
The Group was pleased to be able to recommend
a final ordinary dividend of 2.0p per share, bringing
the total full year dividend to 3.0p per share.
These achievements reflect the strength of
the Group as the clear market leader, our strong
operational performance recognised by customers
through net promoter scores increasing yet again
to record highs and the commitment of our
colleagues to executing against clearly defined
strategic priorities.
Within the year the Group has evolved its
strategy, which is structured around three core
growth pillars: playing to win in the sofa market;
building and scaling the Home business; and
leveraging and building its platforms. We were
pleased to launch a new DFS Group Employee
Value Proposition titled ‘Room for More’, which
was accompanied by a refreshed purpose, mission,
and values. Overall colleague engagement has
risen by 19% year on year. Our leadership team
was also strengthened through the appointment
of Dominique Highfield to the Board as Chief
Financial Officer following an extensive recruitment
process and she is already adding immense value
to our strategic execution.
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Corporate Governance
The Committee was mindful of the uncertain
trading environment facing the Group when originally
setting targets for the FY26 bonus. At the end of
the performance period, the Committee carefully
considered whether the formulaic outcome was
reflective of the broader stakeholder experience
and was satisfied that the bonus targets initially
set were sufficiently stretching. The formulaic
outcome of
97% of maximum for the CEO and 96%
of maximum for the CFO and former interim CFO
was deemed reflective
of the successful
performance of the business in the context of
softer market conditions and therefore, no
discretion was exercised in respect of bonus
outcomes. In line with the Policy, 25% of the
bonus payout will be deferred into shares for
two years.
LTIP vesting in respect of FY26
The 2023 LTIP award was based 45% on adjusted
EPS; 45% on relative TSR growth (13.5% against
the FTSE 250 Index (excluding investment trusts)
and 31.5% on the FTSE 350 General Retailers Index);
and 10% on ESG. Despite strong performance of
the Group over FY26, the performance thresholds
were not met and the award will therefore lapse
in full.
The Committee carefully considered whether the
LTIP outcome was appropriate considering the
overarching business performance and efforts of
management during the period. In particular, the
Committee observed that the Group’s TSR
performance at the end of the LTIP performance
period had been negatively impacted by the
outbreak of the Iran war, despite strong
performance over the majority of FY26. This was
balanced against the importance of ensuring
alignment with the broader shareholder experience,
and therefore no discretion was exercised in
respect of LTIP outcomes.
In the year ended 28 June 2026, no malus and/or
clawback provisions were applied to prior awards.
Appointment of our new
Chief Financial Officer
During the year, the Board was delighted to
appoint Dominique Highfield as Chief Financial
Officer on 5 May 2026. Whilst Dominique has
extensive experience in the retail sector, this is
her first main listed CFO role. The Committee
therefore considered it appropriate to establish
her initial salary at a level to reflect her experience.
Her salary was therefore set at £360,000, between
the lower quartile and median of a group of
companies of a similar size and complexity to
DFS. Effective 1 July 2026, Dominique received
an increase of 3% to her salary, in line with the
majority of the wider workforce.
The Committee intends to keep Dominique’s salary
under review, and, subject to her development and
performance in the role, may make salary adjustments
in excess of the wider workforce increase in future
years, with the intention of moving her remuneration
towards a market-aligned level over time. In line
with the Remuneration Policy, her maximum
bonus opportunity will be set at 110% of salary
and her DSP award opportunity will be set at 75%
of salary. She was eligible for a pro-rated bonus in
respect of FY26 and a pro-rated 2025 DSP award.
The award will vest following the end of FY28
(in line with other participants) and will be granted
at the same time as the 2026 DSP awards.
Marie Wall stepped down from her role as interim
CFO and the Board on 2 April 2026. Marie remained
eligible for a FY26 bonus, pro-rated for the period
she served as interim CFO during the year (subject
to performance and paid at the normal time).
Her 2024 DSP award has lapsed in full.
Implementation for FY27
Annual bonus for FY27
The bonus opportunity for the CEO will remain at
120% of salary and at 110% of salary for the CFO.
To ensure the leadership team remains focused
on driving the collective success of DFS and delivering
on key operational priorities, minor tweaks have
been made to the choice of non-financial metrics
in the bonus. The FY27 bonus will continue to
have a 70% weighting on financial measures
(split between 50% on profit before tax and 20%
on cash flow) and a 30% weighting on a basket of
strategic non-financial measures (10% on
customer; 10% on culture and 10% on collective
strategic objectives linked to market share and
AI transformation).
DFS Group Share Plan awards for FY27
In line with the Policy, DSP awards will be granted
to the CEO and CFO of 87.5% and 75% of salary
respectively. The award will vest after three years,
subject to robust underpins assessing the Group’s
progress
against key strategic and sustainability
priorities;
the Group’s
financial health and
business sustainability; and whether there has
been a materially serious reputational event (in
line with the FY26 awards).
A two-year post
vesting holding period will also apply.
CEO salary for FY27
As part of the annual salary review process, the
Committee carefully reviewed the performance
of Tim Stacey as CEO and the wider DFS Group.
Since his appointment as CEO just under eight
years ago, Tim Stacey has demonstrated exceptional
leadership in stewarding the business through
a number of unprecedented and challenging
events in the broader market. As such, Tim is
highly sought after by
the Group’s
competitors
and other retail companies. The Committee is
mindful that the current challenges caused by
the outbreak of war in Iran have once again
increased the complexity of Tim’s role as he will
have to adapt to a rapidly changing consumer
environment and
softer market, which will require
exceptional resilience.
It was deemed essential
that Tim remains motivated
by a salary that is an
appropriate reflection of his substantial
experience of, and contribution to, the business.
Since joining DFS, Tim has generally received
modest salary increases in line with the wider
workforce, with the exception of a more significant
reset to Tim’s salary for FY24 of 10.3% (5.3%pts
above the wider workforce average of 5%) to
better align his salary with the external market.
However, the market has continued to move at
pace and Tim’s positioning has now fallen behind
a market competitive level which is not commensurate
with his significant contribution to the business.
Considering Tim’s exceptional performance, the
Committee intends to make an adjustment to his
salary to ensure that it is reflective of the scope
and scale of the CEO role and his experience; it
is proposing to increase Tim’s salary to £600,000
(an increase of c.15%).
Directors’ Remuneration report continued
Part A: Annual statement by the Remuneration Committee Chair continued
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The Committee is mindful of the need to take
a measured approach to executive pay, and
reviewed the proposed salary against market
practice at other companies of a similar size
and complexity to DFS and at other listed retail
companies who we compete with for talent. The
proposed salary would be positioned between
the median (£575k) and upper quartile (£615k)
compared to a peer group of other companies
with a similar market capitalisation peer group
to DFS (reflecting Tim’s extensive experience
and criticality of role); and between lower quartile
(£575k) and median (£645k) compared to other
retail peers. This is considered a suitable positioning
given Tim’s proven track record of delivering
value for our shareholders. As part of making this
change, we sought to engage with a number of
our largest shareholders regarding the proposed
salary increase and the response was broadly
supportive. We are grateful for the time taken
to share feedback and remain committed to
engaging with shareholders on our approach
to remuneration.
Our colleagues
As ever, our reward principle of investing in our
colleagues remains unchanged. We are committed
to continuing to invest in those who work tirelessly
across our showrooms, factories, distribution
centres, and Group functions to look after our
customers. This year, we have improved several
colleague benefits (outlined in more detail on
page 74), including moving to a single pension
provider, increasing our Group Life Assurance,
and refreshing our benefits portal. This enhances
our ‘Your Deal’ proposition as part of our continued
commitment to support our wider workforce
across all grades and ensure that the DFS Group
remains one of the more rewarding places to work
in UK retail. The base salary increase budget for
FY27 was approved at 3%, with a higher rate of
4% directed towards the broader workforce
population.
Our colleagues are key to the success of
the DFS Group. I am grateful for all the passion,
commitment, and hard work shown by our
colleagues across the Group, enabling us to
deliver brilliant products and outstanding customer
service. The Committee continues to be mindful
of the wider colleague experience, which is a key
consideration in determining the approach to
take for our Executive Directors. This wider
colleague experience will continue to be a core
focus, including as part of our upcoming review
of the Directors’ Remuneration Policy.
A summary of our remuneration philosophy and
principles that apply across the Group is set out
on page 74 and 75
Looking ahead
In line with the normal three year cycle, our
Directors’ Remuneration Policy will be subject to
a shareholder vote at the 2027 AGM. In advance
of this, the Committee will undertake a thorough
review of the Remuneration Policy to ensure that
it remains fit for purpose in light of developing
market practice and the DFS Group’s strategy.
Resolution proposed
at the 2026 AGM
The Annual Report on Remuneration will be
presented for an advisory vote at the 2026 AGM
and I hope that our shareholders will continue
to support the decisions we have made.
Gill Barr
Chair of the Remuneration Committee
24 September 2026
Directors’ Remuneration report continued
Part A: Annual statement by the Remuneration Committee Chair continued
Annual Report and Accounts 2026 DFS Furniture plc72
Corporate Governance
Directors’ Remuneration report continued
Part B: Remuneration at a glance
Implementation of Remuneration Policy in FY26 Implementation of Remuneration Policy in FY27
Base salary
Tim Stacey: £521,000
Marie Wall*: £319,000
Dominique Highfield*: £57,000
* Pro-rated for portion of year served.
Annual bonus
Total bonus payout (% of maximum)
Tim Stacey: 97.4%, Marie Wall*: 96.4%, Dominique Highfield*: 96.4%
Performance measure Weighting
Outcomes (% of max)
CEO
Outcomes (% of max)
CFO
Group profit before tax 50% 100% 100%
Group free cash flow 20% 100% 100%
Customer 7.5% 100% 100%
Culture 7.5% 79% 79%
ESG 5% 100% 100%
Individual objectives 10% 90% 80%
Total 97.4% 96.4%
* Pro-rated for portion of year served.
2023 Long Term Incentive Plan
Total LTIP payout (% of maximum)
Tim Stacey: 0%
Performance measure Weighting
Outcomes
(% of max)
EPS 45% 0%
TSR (FTSE 250) 13.5% 0%
TSR (FTSE 350
General Retailers) 31.5% 0%
ESG 10% 0%
Total 0%
DFS Group Share Plan
FY27 DSP opportunity (% of salary)
Tim Stacey: 87.5%,
Dominique Highfield: 75%
Underpins for 2026 DSP
1. Performance against the Group’s key strategic
priorities being at an appropriate level,
including those related to sustainability
objectives over the vesting period.
2. Whether there is a material weakness in the
underlying financial health or sustainability
of the business. Factors such as, but not
limited to, revenue, underlying profit, free
cash flow and ROCE would be considered.
3. Whether there has been a materially serious
reputational event which could have been
reasonably foreseen.
Details on the Committee’s assessment of the
underpins will be disclosed in the relevant DRR
at the time of vesting.
To support the Committee’s assessment of
the underpins, an internal dashboard has been
developed to provide a clear framework covering
key financial and non-financial measures related
to the underpins for the 2026 DSP award.
Key structural features
•
Shares vesting under the DSP will be
subject to a two year holding period
•
Committee retains discretion to adjust DSP
outcomes to reflect underlying performance
of the business as well as the experience of
shareholders and other stakeholders
•
Malus and clawback provisions apply
Pension and benefits
•
Pension aligned to wider workforce rate at 4% of salary
•
Taxable benefits remain broadly unchanged from prior
year and include a company car and private medical
insurance (including cover for spouses and dependants
Base salary
Tim Stacey: £600,000 (increase of 15% as
detailed in the Chair’s letter)
Dominique Highfield: £370,800 (increase of 3%,
in line with the majority of the wider workforce)
Pension and benefits
•
Pension aligned to wider workforce
rate at 4% of salary
•
No change to taxable benefits
Annual bonus
Performance measure* Weighting
Group profit before tax 50%
Group free cash flow 20%
Customer 10%
Culture 10%
Collective strategic objectives 10%
* Targets deemed commercially sensitive and will be
disclosed in the FY27 Remuneration Report.
Bonus opportunity (% of salary)
Tim Stacey: 120%,
Dominique Highfield: 110%
Key structural features
•
25% of any bonus earned will normally be
deferred into shares for two years
•
Committee retains discretion to adjust
bonus outcomes to reflect underlying
performance of business
•
Malus and clawback provisions apply
Single figures
Element of pay
£000
Tim
Stacey
Dominique
Highfield
Marie
Wall
Salary 521 57 319
Pension, benefits
and other 22 5 64
Annual bonus 609 58 333
LTIP — — —
Total 1,152 120 716
* Pro-rated for portion of year served.
Tim Stacey
Dominique
Highfield*
Marie Wall*
£1,152k
£716k
£120k
Annual Report and Accounts 2026 DFS Furniture plc 73
Strategic Report Corporate Governance Financial Statements Shareholder Information
Directors’ Remuneration report continued
Part C: Our remuneration philosophy and workforce reward
Our remuneration philosophy and principles
Our updated DFS Group values underpin our pay and recognition policies across DFS Group and the remuneration principles which are supported in our Directors’ Remuneration Policy.
We believe that our ability to deliver fantastic products and service to our customers comes from the passion and commitment shown by all our people across all parts of the Group.
DFS values
Supporting a high-performance sales and service culture
•
To pay a market competitive rate
reflecting our employees’ role
and skills.
•
To offer a reward system that
is fair for all.
•
To enable all employees to share
in success.
•
To create an inclusive and diverse
working environment.
•
To promote the right behaviours
through fairness, equity of treatment
and in doing the right things in the
right way.
•
To implement incentive plans that are
designed to reward and promote
delivery of the Group’s business plan
and key strategic goals.
•
To encourage and support a
high level of performance
and consistent, high-quality
customer experience.
•
To provide access to development
opportunities for all colleagues
enabling growth within the Group.
•
In determining salary increases to apply across the wider
workforce, the Company takes into consideration Company
performance and other market metrics as necessary.
•
Pay arrangements are regularly reviewed for fairness and
market competitiveness.
•
The Company actively encourages wide employee share
ownership. The DFS All Employee Share Scheme has provided
the opportunity for colleagues (subject to eligibility criteria)
to become shareholders in the Company, aligning them to the
long-term success of the Group. This year we introduced a
Stocks and Shares Flexible ISA with Equiniti to further support
colleagues with their shareholding.
•
In addition, for management, the DFS Group Share Plan structure
cascades down to around 162 leaders, ensuring management are
focused on delivering strategic objectives and are aligned to the
overall shareholder experience.
•
We moved to a single pension provider, Standard Life, which
delivers excellent colleague support, modern systems and strong
investment choices as well as providing colleagues with a lower
Annual Management Charge.
•
Aligned our Group Life Assurance to four times salary for
all colleagues, increasing the benefit for the majority of
our colleagues.
•
Colleagues continue to share in our combined success with
performance-related bonus schemes. For those in the Corporate
Bonus Scheme we now provide colleagues with the opportunity
to sacrifice some or all of their bonus into their pension.
•
The DFS All Employee Share Scheme has provided the
opportunity for colleagues to become shareholders in
the Company.
•
Introduction of Total Reward Statements to provide
transparency to all colleagues on their whole reward package.
•
Continued support for our colleague networks to support in
building and maintaining a more inclusive workplace where
everyone feels a sense of belonging.
•
Refresh of our ‘Your Deal’ benefits portal, where colleagues
can access discounts and savings with a number of high street
retailers, purchase additional holidays and buy new technology
interest free, via a salary sacrifice scheme.
•
Launched our new Group purpose, mission, values and leadership
behaviours by immersing 200 of our leaders into a launch event,
followed by cascade activity across the DFS Group in every
brand and function.
•
Continuing to invest in our leadership talent and succession –
we’ve launched the third cohort of our Leadership Development
Programme to support the development of key leadership team
members with internal and external input.
•
Delivered the ‘Leading for Inclusion’ workshop to 410 of our
people leaders across the DFS Group.
•
Launched our Group Leadership Academy for new leaders joining
our Group to ensure a seamless onboarding experience and set
our leaders up for success from day one.
Fair, market competitive pay and benefits
Aligned to our business strategy and culture
Remuneration principles ‘Your Deal’ proposition
We work as one team, and we’re always up to something
great together. We know our collective strengths are
what make us shine. We build supportive and trusting
relationships where we can be our authentic selves
and challenge each other in a healthy way. We create
a community where everyone feels welcome and safe.
We do the right thing, with integrity and commitment.
Our goal is to attract, retain and develop the best
people, who do what they love, and in return are
rewarded fairly for doing so.
together
We’re committed to making each day better than the
last. We strive for excellence in everything we do. We
want each other to grow and succeed. We’re curious,
and we’re always open to new ideas and innovation.
We’re always learning and looking ahead.
never stops
We listen and adapt to our customers’ changing needs. In
every decision we make, our customers come first. We’re
relentless in delivering amazing quality, value, and service.
We show empathy and we truly understand our
customers. We build trust by giving them consistent,
reliable experiences every time.
at our heart
Annual Report and Accounts 2026 DFS Furniture plc74
Corporate Governance
Directors’ Remuneration report continued
Part C: Our remuneration philosophy and workforce reward continued
Remuneration framework
Our reward framework aims to foster alignment across the Group and is informed by our remuneration philosophy and values outlined on the previous page. The key elements of our reward framework and how
they operate across the Group are outlined below (excluding the Executive Directors, whose remuneration framework is described on the following page).
Element of reward Base salary Pension and benefits Annual bonus and recognition awards DFS Group Share Plan and SAYE
Group Leadership Team (6 colleagues)
Set at market
competitive levels.
Comprehensive
benefits offering aligned
to market practice.
Average employer pension
contribution is 4% of salary.
Based on a combination of financial and
non-financial objectives, aiming to reward
and incentivise strategic delivery and strong
individual performance.
Participation in the DFS Group Share Plan offered
to our top leadership and key talent, aligning their
interests with those of our shareholders in the
long term.
Heads of divisions and functions
(84 colleagues)
Managers (120 colleagues) Colleagues in operational areas across the Group
(in retail showrooms, manufacturing sites and in
The Sofa Delivery Company) have access to
variable pay and bonuses based on a combination
of individual and team performance.
All employees in the UK may participate in the
Group’s Sharesave plan which offers employees
the chance to become ‘owners’ of the Group.
All employees (4,239 colleagues)
Further information on our employee initiatives, including our equity, diversity and inclusion initiatives, can be found in our Responsible business report on pages 34 to 43.
Gender pay gap reporting
In line with UK legislation, we published our
Gender Pay Gap Report for 2025, demonstrating
further progress overall across the Group,
and the report is available online at
www.dfscorporate.co.uk.
We are confident that we pay our colleagues
equally for equivalent roles, regardless of gender.
However, the majority male representation in our
leadership population results in a remaining
gender pay gap that we continue to address.
Our analysis for 2025 shows Group level
reductions in both the mean and median gender
pay gap figures. The mean gender pay gap was
0.7%, a fall of a further 3.1% against last year’s
figure; the median figure was -2.8%, falling 6.8%
in comparison to the 2024 analysis. This reflects
the work done to increase female representation
in leadership roles.
As a Group, our workforce is 38% female,
largely due to our manufacturing and logistics
populations which systemically attracts a male
audience due to the nature of the roles.
We are really proud to have increased our gender
balance in leadership across the Group to 41%
female, and we continue to work towards a 50/50
ambition in the longer term, with a conscious
effort made to promote and develop women
internally, and to shortlist more women for
consideration when recruiting.
Our ongoing Diversity and Inclusion agenda
places focus on building a workplace where
women can thrive; we strongly believe that
“if you can see it, you can be it” – which is why
we have encouraged the visibility of our senior
female leaders, sharing their personal journeys
to inspire the future pipeline of female leaders.
Mean gender gap
0.7%
Female representation in workforce
38%
Annual Report and Accounts 2026 DFS Furniture plc 75
Strategic Report Corporate Governance Financial Statements Shareholder Information
Directors’ Remuneration report continued
Part D: Annual Report on Remuneration for the
financial year ended 28 June 2026
Remuneration framework
The Company’s Directors’ Remuneration Policy was renewed at the 2024 AGM – the key change made
to the 2024 Policy was the replacement of the performance based LTIP with the DFS Group Share Plan
(‘DSP’) (restricted shares). The 2024 Policy can be found within the 2024 Annual Report on our website:
www.dfscorporate.co.uk and the key terms have been summarised below.
The Committee has reflected on the ongoing operation of the Policy and believes it continues to serve
the Group well by ensuring the remuneration framework for Executive Directors is market competitive
and capable of incentivising the creation of shareholder value and delivery of our strategic priorities. In
line with the triennial cycle, the Committee intends to conduct a thorough review of the Remuneration
Policy over the coming year, giving regard to developing market practices.
Element of reward Overview
Base salary
•
Base salaries are set at a competitive level to attract and retain key employees
and reflect their experience and position in the Group.
•
Salary increases are generally consistent with the range awarded across the Group
and are normally reviewed annually.
Benefits
•
The Executive Directors receive a basket of market-standard benefits, which
currently includes car, private medical insurance (including cover for spouses
and dependants), relevant professional subscriptions, and reimbursement of
home telephone line and telephone expenses.
Pension
•
Pension contributions for Executive Directors are aligned to the pension provision
available for the wider workforce, which is currently 4% of base salary.
Annual bonus
•
The Executive Directors’ bonus is based on stretching financial and strategic
performance targets.
•
The CEO’s maximum opportunity is currently set at 120% of salary and the CFO’s
is set at 110% of salary.
•
25% of any bonus earned will be deferred into shares for two years.
•
The bonus is subject to malus and clawback provisions.
DFS Group
Share Plan
(DSP)
•
The Executive Directors participate in the DFS Group Share Plan, with the CEO’s
maximum award set at 87.5% of salary and the CFO’s set at 75% of salary.
•
DSP awards will be subject to performance underpins which will be assessed by
the Committee
at the end of the three year vesting period. Vested awards will be
subject to a two year holding period.
•
Malus and clawback provisions apply.
Minimum
shareholding
guidelines
•
Executive Directors are expected to build or maintain (as relevant) a minimum
shareholding of 200% of base salary in the Company.
•
Executive Directors are normally expected to maintain a shareholding equivalent to
the in-employment shareholding requirement immediately prior to departure (or the
actual shareholding on departure, if lower) for two years following ceasing to be an
Executive Director.
Sharesave
plan
•
The Executive Directors are entitled to participate in any all-employee incentives
on the same terms as all employees.
Single total figure of remuneration for Executive Directors – audited
The remuneration of Executive Directors showing the breakdown between components, with
comparative figures for the prior financial year, is shown below. Figures provided have been calculated
in accordance with the Regulations.
Name Year
Base
salary
£000
Taxable
benefits
£000
Bonus
£000
LTIP 3
£000
Pension
£000
Total
fixed
£000
Total
variable
£000
Total
£000
Tim Stacey
2026 5215 4 609 — 18 543 609 1,152
2025 510 514 586 — 18 579 586 1,165
Dominique Highfield 2026
1
57 3 58 — 2 62 58 120
Marie Wall
2026
2
319 51⁶ 333 — 13 383 333 716
2025 184 31 189 — 7 222 189 411
1. Remuneration for Dominique Highfield relates to the period from the date of her appointment to the Board on 5 May 2026
until 28 June 2026. Dominique’s remuneration arrangements have been set out in the Chair’s letter on page 71.
2. Remuneration for Marie Wall relates to the period 29 June 2025 until she stepped down from the Board on 2 April 2026.
3. The performance conditions attached to the 2023 LTIP were not met and therefore the award lapsed in full.
No portion of the LTIP value was therefore attributable to share price appreciation.
4. Includes £34k of back pay for car allowance that was underpaid in previous periods.
5. During the year Tim Stacey sacrificed £10k of his base salary of £521k to purchase additional annual leave.
6. Includes £38k of annual travel allowance agreed in conjunction with appointment as interim CFO.
Taxable benefits
Taxable benefits comprise car, private medical insurance (including cover for spouses and dependants),
relevant professional subscriptions, reimbursement of home telephone line and telephone expenses,
and other minor benefits – the value of which has been included in the Taxable Benefits column.
Any benefits considered significant are detailed in the footnotes to the table above.
Pension
Pension contributions for Executive Directors are aligned to the pension provision for the wider workforce,
which is currently 4% of base salary. Where pension contribution is taken as a salary supplement the
amount is reduced by the associated employer’s National Insurance contribution such that there is
no cost to the Company from this alternative.
Annual bonus outturn for FY26 – audited
Consistent with prior years, the FY26 bonus is based on a rounded assessment of performance with
70% based on financial measures (50% profit before tax and 20% free cash flow) and 30% on strategic
non-financial measures (7.5% customer, 7.5% culture, 5% ESG and 10% individual strategic objectives).
The Committee was mindful of the continuing economic uncertainty when originally setting targets for
the FY26 bonus. At the end of the performance period, the Committee carefully considered whether
the formulaic outcome was reflective of the broader stakeholder experience. The Committee noted the
strong operational performance of the business in the context of softer market conditions and determined
the formulaic outcome of 97% of maximum for the CEO and 96% of maximum for the CFO and former
interim CFO was appropriate. Therefore, no discretion was exercised in respect of bonus outcomes. In
line with the Remuneration Policy, 25% of the bonus payout will be deferred into shares for two years.
Annual Report and Accounts 2026 DFS Furniture plc76
Corporate Governance
Directors’ Remuneration report continued
Part D: Annual Report on Remuneration for the Financial Year ended 28 June 2026 continued
Performance against objectives
Performance measure Weighting
Threshold
(0%) Target
Maximum
(100%) Actual
Outcome
(% of max)
Group underlying profit before
tax and brand amortisation
50% £32.3m £38.0m £43.7m £44.9m 100%
Group free cash flow 20% £27.3m £32.1m £36.9m £40.3m 100%
Customer – average established
Net Promoter Score (dfs)
3.75% 53 54.5 56 57.2 100%
Customer – average established
Net Promoter Score (Sofology)
3.75% 56 59 62 63 100%
Culture – Leaders make the
right decisions
2.5% +12 +14 +16 +23 100%
Culture – How clear are you
on the role you play in achieving
our vision?
2.5% +35 +38 +43 +42 96%
Culture – I feel included at
the DFS Group
2.5% 76% 80% 82% 78% 40%
ESG 5% See below 100%
Individual objectives 10% Individual target – see below
Bonus outcome (% of maximum)
Tim Stacey 97.4%
Dominique Highfield 96.4%
Marie Wall 96.4%
Customer metrics are measured based on net promoter scores of established customers.
Culture metrics are measured by reference to responses to the annual colleague Your Say survey.
Assessment of ESG objective
The Remuneration Committee set clearly defined goals for FY26 around the delivery of the foundational
roadmap and trials needed to progress DFS’ sustainability strategy. Progress on these has been
outlined in detail below.
Environmental
Objective Key measures Performance
Outcome
(% of max)
2030
environmental
roadmap and
supply chain
decarbonisation
Threshold: Draft version of 2030
environmental roadmap established
and potential decarbonisation pathways
with Sofa Delivery Company trials
completed
Decarbonisation
roadmap delivered a
stretching, high quality
strategy that exceeds
standard delivery
requirements through
comprehensive
financial modelling,
demonstrating an
evidence led strategy,
and is underpinned by
operational rigour.
100%
Meets expectations: 2030 roadmap
finalised and includes key findings from
completed Sofa Delivery Company trials.
Exceeds expectations: As above, with
the 2030 roadmap being of high quality.
Solutions presented are costed and well
defined, underpinned by quality and
thorough analysis.
Assessment of individual objectives
In line with FY25, DFS set each Executive Director several individual objectives that reflected the areas
individual executives had the power to directly influence and drive forwards. These objectives were
clearly defined, with identifiable performance measures set at the start of the year. These objectives
were linked to specific projects aiming to facilitate the Group’s transformation and enhance its market
positioning, financial health, and operational effectiveness. Given the proximity of Dominique Highfield’s
joining date to the FY26 year end, her personal objectives have been based on a holistic assessment
of her induction into the business.
The factors the Committee considered in their assessment of the performance of the executives
in meeting these objectives have been outlined below.
Tim Stacey (CEO)
Personal strategic
objective
Key measures
Performance
Outcome
(% of max)
Deliver strategic
priorities for
FY26 and develop
future strategy
for growth
•
Deliver key
strategic priorities
as set out in the
CEO update in
July 2025
•
Articulate future
growth plan
including new
Group purpose,
mission, values
and behaviours
•
Growth strategy
agreed and
embedded within
a revised four year
plan
•
Consistent monthly CEO reports
outlined progress on strategic
priorities, which
culminated in
successfully achieving Board sign off
on a clear four year
growth plan.
•
Launched new purpose, mission,
values, and behaviours in May 2026
as
part of the “Room for more” initiative,
to positive reception from employees.
•
Displayed flexibility in adapting the
four year plan due to the ongoing
macroeconomic volatility, receiving
positive feedback following
Board evaluation.
100%
Lead the delivery
of our business
change agenda
•
Achieve key
business change
milestones
•
Operating costs
below budget
•
Service levels
improved and
customer service
costs below budget
•
Clear strategy
on sustainability
embedded
within business
•
Made satisfactory progress on growth
strategy, in the context of the
changing macroeconomic
environment.
•
Ensured the business operated below
budget despite unexpected cost
increases following the outbreak of
the war in Iran.
•
Saw customer NPS scores reach
record levels for both brands, and all
lead metrics were positive.
•
Sustainability strategy successfully
signed off in June 2026.
80%
Annual Report and Accounts 2026 DFS Furniture plc 77
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Directors’ Remuneration report continued
Part D: Annual Report on Remuneration for the Financial Year ended 28 June 2026 continued
Marie Wall (former interim CFO)
Personal strategic
objective
Key Measures
Performance
Outcome
(% of max)
Financial
transformation
(phase 1)
•
Build core finance
run capabilities
•
Improve financial
controls assurance
•
Start delivery
of phase 1
‘non-negotiable’
initiatives
•
Improved effectiveness of the
Finance function and created a
stronger baseline for change.
•
Unlocked a lower-cost, lower-risk
“build then buy” alternative model
for the Finance function.
•
Restructured finance leadership
team in November 2025 to clarify
role accountabilities.
•
Completed a comprehensive financial
control risk assessment in Q1, resulting
in materially improved audit outcomes.
•
Enhanced forecast accuracy and
longer-range horizon scanning to
support capital allocation decisions
and major audit judgements.
80%
Transformation
and business
change (phase 2)
•
Develop and
agree finance
transformation
roadmap
•
Build internal
finance change
capabilities
•
Prepare for scale
transformation
•
Agreed Board approval in March for
a two-phased finance transformation
roadmap.
•
Built out finance capabilities to
support a full-scale transformation
through a combination of in-house
resources and external partners.
•
Convened a Steering Committee to
support the go-forward Finance team
and maintained transformation
momentum through a period of
significant macroeconomic volatility.
80%
LTIP awards vesting in relation to performance in FY26 – audited
The 2023 award was granted on 16 October 2023 and was assessed against the performance targets at
the end of FY26. The 2023 LTIP award was based 45% on EPS; 45% on TSR (compared to both the FTSE
250 (excluding Investment Trusts) and FTSE 350 General Retailers); and 10% on ESG. The performance
targets for these measures were not met and therefore this award will lapse.
LTIP award
Performance
conditions
Weighting
(% of award) Detail
Threshold
performance
Max
performance
Actual
performance
Vesting
%
2023 LTIP EPS 45% Adjusted EPS 17.9p 26.7p 13.8p 0%
TSR 13.5% TSR
(FTSE 250 Index)
Index Index +
10% p.a.
Below index 0%
31.5% TSR (FTSE 350
General Retailers)
Index Index +
10% p.a.
Below index 0%
ESG 5% Carbon intensity
reduction
7.5 7 or less 9.5 0%
5% Reduction in
plastic packaging
<30% 50% 14.1% 0%
Total vesting 0%
For threshold performance 20% of awards vest. For maximum performance 100% of awards vest.
Vesting is on a straight-line basis between these points.
The final level of vesting of these awards was 0%. No discretion was exercised in respect of award
vesting levels.
Scheme interests awarded in FY26 (2025 awards) – audited
Details of DSP and deferred bonus awards granted during FY26 are set out in the table below.
Director Scheme Type of award
Number of
shares awarded
Value of award at
date of grant (£)
Value of award as
% of salary
CEO – Tim Stacey
DSP
1
Nil cost option 293,482 £455,875 87.5%
Deferred bonus
2
Nil cost option 93,942 £146,550 28%
1. The number of shares granted was based on a share price of £1.55. This was the average of the closing share price
on the three days prior to the date of grant (23 October 2025). The award will vest after three years, subject to the
Committee’s assessment of the underpin conditions laid out below. Shares vesting under the DSP will be subject
to a two year holding period.
2. Grant of deferred shares in relation to the FY25 bonus. The number of shares granted was based on a share price
of £1.56 (which was the closing share price on the day immediately prior to the grant on 21 October 2025).
Annual Report and Accounts 2026 DFS Furniture plc78
Corporate Governance
Directors’ Remuneration report continued
Part D: Annual Report on Remuneration for the Financial Year ended 28 June 2026 continued
Arrangements for the outgoing interim CFO – audited
Marie Wall stepped down from the Board as interim CFO on 2 April 2026. All remuneration arrangements
relating to Marie’s departure were consistent with the Remuneration Policy and the Company’s incentive
plan rules. Marie was paid a payment of £5k in respect of accrued but not taken holiday entitlement
and received a pro-rated bonus of £333k in respect of the period of time which she served as interim
CFO (subject to performance and paid at the normal time). The 2024 DSP award granted to Marie
lapsed in full.
Other than the above, no other payments were made for loss of office during the year.
Single figure remuneration table for Non-Executive
Directors – audited
The remuneration of Non-Executive Directors showing the breakdown between components,
with comparative figures for the prior year, is shown below. Figures provided have been calculated
in accordance with the Regulations.
Director Year
Fees
£000
Other
£000
Total
£000
Gill Barr 2026 68 — 68
2025 67 — 67
Jo Boydell
1
2026 22 — 22
2025 67 — 67
Tony Buffin 2026 58 — 58
2025 21 — 21
Alison Hutchinson 2026 79 — 79
2025 78 — 78
Steve Johnson 2026 210 — 210
2025 206 — 206
Bruce Marsh 2026 68 — 68
2025 53 — 53
1. Jo Boydell stepped down from the Board on 14 November 2025.
Non-Executive Director fees in FY27
Non-Executive Directors’ fees, including the Chair fee, were increased by 3% in July 2026 which is in
line with the average base salary increase for the majority of the wider workforce. The fee structure
and levels applying for FY27 are set out below:
Chair fee £216,300
Senior Independent Director and Chair of the Responsibility and
Sustainability Committee fee £80,770
Chair of Audit/Remuneration Committee fee £70,050
Basic Non-Executive Director fee £60,050
Performance underpins for FY26 (2025 award) DSP
The performance underpins for the 2025 DSP award are unchanged from the 2024 award and are set out below.
1. Performance against the Group’s key strategic priorities being at an appropriate level, including
those related to our sustainability objectives over the vesting period.
2. Whether there is a material weakness in the underlying financial health or sustainability of the
business. Factors such as, but not limited to, revenue, underlying profit, free cash flow and ROCE
would be considered.
3. Whether there has been a materially serious reputational event which could have been
reasonably foreseen.
To support the Committee’s assessment of the underpins, an internal dashboard has been developed
to provide a clear framework covering key financial and non-financial measures related to the underpins
for the 2025 DSP award.
Malus and clawback
Malus and clawback provisions apply to all variable incentive schemes, including the annual bonus
and DSP. Malus may apply before the determination of the bonus, before the vesting of any deferred
component under the bonus and before the vesting of any LTIP or DSP award. Clawback may apply up
until three years after the date of any cash bonus payment and up until three years after the date of
vesting of the LTIP and DSP awards. These periods are considered reasonable to support the enforceability
of clawback in light of the business’ risk profile and market practice. Malus and clawback will continue
to apply following cessation of employment.
Malus and clawback provisions may apply in the following circumstances: material underperformance;
significant brand or reputational damage; material misstatement of accounts or financial results; gross
misconduct; fraud; events reasonably anticipated to result in corporate failure; misstated or misleading
performance measures; errors in award vesting; failure of risk management; or any other reason
determined by the relevant committee.
The Committee has not exercised the malus or clawback provisions during FY26.
SAYE awards – audited
No Directors were granted SAYE options during FY26.
Dilution
The Company monitors the levels of share grants and the impact of these on the ongoing requirement
for shares. In accordance with guidelines set out by the Investment Association (‘IA’) the Company can
issue a maximum of 10% of its issued share capital in a rolling ten year period to employees under all its
share plans.
Payment to past Directors – audited
There were no payments to past Directors.
Annual Report and Accounts 2026 DFS Furniture plc 79
Strategic Report Corporate Governance Financial Statements Shareholder Information
Directors’ Remuneration report continued
Part D: Annual Report on Remuneration for the Financial Year ended 28 June 2026 continued
Shareholding and other interests at 28 June 2026 – audited
Directors’ share interests and, where applicable, achievement of shareholding requirements are set out below. In order that their interests are aligned with those of shareholders, Executive Directors are expected
to build up and maintain (as relevant) a personal shareholding which for FY26 was equal to 200% of their base salary in the Company.
Shares no longer subject to performance conditions (e.g. deferred bonus awards, LTIP shares within the holding period and DSP awards) will count towards the requirement on a net of tax basis.
Director
Number of
beneficially owned
shares
1
Number of
shares under
the Deferred
Bonus Plan
Number of
shares under
the DSP
% of
salary held
Shareholding
requirement
met
Subject to
performance
conditions
Not subject
to conditions
Vested but
unexercised
Unvested
SAYE awards
Total at
28 June 2026
Tim Stacey 364,335
5
93,942 576,678 199% No — — — — 1,034,955
Dominique Highfield
2
— — — — No — — — — —
Marie Wall
3
— — 182,724
6
64% No — — — — 182,724
Steve Johnson 70,666 — — — — — — — — 70,666
Gill Barr 15,557 — — — — — — — — 15,557
Jo Boydell
4
21,926 — — — — — — — — 21,926
Tony Buffin 35,898 — — — — — — — — 35,898
Alison Hutchinson 69,833 — — — — — — — — 69,833
Bruce Marsh 30,000 — — — — — — — — 30,000
Total 608,215 93,942 759,402 — — — — — — 1,461,559
1. Beneficial interests include shares held directly or indirectly by connected persons.
2. Dominique Highfield was appointed to the Board on 5 May 2026 and will be expected to build up her shareholding over time.
3. Marie Wall stepped down from the Board on 2 April 2026. Her shareholding is shown as at her last day of employment on 2 April 2026.
4. Jo Boydell stepped down from the Board on 14 November 2025 and her shareholding is shown as at this date.
5. As reported in October and November 2025, the reduction in the percentage of Tim Stacey’s salary held as shares was due to the requirement for him to transfer 183,593 shares to his former spouse. Additionally, the DFS shares held
by his former spouse now no longer count towards his beneficial interests. Tim Stacey has not sold any of his shareholding (other than to settle tax) during FY26. It is expected he will once again reach his shareholding guideline following
the award of the 2026 deferred bonus and DSP awards.
6. Relates to the 2024 DSP award, which lapsed in full following Marie stepping down from the Board.
At 18 September 2026 there had been no movement in Directors’ shareholdings and share interests from 28 June 2026.
Outstanding share awards
The following share awards remain outstanding as at 28 June 2026 for the Executive Directors:
Director
1
Type of award2 Date of grant
Number of
awards Awards vested Awards lapsed
Outstanding
awards
Market price
on date of grant
3
Normal vesting
date
Tim Stacey 2023 LTIP 16/10/23 860,120 — 860,120 — £1.02 16/10/26
2024 DSP 12/12/24 283,196 — — 283,196 £1.44 12/12/27
2025 DSP 23/10/25 293,482 — — 293,482 £1.55 23/10/28
2023 DBP 20/10/23 41,606 41,606 — — £1.02 20/10/25
2025 DBP 21/10/25 93,942 — — 93,942 £1.56 21/10/27
1. Marie Wall’s 2024 DSP award lapsed in full upon her stepping down as interim CFO.
2. The underpins for the DSP awards and performance measures applicable to the LTIP awards are detailed in the Annual Report in the year of grant, or subsequently on the Company’s website if the performance measures are finalised after
the Annual Report.
3. The share price for calculation is the average of the closing share price on the three days prior to the grant for any LTIP and DSP awards, and the closing share price on the day prior to the grant for any DBP awards.
Annual Report and Accounts 2026 DFS Furniture plc80
Corporate Governance
Directors’ Remuneration report continued
Part D: Annual Report on Remuneration for the Financial Year ended 28 June 2026 continued
Total Shareholder Return
The chart illustrates the Group’s Total Shareholder Return performance against the FTSE 250 Index from the end of FY16 to the end of FY26.
This peer group represents the Company’s key market for investment capital.
Chief Executive Officer’s remuneration for the last ten years
The table below indicates the total single figure of remuneration for the CEO for the previous ten financial years, along with the annual bonus payout and LTIP vesting level as a percentage
of the maximum opportunity.
FY26 FY25 FY24 FY23 FY22 FY21 FY20 FY19 FY18 FY17
CEO Tim Stacey Tim Stacey Tim Stacey Tim Stacey Tim Stacey Tim Stacey Tim Stacey Tim Stacey
1
Ian Filby Ian Filby Ian Filby
Single figure (£‘000) 1,152 1,165 523 665 496 1,999 568
3
464 374 673 666
Annual bonus (% of max) 97.4% 95.8% 0% 31.1% 0% 100% 0%
2
26.2% 32.2% 36% 37.5%
LTIP vesting (% of max) 0% 0% 0% 0% 0% 100% 0% 28.6% 28.6% 0% 0%
1. Tim Stacey became CEO and Executive Director on 1 November 2018.
2. The Committee applied downward discretion to override the formulaic outcome of the FY20 annual bonus to zero.
3. Tim Stacey’s single figure for FY20 includes an award under the DFS Restricted Share Plan which was made to the CEO prior to his appointment as an Executive Director. The award had a value of £97.7k and vested on 16 November 2019.
190
170
150
130
110
90
70
50
Jul 2016 Jul 2017 Jul 2018 Jun 2019 Jun 2020 Jun 2021 Jun 2022 Jun 2023 Jun 2024 Jun 2025 Jun 2026
DFS Furniture plc
FTSE 250 Index (excluding investment trusts)
Annual Report and Accounts 2026 DFS Furniture plc 81
Strategic Report Corporate Governance Financial Statements Shareholder Information
Directors’ Remuneration report continued
Part D: Annual Report on Remuneration for the Financial Year ended 28 June 2026 continued
Relative importance of spend on pay
The table below sets out the overall spend on pay for all employees compared with the returns
distributed to shareholders.
Significant distributions FY26 FY25 % change
Employee remuneration £207.7m £204.2m 1.7%
Distributions to shareholders (dividends and share buybacks)
£2.3m — 100%
The above figures are taken from notes 4 and 21 to the financial statements.
CEO pay ratio
This is the seventh year that we have disclosed the Group’s CEO pay ratio.
The Company has adopted Option B: gender pay gap data, as this approach was considered to remain
appropriate due to data availability and to allow consistency with prior year comparison. The Committee
will continue to determine the most appropriate methodology (Option A, B or C) to be used each year,
by considering the robustness of the calculation methodology as well as the availability of data and
operational time constraints.
The relevant employees at each quartile for each year were identified in April (2026 and 2025) using
our gender pay gap data. The pay and benefits data for the relevant 25th, 50th and 75th percentile
employees is taken from the 12 month period ending in June 2025 (financial year FY25) and June 2026
(financial year FY26). The pay and benefits figure includes:
•
all earnings paid through the payroll, e.g. salary, bonus, and long term incentives
•
the value of the employer pension contributions
•
any other taxable benefits, e.g. private medical, company car etc
•
no elements of pay were omitted and there was no departure from the single figure methodology.
Pay and benefits for the relevant employees have been calculated on a full-time equivalent basis
and there was no reliance on estimates.
The lower quartile, median and upper quartile employees were identified from the gender pay gap data
where the hourly pay for employees was ranked. A sample of ten employees’ pay and benefits either
side of the initially identified employees was reviewed to ensure that the appropriate representative
employees are selected.
The table below compares the single total figure of remuneration for the CEO with that of employees
who are paid at the 25th, 50th and 75th percentile of the employee population.
CEO pay ratio data
Year Method 25th percentile 50th percentile 75th percentile
2026 Option B 35:1 30:1 27:1
2025 Option B 35:1 33:1 28:1
2024 Option B 22:1 16:1 12:1
2023 Option B 27:1 18:1 18:1
2022 Option B 20:1 15:1 12:1
2021 Option B 76:1 66:1 61:1
2020 Option B 24:1 20:1 16:1
2026 25th percentile 50th percentile 75th percentile
Salary £30,541 £34,027 £41,143
Total pay and benefits £33,316 £38,250 £43,258
The pay ratio for 2026 is fairly stable compared to 2025, reflecting incentive outcomes for 2026 being
similar to 2025 and our ongoing efforts to invest in supporting our colleagues.
In line with the Regulations, this analysis will be extended up to ten years in the future. The Committee
considers pay ratios as one of many reference points when considering remuneration. Throughout DFS,
pay is positioned to be fair and market competitive in the context of the relevant talent market for each role.
Directors’ service contracts and letters of appointment
When setting notice periods, the Committee has regard to market practice and corporate governance
best practice. The table below summarises the service contracts for our Executive Directors.
Date of contract Notice period
Tim Stacey 24 May 2022 12 months (Executive) or 12 months (Company)
Dominique Highfield 19 January 2026 12 months (Executive) or 12 months (Company)
All service contracts are available for viewing at the Company’s registered office and at the AGM.
The Non-Executive Directors do not have service contracts but are appointed under letters of
appointment which provide for a review after an initial three year term and are terminable by either the
Non-Executive Director or the Company with three months’ prior written notice. Each Non-Executive
Director is subject to annual re-election at the Company’s AGM.
The table below sets out the dates that each Non-Executive Director seeking election/re-election
at the 2026 AGM was first appointed as a Group Director.
Date of appointment
Alison Hutchinson 1 May 2018
Steve Johnson 6 December 2018
Gill Barr 1 March 2023
Bruce Marsh 1 August 2024
Tony Buffin 24 February 2025
Annual Report and Accounts 2026 DFS Furniture plc82
Corporate Governance
Internal and external support for the Committee
The Chair, the CEO and the CFO attend meetings at the invitation of the Committee but are not
present when their own remuneration is being discussed. The Company Secretary acts as Secretary
to the Committee. The Committee is supported by the CPO and the Finance team.
The Committee retained Deloitte LLP as its adviser following their initial appointment on 11 November 2023.
Deloitte LLP is a founding member of the Remuneration Consultants Group and a signatory to the
Code of Conduct for Remuneration Consultants. The Committee is comfortable that Deloitte LLP
provides objective and independent remuneration advice and has no conflicts of interest with the
Group that may impair its independence. The Committee is satisfied that the Deloitte engagement
team which provide remuneration advice to the Committee do not have connections with DFS
Furniture plc or its Directors that may impair their independence.
The Committee reviewed the potential for conflicts of interest and judged that there were appropriate
safeguards against such conflicts.
Total fees payable to Deloitte LLP in respect of services to the Committee during the year amounted to
£102,400 and were charged on a time and materials basis. Deloitte LLP also provided tax and financial
advisory services in the period.
Statement of voting
The table below sets out the outcome of the advisory vote on the resolution for approval of the
Annual report on remuneration at the 2025 AGM and the binding vote on the resolution for approval
of the Directors’ Remuneration Policy at the 2024 AGM:
Resolution
Votes
for %
Votes
against % Total votes
% of issued
capital voted
Votes
withheld
Annual report
on remuneration
(2025)
203,809,804 99.67% 669,571 0.33% 204,479,375 87.33% 58,469
Remuneration
Policy (2024)
198,349,001 94.46% 11,633,255 5.54% 209,982,256 89.68% 1,000
The Committee is very grateful for the strong support shown by shareholders for the Directors’
Remuneration Policy, which can be found in full within the 2024 Annual Report on our website:
www.dfscorporate.co.uk.
Gill Barr
Chair of the Remuneration Committee
24 September 2026
Directors’ Remuneration report continued
Part D: Annual Report on Remuneration for the Financial Year ended 28 June 2026 continued
Annual Report and Accounts 2026 DFS Furniture plc 83
Strategic Report Corporate Governance Financial Statements Shareholder Information
Directors’ report
DFS Furniture plc (‘the Company’) is the holding
company of the DFS Group of companies
(‘the DFS Group’). The Company has no overseas
subsidiaries but in accordance with the Companies
Act 2006 and the Disclosure and Transparency
Rules (‘DTRs’) discloses that its subsidiary, DFS
Trading Limited, operates branches outside of
the UK, in the Republic of Ireland.
The Directors’ report for the year ended
28 June 2026 comprises this report, together
with other sections of the Annual Report
incorporated by reference. The Strategic report
and the Directors’ report together form the
Management Report for the purposes of the
Disclosure Guidance and Transparency Rules
(DTR) 4.1.8R.
The Directors’ Report fulfils the requirements
of the Corporate Governance Statement for
the purposes of DTR 7.2.3R. Both the Strategic
report and the Directors’ report have been
drawn up and are presented in accordance with,
and in reliance upon, applicable English company
law. The liabilities of the Directors in connection
with those reports shall be subject to the limitations
and restrictions provided by such law.
As permitted by legislation, certain matters
required to be included in the Directors’ report
are instead presented within the Strategic
report on pages 1 to 49, where the Board
considers them to be of primary strategic
importance. These include:
•
matters the Board considers are of strategic
importance including future business
developments (throughout the Strategic
report pages 1 to 49);
•
risk management on pages 24 to 30;
•
information on how the Directors have had
regard for the Company’s stakeholders, and
the effect of that regard, on pages 32 and 33;
and
•
our approach to social, environmental and
ethical matters, in our Responsible business
report on pages 34 to 43, and our TCFD
report on pages 44 to 49.
Other information to be disclosed in the
Directors’ report is given in this section.
Disclosure Page
Audit and Risk Committee report 63
Our people and culture 35
Corporate governance report 54
Directors’ interests 80
Directors’ Remuneration report 70
Executive share plans 78
Human rights and modern slavery 41
Equity, diversity and inclusion 36
Independent auditor’s report 90
Internal controls/risk management 65
Nomination Committee report 68
Responsible business report 34
Section 172 statement 32
Task Force on Climate-related
Financial Disclosures 44
Board of Directors
The membership of the Board and biographical
details of the Directors are on pages 52 to 53.
with details of Directors’ beneficial and non-
beneficial interests in the shares of the Company
provided on page 80 of the Directors’
Remuneration report.
Changes to the Board of Directors during the
year and up to the date of this report are
summarised below.
Name Position
Effective date
of appointment/
departure
Appointment
Dominique
Highfield
Chief Financial
Officer
Appointed
5 May 2026
Departures
Marie Wall Interim Chief
Financial Officer
Resigned
2 April 2026
Jo Boydell Independent
Non-Executive
Director
Resigned
14 November
2025
The appointment and replacement of Directors is
governed by the Company’s Articles of Association
(the “Articles”), the UK Corporate Governance
Code, the Companies Act 2006, and related
legislation. In accordance with the Articles, any
Director appointed during the year holds office only
until the next Annual General Meeting (AGM), at
which point they will stand for election. All other
Directors submit themselves for annual re-election.
The Board unanimously recommends the
election or re-election of the proposed Directors,
citing their relevant skills, experience, and continued
contribution to Board deliberations. During the
financial year, no Director held a material interest in
any contract of significance to the Group’s business.
The Board considers that all of the Directors
continue to be effective, committed to their roles
and able to devote sufficient time to discharge
their responsibilities.
Directors’ service contracts and letters of
appointment are available for inspection at the
Company’s registered office and will be available at
the AGM. Executive Directors serve under rolling
contracts, further details of which are provided on
page 82 of the Directors’ Remuneration Report.
Non-Executive Directors are appointed under
letters of appointment for an initial three year term,
which may be extended by mutual agreement and
annual re-election, and are terminable by either
party with three months’ written notice (or six
months in the case of the Chair).
In discharging their duties, the Directors have
regard for the interests of the Group’s employees,
suppliers, and customers. Further details on
stakeholder engagement are provided on pages
32 and 33.
For additional information on Board governance,
the schedule of matters reserved for the Board is
available at:
www.dfs.corporate.co.uk
The table below sets out the date that each
Non-Executive Director seeking election/re-election
at the 2026 AGM was appointed to the Board.
Non-Executive Director Date of appointment
Alison Hutchinson 1 May 2018
Steve Johnson 6 December 2018
Gill Barr 1 March 2023
Bruce Marsh 1 August 2024
Tony Buffin 24 February 2025
Details of any shares held by a Director in the
Company, including those of any connected persons,
are detailed in the Directors’ Remuneration report
on page 80. The Board exercises all the powers of
the Company subject to the Articles, the Act and
shareholder resolutions.
Further information about employee share option
schemes is in note 25 to the financial statements
Annual Report and Accounts 2026 DFS Furniture plc84
Corporate Governance
Directors’ report continued
Directors’ responsibilities
The Directors’ responsibilities for the financial
statements contained within this Annual Report
and Accounts and the Directors’ confirmations as
required under DTR 4.1.12 are set out on page 88.
Directors’ conflicts of interest
The Company has procedures in place for managing
conflicts of interest. All Directors are required to
avoid situations in which they have, or could
have, a direct or indirect interest that conflicts,
or possibly may conflict, with the interests of the
Company. Should a Director become aware that
they, or any of their connected parties, have an
interest in an existing or proposed transaction
with the Company or its subsidiaries, they are
expected to notify the Board in writing or at the
next Board meeting. Internal controls are in place
to ensure that any related party transactions
involving Directors, or their connected parties,
are conducted on an arm’s length basis. Directors
have a continuing duty to update any changes
to these conflicts.
Directors’ indemnities
and insurance
The Group maintains Directors’ and Officers’
liability insurance which provides appropriate
cover for any legal action brought against Directors
or Officers. The Company has also granted
indemnities
to each of its Directors to the extent
permitted by law. Qualifying third-party
indemnity provisions (as defined by Section 234
of the Companies Act 2006) were in force during
the year ended 28 June 2026. They remain in
force in relation to certain losses and liabilities
which the Directors may incur to third parties in
the course of acting as Directors or employees of
the Company or of any associated company.
Dividends
On 19 March 2026 the Board announced its
FY26 interim results and an interim dividend
of 1.0 pence per share. The Board proposes a final
dividend of 2.0 pence per share to be paid in
respect of the 52 week period ended 28 June
2026, subject to approval by the shareholders at
the AGM on 13 November 2026. The final
dividend will be paid on 24 December 2026 to all
shareholders
on the register at 4 December 2026.
The Company’s
shares will trade ex-dividend from 3
December 2026.
Details of the interim and proposed final dividends
for the year are summarised in the table below.
Interim dividend 1.0p (FY25: 0.0p)
Proposed final dividend 2.0p (FY25: 0.0p)
Total dividend 3.0p (FY25: 0.0p)
Dividends may be declared by ordinary
resolution, provided the amount does not
exceed that recommended by the Board. Subject
to the Companies Act 2006, the Board may pay
interim or fixed-rate dividends if the Company’s
financial
position, in the Board’s opinion, justifies
such payments.
Shareholder and voting rights
All members who hold ordinary shares are entitled
to attend and vote at the AGM. Voting on all
resolutions at the 2026 AGM will be by way of a
poll. On a poll, every member present in person
or by proxy has one vote for every ordinary share
held or represented. The Notice of Meeting
specifies the deadlines for exercising voting rights.
To encourage shareholders to participate in the AGM
process, the Company offers electronic proxy voting
through the CREST service and all resolutions will
be proposed and voted on at the meeting on an
individual basis by shareholders or their proxies.
The Company is not aware of any agreements
between shareholders that may result in restrictions
on the transfer of securities and voting rights.
There are no restrictions on the transfer of
ordinary shares in the Company other than
certain restrictions imposed by laws and
regulations (such as insider trading laws and
market requirements relating to closed periods)
and requirements of internal rules and procedures
whereby Directors and certain employees of the
Company require prior approval to deal in the
Company’s securities.
Substantial shareholders
Information provided to the Company pursuant
to the Financial Conduct Authority’s DTRs is
published on a Regulatory Information Service and
on the Company’s website. As at 18 September
2026, the Company had been notified of the
following holdings of voting rights in its shares
under DTR Rule 5. The information provided
below was correct at the date of notification. It
should be noted that holdings are likely to have
changed since the Company was notified.
However notification of any change is not
required until the next notifiable threshold is
crossed. Percentages are shown as notified,
calculated with reference to the Company’s
disclosed share capital as at the date of the
notification.
Investor
Number of
ordinary
shares
%
voting
rights
Date of
notification
FIL Limited 22,360,315 9.5 17 September
2026
Man Wah
Holdings
Limited
21.518,450 9.1 17 September
2026
Liontrust
Investment
Partners LLP
12,996,542 5.5 4 August
2026
Adriana S.A. 21,177,343 9.0 16 June 2026
J O Hambro
Capital
Management
Limited
23,350,644 10.0 13 May 2025
As required under the Companies Act, the
Company is required to disclose certain
additional information in the Directors’ report.
This information is set out below.
Share capital
The Company has only one class of shares, being
ordinary shares of £0.10 each. The shares of the
Company have been traded on the Main Market
of the London Stock Exchange throughout the
52 weeks ended 28 June 2026. The Company has
an issued share capital of 236,000,000 ordinary
shares of £0.10 each (2025: 236,000,000).
The voting rights of the Company’s shares are
identical, with each share carrying the right to
one vote. Holders of ordinary shares of the Company
are entitled to participate in authorised dividends
and to receive notice and to attend and speak at
general meetings.
On 8 December 2025 the Company transferred
all 1,855,580 ordinary shares of £0.10 each in the
Company held in treasury, representing 0.8% of
the Company’s issued share capital, to the DFS
Furniture plc Employee Benefit Trust to help meet
future obligations arising under the Company’s
share schemes. No consideration was received
by the Company in relation to the transfer. At 28
June 2026 the Company held no ordinary shares
in treasury (2025: 1,855,580). As at 18 September
2026 the Company held no shares in treasury and
therefore the total number
of ordinary shares with
voting rights in the Company
is 236,000,000.
The Directors are not aware of any agreements
between holders of the Company’s shares that
may result in the restriction of the transfer of
securities or on voting rights. No shareholder
holds securities carrying any special rights or
control over the Company’s share capital.
Details of employee share schemes are provided
in note 25 to the financial statements. As at 28
June 2026, the Employee Benefit Trust held
4,370,663 shares (2025: 3,060,209).
Annual Report and Accounts 2026 DFS Furniture plc 85
Strategic Report Corporate Governance Financial Statements Shareholder Information
Directors’ report continued
Powers for the Company issuing
or buying back its own shares
The Company was authorised by shareholders
at the 2025 AGM to purchase in the market up
to 10% of its issued share capital, as permitted
under the Company’s Articles. No shares were
bought back under this authority during the year
ended 28 June 2026 and up to the date of this
report. This standard authority is renewable
annually; the Directors will seek to renew it
at the 2026 AGM.
The Directors were granted authority at the 2025
AGM to allot relevant securities up to a nominal
amount of £7,804,814 (or up to £15,609,628 in
connection with an offer by way of a rights issue).
This authority will apply until the conclusion of
the 2026 AGM. The Company did not allot any
further shares during the year (2025: nil). The
Company will seek the usual renewal of this
authority at the AGM in November 2026.
The Articles may be amended by a special resolution
of the shareholders at a general meeting. Subject
to the Articles, the Companies Act 2006 and any
directions given by special resolution, the business
of the Company will be managed by the Board
which may exercise all of the powers of the Company.
Change of control
The Company is not a party to any significant
agreements which take effect, alter, or terminate,
solely upon the event of a change of control in
the Company following a takeover bid. However,
in the event of a change of control of the Company,
the Company is obliged to give written notice to
its Lenders. Each individual lender then has the
right to give written notice to the Company to
demand early repayment of its outstanding loans
to that lender and to cancel that lender’s
commitments in full.
Each of the Company’s share incentive scheme
rules contain provisions that may cause options
and awards granted under these schemes to vest
and become exercisable in the event of a change
of control.
There are no agreements between the Company
and its Directors or employees providing for
additional compensation for loss of office or
employment (whether through resignation,
redundancy or otherwise) that occurs because
of a takeover bid.
Significant agreements
The Company does not have any contractual
or other relationships with any single party
which are essential to the business of the Group
and, therefore, no such relationships have
been disclosed.
Colleague information
Our colleagues are fundamental to our success,
and we remain committed to their continued
involvement and engagement. Information
regarding our approach to people management
is provided throughout this Annual Report,
specifically on pages 8, 32, 35 and 36.
Share schemes are a long-established and
successful part of colleagues’ total reward
packages, encouraging and supporting employee
share ownership. The Company operates an
all-employee SAYE Scheme. As at 28 June 2026,
1,835 colleagues were participating in the
Company’s SAYE Scheme. Full details of
the scheme are in note 25 to the financial
statements.
Reflecting our core value of ‘Everyone together’,
we are dedicated to fostering an inclusive
environment where all colleagues feel
welcome and supported. The Group maintains
a comprehensive communication programme
to ensure colleagues are informed of relevant
business matters. This includes regular updates
from the Group Leadership Team (GLT) via the
‘The Hub’ intranet, ‘Brew with the GLT’ sessions,
and wider briefings for our teams.
The Board receives feedback through regular site
visits to showrooms, distribution centres, and
factories. Furthermore, the Group Voice Forum
provides a structured platform for the Designated
Non-Executive Director to engage with employee
representatives, ensuring that colleague feedback
is captured consistently and effectively across
the Group.
We do not tolerate discrimination, harassment,
bullying or victimisation in any form. We have
Group-wide policies and processes in place to
support fair treatment throughout the colleague
lifecycle, including recruitment, development,
promotion and reward. Our inclusion efforts are
supported by our colleague inclusion networks
and senior leadership oversight.
Employees with disabilities
The DFS Group is committed to supporting
colleagues and candidates with both visible and
non-visible disabilities, accessibility needs and
health conditions. Where appropriate, reasonable
adjustments are made to support colleagues to
perform their roles effectively. Decisions relating
to recruitment, training, development and career
progression are based on skills and capability,
with appropriate support in place.
We want to continue to create a balanced,
diverse and inclusive workforce reflective of our
customer demographic, with a key focus on
disability, ensuring we are creating a safe and
accessible environment for both colleagues and
customers. We continue to develop our long-term
accessibility approach, supported by our inclusion
network, The Bridge, focused on connecting
diverse abilities and our support for, and membership
of, the Hidden Disabilities Sunflower scheme.
The scheme is a British initiative designed to
help people with non-visible disabilities navigate
public spaces more easily and uses a sunflower
lanyard as a discreet symbol to indicate that the
wearer may require additional assistance or support.
Simply by wearing the sunflower, you’re just
letting everyone know that you might need
extra help, understanding, or just more time.
This vital initiative has been fully integrated
across all our operational pillars, including DFS
Retail, Sofology, our Group functions, and The
Sofa Delivery Company. We have been
encouraged by the exceptional engagement
across the Group, with 3,544 colleagues to date
having completed our bespoke training module.
Ethical supply chain
Our culture and values are firmly rooted in doing
what is right. We set clear expectations for
behaviour that all our colleagues and suppliers are
required to follow. We are committed to upholding
human rights across our business and supply chain,
with zero tolerance for any form of modern slavery.
For further details, please refer to our modern
slavery and human trafficking statement and our
human rights policy which are available on our
corporate website: www.dfscorporate.co.uk.
To support our colleagues in maintaining ethical
standards and reporting concerns, we have
implemented a clear whistleblowing policy and
a confidential reporting hotline. As part of our
commitment to managing the risk of modern
slavery, all leaders and senior team members
are required to complete mandatory training
on identifying various forms of modern slavery
and the appropriate reporting procedures.
We also hold our value chain partners to the
highest ethical standards. We are committed
to ongoing assessments of modern slavery risks
within our supply chain and will continue to take
proactive steps to address these issues. All
manufacturing partners within the Group are
required to sign a supplier code of practice,
which outlines the framework for an annual
on-site audit. This audit incorporates ethical
criteria and due diligence measures to prevent
modern slavery and forced labour.
During the year, 100% of the Group’s suppliers of
goods for resale underwent at least one on-site audit,
with no instances of unlawful practices identified.
Additionally, we mandate that every supplier
obtains SMETA certification, which evaluates
labour standards, health and safety, environmental
performance, and ethics at the supplier site.
Annual Report and Accounts 2026 DFS Furniture plc86
Corporate Governance
Directors’ report continued
Information on greenhouse
gas emissions
The information on greenhouse gas emissions
that the Company is required to disclose is set
out in the Responsible business report and TCFD
section on pages 34 to 49. This information is
incorporated into this Directors’ report by
reference and is deemed to form part of this
Directors’ report.
Research and development
Research and innovation remain key to our
product offering, enabling the development
of better products for our customer base.
Donations
The Group did not make any political donations
or incur any political expenditure during the year
ended 28 June 2026. We are however proud of
our partnership with Children in Need, focusing
on alleviating furniture poverty (see page 38).
Treasury and risk management
The Company’s approach to treasury and
financial risk management, including its use
of hedging instruments, is explained in the
Risks and uncertainties section on page 26
and note 24 to the financial statements.
Independent auditor
In accordance with section 489 of the Companies
Act 2006 (‘the Act’), the Audit and Risk
Committee has recommended that a resolution to
reappoint KPMG LLP as auditor of the DFS Group
will be proposed to the shareholders at the AGM.
The Directors who held office at the date of this
report confirm that, so far as they are each aware,
there is no relevant audit information of which
the Company’s auditor is unaware, and each such
Director has taken the reasonable steps that they
ought to have taken as a Director to make themselves
aware of any relevant audit information and to
establish that the Company’s auditor is aware of
the information. This confirmation is given and
should be interpreted in accordance with the
provisions of section 418 of the Act.
Information to be disclosed under
UK Listing Rule (‘UKLR’) 6.6.1R
Listing rule Detail Reference
UKLR 6.6.1R
(1), (2),
(4-10), (13)
Nothing to
disclose
Not applicable
UKLR 6.6.1R
(3)
Long-term
incentive
schemes
Pages 70 to 83
UKLR 6.6.1R
(11), (12)
Waiver of
dividends
Note 22 to the
financial
statements
Subsequent events
Between 28 June 2026 and the date of this report
there have been no reportable events.
Disclaimer
This Directors’ report, the Strategic report and
the financial statements contain certain
forward-looking statements with respect to the
financial condition, results, operations, and
business of DFS Furniture plc. These statements
and forecasts involve risk and uncertainty
because they relate to events and depend upon
circumstances that will occur in the future.
There are a number of factors that could cause
actual results or developments to differ materially
from those expressed or implied by these
forward-looking statements and forecasts.
Nothing in this Directors’ report or the Strategic
report or in the financial statements should be
construed as a profit forecast.
This document also contains non-financial
information and data. While reasonable steps
have been taken to ensure that this is correct,
it has not been externally audited or verified
unless specifically stated in this document.
Going concern
In adopting the going concern basis for preparing
the financial statements, the Directors have
considered the business activities as set out on
pages 1 to 49, the financial position of the DFS
Group, its cash flows, liquidity position and
borrowing facilities as set out in the Financial
review on pages 17 to 21, the DFS Group’s financial
risk management objectives and exposures to
liquidity and financial risks as set out in note 24 to
the financial statements, as well as the DFS Group’s
risks and uncertainties as set out on pages 24 to 30.
Based on the DFS Group’s cash flow forecasts,
the Board expects the DFS Group to have adequate
resources to continue in operation, meet its
liabilities as they fall due, retain sufficient available
cash and not breach the covenants applicable to
its borrowing facilities for the foreseeable future,
being a period of at least 12 months from the
approval of the financial statements. The Board
therefore considers it appropriate for the DFS
Group to adopt the going concern basis in
preparing its financial statements.
At 17 September 2026, the last practicable
date prior to approval of the Annual Report,
£150.6m of the revolving credit facility remained
undrawn, in addition to cash in hand, at bank of
£5.3m.
Long-term viability statement
The Directors have assessed the prospects of the
DFS Group over a three year period to June 2029.
This has taken into account the business model,
strategic aims, risk appetite, and principal risks and
uncertainties, along with the DFS Group’s current
financial position. Based on this assessment, the
Directors have a reasonable expectation that the
DFS Group will be able to continue in operation
and meet its liabilities as they fall due over the
three year period under review.
See our approach to assessing long-term viability
on page 31
Annual General Meeting (‘AGM’)
The Company’s next AGM will take place on
13 November 2026 at the DFS Group Support
Centre, 1 Rockingham Way, Redhouse Interchange,
Adwick-le-Street, Doncaster, DN6 7NA at 2.30pm.
The Annual Report and Accounts and Notice of
the AGM, including the resolutions to be
proposed, will be sent to shareholders at least 21
clear days prior to the date of the meeting.
Shareholders are invited to submit questions prior
to the meeting by emailing the Company
Secretary, Liz McDonald at liz.mcdonald@dfs.
co.uk.
The Directors’ report was approved by the Board
of Directors on 24 September 2026 and signed
on its behalf by:
Elizabeth McDonald
Group General Counsel and Company Secretary
24 September 2026
Annual Report and Accounts 2026 DFS Furniture plc 87
Strategic Report Corporate Governance Financial Statements Shareholder Information
Statement of Directors’ responsibilities in respect of the Annual Report and the financial statements
The Directors are responsible for preparing the Annual Report and the Group and parent
Company financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare
Group and parent Company financial statements
for each financial year. Under that law they are
required to prepare the Group financial statements
in accordance with UK-adopted international
accounting standards and applicable law and
have elected to prepare the parent Company
financial statements in accordance with UK
accounting standards and applicable law, including
FRS 101 Reduced Disclosure Framework.
Under company law the Directors must not
approve the financial statements unless they are
satisfied that they give a true and fair view of the
state of affairs of the Group and parent Company
and of the Group’s profit or loss for that period.
In preparing each of the Group and parent
Company financial statements, the Directors
are required to:
•
select suitable accounting policies
and then apply them consistently;
•
make judgements and estimates that are
reasonable, relevant and reliable and, in
respect of the parent Company financial
statements only, prudent;
•
for the Group financial statements,
state whether they have been prepared
in accordance with UK-adopted
international accounting standards;
•
for the parent Company financial statements,
state whether applicable UK accounting
standards have been followed, subject to any
material departures disclosed and explained in
the parent Company financial statements;
•
assess the Group and parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern; and
•
use the going concern basis of accounting
unless they either intend to liquidate the
Group or the parent Company or to cease
operations or have no realistic alternative
but to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show
and explain the parent Company’s transactions
and disclose with reasonable accuracy at any
time the financial position of the parent Company
and enable them to ensure that its financial statements
comply with the Companies Act 2006. They are
responsible for such internal control as they
determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error, and
have general responsibility for taking such steps
as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect
fraud and other irregularities.
Under applicable law and regulations, the
Directors are also responsible for preparing a
Strategic report, Directors’ report, Directors’
Remuneration Report and Corporate governance
statement that complies with that law and
those regulations.
The Directors are responsible for the maintenance
and integrity of the corporate and financial
information included on the Company’s website.
Legislation in the UK governing the preparation
and dissemination of financial statements may
differ from legislation in other jurisdictions.
In accordance with Disclosure Guidance and
Transparency Rule (‘DTR’) 4.1.16R, the financial
statements will form part of the annual financial
report prepared under DTR 4.1.17R and 4.1.18R.
The auditor’s report on these financial statements
provides no assurance over whether the annual
financial report has been prepared in accordance
with those requirements.
Responsibility statement
of the Directors in respect
of the Annual Financial Report
We confirm that to the best of our knowledge:
•
the financial statements, prepared in accordance
with the applicable set of accounting standards,
give a true and fair view of the assets, liabilities,
financial position and profit or loss of the
Company and the undertakings included in
the consolidation taken as a whole; and
•
the Strategic report/Directors’ report includes
a fair review of the development and performance
of the business and the position of the issuer,
and the undertakings included in the consolidation
taken as a whole, together with a description
of the principal risks and uncertainties that
they face.
We consider the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for
shareholders to assess the Group’s position
and performance, business model and strategy.
Tim Stacey
Chief Executive Officer
Dominique Highfield
Chief Financial Officer
24 September 2026
Annual Report and Accounts 2026 DFS Furniture plc88
Corporate Governance
Financial
Statements
The following section presents the Group’s
financial statements for the year ended 28 June
2026. These statements have been prepared in
accordance with applicable accounting standards
and provide a detailed view of DFS Furniture plc’s
financial performance, position, and cash flows
over the reporting period.
In this section
90 Independent auditor’s report
97 Consolidated income statement
98 Consolidated statement of comprehensive income
99 Consolidated balance sheet
100 Consolidated statement of changes in equity
101 Consolidated cash flow statement
102 Notes to the consolidated financial statements
122 Company balance sheet
123 Company statement of changes in equity
124 Notes to the Company financial statements
Strategic Report Corporate Governance Financial Statements Shareholder Information
Annual Report and Accounts 2026 DFS Furniture plc 89
Independent auditor’s report
to the members of DFS Furniture plc
1. Our opinion is unmodified
We have audited the financial statements of DFS Furniture plc (“the Company”) for the 52-week period
ended 28 June 2026 which comprise the Consolidated Income Statement, Consolidated Statement of
Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity,
Consolidated Cash Flow Statement, the Company Balance Sheet, Company Statement of Changes in
Equity, and the related notes, including the accounting policies in note 1 to both the Group and parent
Company financial statements.
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of the parent
Company’s affairs as at 28 June 2026 and of the Group’s profit for the period then ended;
•
the Group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
•
the parent Company financial statements have been properly prepared in accordance with UK
accounting standards, including FRS 101 Reduced Disclosure Framework; and
•
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities are described below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our
report to the Audit and Risk Committee.
We were first appointed as auditor by the directors on 27 April 2010. The period of total uninterrupted
engagement is for the 12 financial years ended 28 June 2026 as a public interest entity and 16 financial
periods in total. We have fulfilled our ethical responsibilities under, and we remain independent of the
Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to
listed public interest entities. No non-audit services prohibited by that standard were provided.
Overview
Materiality: Group financial
statements as a whole
£3.0m (2025: £2.5m)
0.28% (2025: 0.24%) of Group revenue
Key audit matters vs 2025
Recurring risks Carrying value of Goodwill – DFS Cash Generating Unit (‘CGU’)
Recoverability of parent company’s investment in subsidiaries
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in
the audit of the financial statements and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by us, including those which had the greatest effect on: the
overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement
team. We summarise below the key audit matters, in decreasing order of audit significance, in arriving
at our audit opinion above, together with our key audit procedures to address those matters and, as
required for public interest entities, our results from those procedures. These matters were addressed,
and our results are based on procedures undertaken, in the context of, and solely for the purpose of,
our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently
are incidental to that opinion, and we do not provide a separate opinion on these matters.
The risk Our response
Carrying value of
Goodwill – DFS
Cash Generating
Unit (‘CGU’)
£479.9 million;
(2025: £479.9
million)
Refer to page 65
(Audit and Risk
Committee
Report), page 105
(accounting
policy) and page
113 (financial
disclosures).
Forecast-based assessment
There is a risk, due to the nature of cash
flow forecasts, that the business may
not meet expected order intake growth
projections in order to support the
carrying value of goodwill in the DFS
Cash Generating Unit (‘CGU’).
This risk of goodwill impairment is
significant in the DFS CGU in light of
the current economic climate, volatility
in the financial performance of the
Group and volatility in the accuracy of
the assumptions.
The Group considered the
recoverability of the goodwill balance
through a value in use calculation that
had underlying assumptions of varying
sensitivities, including the key
assumption of order intake growth. The
estimated recoverable amount is
subjective due to the inherent
uncertainty involved in forecasting and
discounting future cash flows.
We performed the tests below rather
than seeking to rely on any of the
Company’s controls because the nature
of the balance is such that we would
expect to obtain audit evidence primarily
through the detailed procedures described.
Our procedures included:
•
Historical comparisons: We compared
the previous forecasts for the CGU
against actual outcomes to assess
the historical reliability of the
Group’s forecasting.
•
Benchmarking assumptions: We
compared the CGU’s trading forecasts
against current trading performance,
externally derived anticipated growth
in the furniture retail sector and
applied our knowledge of the Group
and retail sector, investigating any
significant deviations in order to
challenge assumptions, including
order intake growth, included in the
forecasts and assess any indicators of
management bias.
•
Sensitivity analysis: We performed
sensitivity analysis over order intake,
gross profit margins, terminal growth
rate and the discount rate in order to
determine their impact on the value in
use calculations.
Annual Report and Accounts 2026 DFS Furniture plc90
Financial Statements
Independent auditor’s report continued
to the members of DFS Furniture plc
The risk Our response
Carrying value of
Goodwill – DFS
Cash Generating
Unit (‘CGU’)
continued
Disclosure quality
Given the inherent uncertainty
involved in forecasting, there is a risk
that disclosures do not provide users of
the financial statements with sufficient
information over the sensitivity of the
outcome of the impairment
assessment to changes in key
assumptions.
The effect of these matters is that, as
part of our risk assessment, we
determined that the value in use has a
high degree of estimation uncertainty,
with a potential range of reasonable
outcomes greater than our materiality
for the financial statements as a whole
and possibly many times that amount.
The financial statements (note 10)
disclose the sensitivity estimated by
the Group.
•
Our sector knowledge: We critically
assessed the discount rate by obtaining
the inputs used in the discount rate
calculations, independently
benchmarking against our own
expectations and comparing the
overall rate to an expected range
based on our own benchmarks.
We combined insights from external
sources and finalised FY26 audits
to critically assess assumptions and
downside scenarios. We assessed
possible indicators of impairment
for the CGU compared with our
industry knowledge and understanding
of the Group.
•
Assessing transparency: We
considered the adequacy of the
Group’s disclosures around the
carrying value of goodwill and the
impairment analysis, assessing
whether the Group’s disclosures
about the sensitivity of the outcome
of the impairment assessment to
changes in key assumptions reflected
the risks inherent in the recoverable
amount of goodwill.
Our results
•
We found the Company’s conclusion
that there is no impairment of goodwill
in respect of the DFS CGU, and the
sensitivity disclosures made, to be
acceptable (2025 result: acceptable).
The risk Our response
Recoverability of
parent company’s
investment in
subsidiaries
Parent company’s
investment in
subsidiaries:
£264.0 million;
(2025: £260.5
million)
Refer to page 65
(Audit and Risk
Committee
Report), page 124
(accounting
policy) and page
125 (financial
disclosures).
Low risk, high value:
The carrying amount of the parent
company’s investments in subsidiaries
represents 49% (2025: 49%) of the
Parent Company’s total assets.
Recoverability is not at a high risk of
material misstatement or subject to
significant judgement. However, due to
materiality in the context of the Parent
Company financial statements, this is
considered to be the area that had the
greatest effect on our overall Parent
Company audit.
We performed the tests below rather
than seeking to rely on any of the
Company’s controls because the nature
of the balance is such that we would
expect to obtain audit evidence primarily
through the detailed procedures described.
Our procedures included:
•
Tests of detail: We assessed the
company’s evaluation of the
recoverability of investments,
including their calculation of the
enterprise value of trading entities
through critically assessing key
assumptions in line with the
procedures noted on page 90 and
sensitivity analysis.
•
We compared the carrying amount of
100% of investments with the relevant
subsidiaries’ draft balance sheet to
identify whether their net assets,
being an approximation of their
minimum recoverable amount, were in
excess of their carrying amount and
assessed whether those subsidiaries
have historically been profit-making.
•
We compared the debt-adjusted
market capitalisation to the
investment value to assess
impairment indicators.
Our results
•
We found the company’s conclusion
that there is no impairment of the
investments in subsidiaries to be
acceptable (2025: acceptable).
We continue to perform procedures over the recoverability of amounts due to the parent company
from other group companies. However, we have not assessed this as one of the most significant risks in
our current year audit and, therefore, it is not identified as part of the parent company key audit matter
in our report this year.
2. Key audit matters: our assessment of risks of material
misstatement continued
Annual Report and Accounts 2026 DFS Furniture plc 91
Strategic Report Corporate Governance Financial Statements Shareholder Information
Independent auditor’s report continued
to the members of DFS Furniture plc
3. Our application of materiality
and an overview of the scope
of our audit
Our application of materiality
Materiality for the Group financial statements
as a whole was set at £3.0m (2025: £2.5m),
determined with reference to a benchmark of
Group revenue, of which it represents 0.28%
(2025: 0.24%).
Materiality for the parent Company financial
statements as a whole was set at £2.0m
(2025: £1.6m), determined with reference to
a benchmark of parent Company total assets,
of which it represents 0.37% (2025: 0.3%).
In line with our audit methodology, our
procedures on individual account balances and
disclosures were performed to a lower threshold,
performance materiality, so as to reduce to an
acceptable level the risk that individually immaterial
misstatements in individual account balances
add up to a material amount across the financial
statements as a whole.
Performance materiality for the group was set at
65% (2025: 65%) of materiality for the financial
statements as a whole, which equates to £1.95m
(2025: £1.62m) for the Group and £1.3m (2025:
£1.0m) for the parent company. We applied this
percentage in our determination of performance
materiality for both group and parent company
based on the level of identified misstatements
and control deficiencies during the prior period.
We agreed to report to the Audit and Risk
Committee any corrected or uncorrected
identified misstatements exceeding £0.15m
(2025: £0.125m), in addition to other identified
misstatements that warranted reporting on
qualitative grounds.
Our audit procedures covered 99% (2025: 100%)
of Group revenue. We performed audit procedures
in relation to components that accounted for
99% (2025: 99%) of Group profit before tax
and 99% (2025: 99%) of Group total assets.
For the remaining components for which we
performed no audit procedures, no component
represented more than 0.2% (2025: 0.2%) of
Group profit before tax or 0.2% (2025: 0.5%)
of Group total assets. We performed analysis
at an aggregated Group level to re-examine
our assessment that there is not a reasonable
possibility of a material misstatement in
these components.
Impact of controls on our group audit
As noted within the strategic report on page 30,
the Group’s control environment is undergoing a
programme of transformation with business
change projects impacting key areas, including
IT. We, assisted by our IT auditors, obtained an
understanding of the general IT environment
related to the main finance IT system, the inventory
systems used by all in-scope components in the
group, and the revenue IT systems used by DFS
Trading, Sofology and SoDelCo components,
which were noted to be the main IT systems
relevant to our audit.
We assessed the current design of controls
intended to address the risk of management
override of controls; and, as a result of this
assessment, we were unable to place reliance on
controls in this area. Accordingly, we conducted
incremental risk assessment over journal entries
which led to increased substantive work in our
approach to journal testing.
Group revenue
£1,057.5m (2025: £1,030.3m)
Group materiality
£3.0m (2025: £2.5m)
Group revenue
Group materiality
£3.0m
Whole financial statements materiality
(2025: £2.5m)
£1.95m
Whole financial statements
performance materiality (2025: £1.62m)
£1.1m – £2.4m
Range of materiality at 4 components
(2025: £1.0m to £2.0m)
£0.15m
Misstatements reported to the audit
and risk committee (2025: £0.125m)
Overview of the scope of our audit
We performed risk assessment procedures to
determine which of the Group’s components
are likely to include risks of material misstatement
to the Group financial statements and which
procedures to perform at these components
to address those risks.
In total, we identified 7 (2025: 7) components,
having considered our evaluation of the Group’s
operational and legal structure; the existence of
common information systems; segmental reporting
of the group and our ability to perform audit
procedures centrally.
Of those, we identified 4 (2025: 4) quantitatively
significant components which contained the
largest percentages of either total revenue or
total assets of the Group, for which we
performed audit procedures.
Accordingly, we performed audit procedures
on 4 (2025: 4) components. All procedures were
completed by the group audit team and no
component auditors were engaged. We also
performed the audit of the parent Company.
We set the component materialities, ranging from
£1.1m to £2.4m (2025: £1.0m to £2.0m), having
regard to the mix of size and risk profile of the
Group across the components.
Annual Report and Accounts 2026 DFS Furniture plc92
Financial Statements
Independent auditor’s report continued
to the members of DFS Furniture plc
3. Our application of materiality
and an overview of the scope of
our audit continued
Impact of controls on our group audit
continued
Considering the developing nature of the overall
control environment and transformation project,
we concluded that a predominantly substantive
audit approach was appropriate in all areas of the
audit for the period ended 28 June 2026.
We adopted a data-oriented approach to auditing
revenue for the DFS Trading component by
performing data and analytics routines. Given
that we did not plan to rely on IT controls in our
audit, a direct testing approach was used over
the completeness and reliability of data used in
these routines and in respect of system data used
in our substantive testing on other transactional
areas including journals. In our audit of revenue
for the other in-scope components and other
areas of the audit, we planned and performed
additional substantive testing rather than
relying on controls.
Our audit procedures covered the following
percentage of Group revenue:
Group revenue
Group total assets
Group profit before tax
2026 – 99%
2025 – 100%
2026 – 99%
2025 – 99%
2026 – 99%
2025 – 99%
99%
(2025: 100%)
99%
(2025: 99%)
99%
(2025: 99%)
We performed audit procedures in relation to
components that accounted for the following
percentages of Group profit before tax and
Group total assets:
4. Going concern
The directors have prepared the financial statements
on the going concern basis as they do not intend
to liquidate the Group or the Company or to cease
their operations, and as they have concluded that
the Group’s and the Company’s financial position
means that this is realistic. They have also concluded
that there are no material uncertainties that could
have cast significant doubt over their ability to
continue as a going concern for at least a year
from the date of approval of the financial
statements (“the going concern period”).
We used our knowledge of the Group, its industry,
and the general economic environment to identify
the inherent risks to its business model and analysed
how those risks might affect the Group’s and
Company’s financial resources or ability to continue
operations over the going concern period. The
risks that we considered most likely to adversely
affect the Group’s and Company’s available
financial resources and/or metrics relevant to
debt covenants over this period were:
•
Challenging retail trading conditions driven by
macroeconomic impacts such as rising inflation
and cost of living, resulting in increased operational
costs and reduced customer confidence and
disposable income;
•
Risk of breach of financial covenants arising from
financing facilities maturing in next 2-5 years.
We considered whether these risks could
plausibly affect the liquidity or covenant
compliance in the going concern period by
assessing the directors’ sensitivities over the
level of available financial resources and
covenant thresholds indicated by the Group’s
financial forecasts taking account of severe, but
plausible adverse effects that could arise from
these risks individually and collectively.
Our procedures also included:
•
Assessing the level and expiry of committed
financing, covenant compliance during the
forecasted and historical periods and recalculation
of covenants through inspection of financing
documentation, including lender communications;
•
Critically assessing key assumptions
underpinning the cash flow forecasts (order
intake and gross profit margin) by
benchmarking against third-party evidence.
We evaluated the sensitivity of financial
resources to adverse scenarios and assessed
the plausibility of downside cases and break
points;
•
Critically assessing key assumptions underpinning
the cash flow forecasts (order intake and
gross profit margin) by benchmarking against
third-party evidence. We evaluated the
sensitivity of financial resources to adverse
scenarios and assessed the plausibility of
downside cases and break points;
•
Assessing historical forecasting accuracy by
comparing prior period cash flow forecasts to
actual results; and
•
Considering the achievability of mitigating
actions proposed by the directors and their
historical track record in implementing such
measures.
We considered whether the going concern
disclosure in note 1 to the financial statements
gives a full and accurate description of the
directors’ assessment of going concern, including
the identified risks, dependencies, and related
sensitivities. We assessed the completeness of
the going concern disclosure.
Our conclusions based on this work:
•
we consider that the directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate;
•
we have not identified, and concur with the
directors’ assessment that there is not, a
material uncertainty related to events or
conditions that, individually or collectively,
may cast significant doubt on the Group’s
or Company’s ability to continue as a going
concern for the going concern period;
•
we have nothing material to add or draw
attention to in relation to the directors’ statement
in note 1 to the financial statements on the
use of the going concern basis of accounting
with no material uncertainties that may cast
significant doubt over the Group and Company’s
use of that basis for the going concern period,
and we found the going concern disclosure in
note 1 to be acceptable; and
•
the related statement under the UK Listing
Rules set out on page 87 is materially
consistent with the financial statements
and our audit knowledge.
However, as we cannot predict all future events
or conditions and as subsequent events may
result in outcomes that are inconsistent with
judgements that were reasonable at the time
they were made, the above conclusions are not a
guarantee that the Group or the Company will
continue in operation.
Annual Report and Accounts 2026 DFS Furniture plc 93
Strategic Report Corporate Governance Financial Statements Shareholder Information
Independent auditor’s report continued
to the members of DFS Furniture plc
5. Fraud and breaches of laws
and regulations – ability to detect
Identifying and responding to risks of
material misstatement due to fraud
To identify risks of material misstatement due
to fraud (“fraud risks”) we assessed events or
conditions that could indicate an incentive
or pressure to commit fraud or provide an
opportunity to commit fraud. Our risk
assessment procedures included:
•
Enquiring of directors, the Audit and Risk
Committee, internal audit and general counsel
as to the Group’s high-level policies and
procedures to prevent and detect fraud,
including the internal audit function, and the
Group’s channel for “whistleblowing”, as well
as whether they have knowledge of any
actual, suspected or alleged fraud.
•
Reading minutes from meetings of the
Board and its sub-committees, including
the Audit and Risk, Remuneration and
Nominations Committees.
•
Considering the Long-Term Incentive Plan,
Deferred Bonus Scheme, Restricted Share
Plan and Save As You Earn remuneration
incentive schemes and performance targets
for management and directors.
•
Using analytical procedures to identify
any unusual or unexpected relationships.
We communicated identified fraud risks
throughout the audit team and remained alert
to any indications of fraud throughout the audit.
As required by auditing standards, and taking into
account possible pressures to meet profit targets
and our overall knowledge of the control environment,
we perform procedures to address the risk of
management override of controls, in particular
the risk that Group and component management
may be in a position to make inappropriate
accounting entries and the risk of bias in accounting
estimates and judgements such as impairment
assumptions. On this audit we do not believe
there is a fraud risk related to revenue recognition
because there is little opportunity to fraudulently
misstate revenue based on the high volume of
low value transactions.
We did not identify any additional fraud risks.
We performed procedures including:
•
Identifying journal entries to test for all
in-scope components based on risk criteria
and comparing the identified entries to
supporting documentation. These included
journal entries with unexpected account
combination postings to revenue, cash and
borrowings; journal entries posted by users
with few postings in the period; postings
made by or referencing specific
employees;
and postings to seldom used accounts.
•
Assessing whether the judgements made in
making accounting estimates are indicative
of a potential bias.
Identifying and responding to
risks of material misstatement
due to non-compliance with laws
and regulations
We identified areas of laws and regulations that
could reasonably be expected to have a material
effect on the financial statements from our general
commercial and sector experience, through
discussion with the directors and other management
(as required by auditing standards), and from
inspection of the Group’s regulatory and legal
correspondence and discussed with the directors
and other management the policies and procedures
regarding compliance with laws and regulations.
As the Group is regulated, our assessment of
risks involved gaining an understanding of the
control environment including the entity’s procedures
for complying with regulatory requirements.
We communicated identified laws and
regulations throughout our team and remained
alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations
on the financial statements varies considerably.
Firstly, the Group is subject to laws and regulations
that directly affect the financial statements
including financial reporting legislation (including
related companies legislation), distributable profits
legislation and taxation legislation and we assessed
the extent of compliance with these laws and
regulations as part of our procedures on the related
financial statement items.
Secondly , the Group is subject to many other
laws and regulations where the consequences of
non-compliance could have a material effect on
amounts or disclosures in the financial
statements, for instance through the imposition
of fines or litigation. We identified the following
areas as those most likely to have such an effect:
health and safety, data protection, anti-bribery,
employment law, consumer legislation and
certain aspects of company legislation
recognising the financial and regulated nature of
the Group’s activities and its legal form. Auditing
standards limit the required audit procedures to
identify non-compliance with these laws and
regulations to enquiry of the directors and other
management and inspection of regulatory and
legal correspondence, if any. Therefore if a
breach of operational regulations is not disclosed
to us or evident from relevant correspondence,
an audit will not detect that breach.
Context of the ability of the audit
to detect fraud or breaches of law
or regulation
Owing to the inherent limitations of an audit,
there is an unavoidable risk that we may not have
detected some material misstatements in the
financial statements, even though we have
properly planned and performed our audit in
accordance with auditing standards. For example,
the further removed non-compliance with laws
and regulations is from the events and transactions
reflected in the financial statements, the less
likely the inherently limited procedures required
by auditing standards would identify it.
In addition, as with any audit, there remained a
higher risk of non-detection of fraud, as these
may involve collusion, forgery, intentional
omissions, misrepresentations, or the override
of internal controls. Our audit procedures are
designed to detect material misstatement. We
are not responsible for preventing non-compliance
or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
Annual Report and Accounts 2026 DFS Furniture plc94
Financial Statements
Independent auditor’s report continued
to the members of DFS Furniture plc
6. We have nothing to report
on the other information in the
Annual Report
The directors are responsible for the other
information presented in the Annual Report
together with the financial statements. Our
opinion on the financial statements does not
cover the other information and, accordingly,
we do not express an audit opinion or, except
as explicitly stated below, any form of assurance
conclusion thereon.
Our responsibility is to read the other information
and, in doing so, consider whether, based on our
financial statements audit work, the information
therein is materially misstated or inconsistent
with the financial statements or our audit knowledge.
Based solely on that work we have not identified
material misstatements in the other information.
Strategic report and directors’ report
Based solely on our work on the other information:
•
we have not identified material misstatements
in the strategic report and the directors’ report;
•
in our opinion the information given in those
reports for the financial period is consistent
with the financial statements; and
•
in our opinion those reports have been
prepared in accordance with the Companies
Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’
Remuneration Report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal
risks and longer-term viability
We are required to perform procedures to
identify whether there is a material inconsistency
between the directors’ disclosures in respect
of emerging and principal risks and the viability
statement, and the financial statements and
our audit knowledge.
Based on those procedures, we have nothing
material to add or draw attention to in relation to:
•
the directors’ confirmation within the Viability
Reporting on page 31 that they have carried
out a robust assessment of the emerging and
principal risks facing the Group, including
those that would threaten its business model,
future performance, solvency and liquidity;
•
the Risk and Uncertainties disclosures describing
these risks and how emerging risks are identified,
and explaining how they are being managed
and mitigated; and
•
the directors’ explanation in the Viability
Reporting of how they have assessed the
prospects of the Group, over what period they
have done so and why they considered that
period to be appropriate, and their statement
as to whether they have a reasonable expectation
that the Group will be able to continue in operation
and meet its liabilities as they fall due over the
period of their assessment, including any
related disclosures drawing attention to any
necessary qualifications or assumptions.
We are also required to review the Viability
Reporting, set out on page 31 under the UK
Listing Rules. Based on the above procedures,
we have concluded that the above disclosures
are materially consistent with the financial
statements and our audit knowledge.
Our work is limited to assessing these matters
in the context of only the knowledge acquired
during our financial statements audit. As we
cannot predict all future events or conditions
and as subsequent events may result in outcomes
that are inconsistent with judgements that were
reasonable at the time they were made, the absence
of anything to report on these statements is not
a guarantee as to the Group’s and Company’s
longer-term viability.
Corporate governance disclosures
We are required to perform procedures to
identify whether there is a material inconsistency
between the directors’ corporate governance
disclosures and the financial statements and our
audit knowledge.
Based on those procedures, we have concluded
that each of the following is materially consistent
with the financial statements and our audit knowledge:
•
the directors’ statement that they consider
that the annual report and financial statements
taken as a whole is fair, balanced and
understandable, and provides the information
necessary for shareholders to assess the
Group’s position and performance, business
model and strategy;
•
the section of the annual report describing
the work of the Audit and Risk Committee,
including the significant issues that the audit
and risk committee considered in relation to
the financial statements, and how these
issues were addressed; and
•
the section of the annual report that describes
the review of the effectiveness of the Group’s
risk management and internal control systems.
We are required to review the part of the
Corporate Governance Statement relating to the
Group’s compliance with the provisions of the UK
Corporate Governance Code specified by the UK
Listing Rules for our review. We have nothing to
report in this respect.
7. We have nothing to report
on the other matters on which
we are required to report
by exception
Under the Companies Act 2006, we are required
to report to you if, in our opinion:
•
adequate accounting records have not been
kept by the parent Company, or returns
adequate for our audit have not been received
from branches not visited by us; or
•
the parent Company financial statements
and the part of the Directors’ Remuneration
Report to be audited are not in agreement
with the accounting records and returns; or
•
certain disclosures of directors’ remuneration
specified by law are not made; or
•
we have not received all the information
and explanations we require for our audit.
We have nothing to report in these respects.
8. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set
out on page 88, the directors are responsible for:
the preparation of the financial statements
including being satisfied that they give a true and
fair view; such internal control as they determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error; assessing the
Group and parent Company’s ability to continue
as a going concern, disclosing, as applicable,
matters related to going concern; and using the
going concern basis of accounting unless they
either intend to liquidate the Group or the parent
Company or to cease operations, or have no
realistic alternative but to do so.
Annual Report and Accounts 2026 DFS Furniture plc 95
Strategic Report Corporate Governance Financial Statements Shareholder Information
Independent auditor’s report continued
to the members of DFS Furniture plc
8. Respective responsibilities
continued
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance
about whether the financial statements as a
whole are free from material misstatement,
whether due to fraud or error, and to issue
our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does
not guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements
can arise from fraud or error and are considered
material if, individually or in aggregate, they
could reasonably be expected to influence the
economic decisions of users taken on the basis
of the financial statements.
A fuller description of our responsibilities
is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these
financial statements in an annual financial
report prepared under Disclosure Guidance
and Transparency Rule 4.1.17R and 4.1.18R. This
auditor’s report provides no assurance over
whether the annual financial report has been
prepared in accordance with those requirements.
9. The purpose of our audit
work and to whom we owe our
responsibilities
This report is made solely to the Company’s
members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our
audit work has been undertaken so that we might
state to the Company’s members those matters
we are required to state to them in an auditor’s
report and for no other purpose. To the fullest
extent permitted by law, we do not accept or
assume responsibility to anyone other than the
Company and the Company’s members, as a
body, for our audit work, for this report, or for
the opinions we have formed.
for and on behalf of KPMG LLP , Statutory Auditor
Chartered Accountants
1 St Peter’s Square
Manchester
M2 3AE
24 September 2026
Annual Report and Accounts 2026 DFS Furniture plc96
Financial Statements
Consolidated income statement
for 52 weeks ended 28 June 2026 (52 weeks ended 29 June 2025)
Note
52 weeks to 28 June 2026 | 52 weeks to 29 June 2025 | ||||||
| Non- | Non- | ||||||
| Underlying | underlying | Total | Underlying | underlying | Total | ||
| £m | £m | £m | £m | £m | £m | ||
Gross sales 1 | 1, 2 | ||||||
Revenue | 2 | ||||||
Cost of sales | ( | ( | ( | ( | |||
Gross profit | |||||||
Selling and distribution costs | ( | ( | ( | ( | |||
Administrative expenses | ( | ( | ( | ( | ( | ||
Operating profit/(loss) before depreciation, amortisation and impairment | 3 | ( | |||||
Depreciation | ( | ( | ( | ( | |||
Amortisation | ( | ( | ( | ( | |||
Impairment | ( | ( | ( | ( | |||
Operating profit | 2, 3 | ||||||
Finance income | 5 | ||||||
Finance expenses | 5 | ( | ( | ( | ( | ||
Profit before tax | |||||||
Taxation | 6 | ( | ( | ( | ( | ( | |
Profit for the period | |||||||
Earnings per share | 7 | ||||||
Basic | |||||||
Diluted |
1. Refer to pages 22 to 23 for APM definitions.
Annual Report and Accounts 2026 DFS Furniture plc 97
Strategic Report Corporate Governance Financial Statements Shareholder Information
Consolidated statement of comprehensive income
for 52 weeks ended 28 June 2026 (52 weeks ended 29 June 2025)
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Profit for the period | ||
| 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 | ( | |
| Net change in fair value of cash flow hedges reclassified to profit or loss | ||
– recognised in cost of sales | ||
Income tax on items that are or may be reclassified subsequently to profit or loss | ( | |
Other comprehensive income/(expense) for the period, net of income tax | ( | |
Total comprehensive income for the period | ||
Total comprehensive income for the period attributable to owners of the parent |
Annual Report and Accounts 2026 DFS Furniture plc98
Financial Statements
Consolidated balance sheet
as at 28 June 2026
| 28 June 2026 | 29 June 2025 | ||
| Note | £m | £m | |
| Non-current assets | |||
Property, plant and equipment | 8 | ||
Right of use assets | 8, 9 | ||
Intangible assets | 10 | ||
Other financial assets | 12 | ||
Deferred tax assets | 13 | ||
| Current assets | |||
Inventories | 14 | ||
Other financial assets | 12 | ||
Trade and other receivables | 15 | ||
Current tax assets | |||
Cash and cash equivalents (excluding bank overdrafts) | |||
Total assets | |||
| Current liabilities | |||
Bank overdraft | ( | ( | |
Trade payables and other liabilities | 16 | ( | ( |
Lease liabilities | 9 | ( | ( |
Provisions | 20 | ( | ( |
Other financial liabilities | 17 | ( | ( |
( | ( | ||
| Non-current liabilities | |||
Interest bearing loans and borrowings | 18 | ( | ( |
Lease liabilities | 9 | ( | ( |
Provisions | 20 | ( | ( |
Other financial liabilities | 17 | ( | ( |
( | ( | ||
Total liabilities | ( | ( | |
Net assets | |||
| Equity attributable to owners of the Company | |||
Share capital | 22 | ||
Share premium | 22 | ||
Merger reserve | 22 | ||
Capital redemption reserve | 22 | ||
Treasury shares | 22 | ( | |
Employee Benefit Trust shares | 22 | ( | ( |
Cash flow hedging reserve | 22 | ( | |
Retained earnings | ( | ( | |
Total equity |
Company registered number: 07236769
Annual Report and Accounts 2026 DFS Furniture plc 99
Strategic Report Corporate Governance Financial Statements Shareholder Information
Consolidated statement of changes in equity
| Capital | Employee | Cash flow | |||||||
| Share | Share | Merger | redemption | Treasury | Benefit Trust | hedging | Retained | Total | |
| capital | premium | reserve | reserve | shares | shares | reserve | earnings | equity | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | |
Balance at 30 June 2024 | ( | ( | ( | ( | |||||
Profit for the year | |||||||||
Other comprehensive income/(expense) | ( | ( | |||||||
Total comprehensive income for the year | ( | ||||||||
Employee Benefit Trust shares issued | ( | ||||||||
Share based payments | |||||||||
Tax recognised directly in equity | |||||||||
Balance at 29 June 2025 | ( | ( | ( | ( | |||||
Profit for the year | |||||||||
Other comprehensive income/(expense) | ( | ||||||||
Total comprehensive income for the year | |||||||||
Dividends | ( | ( | |||||||
Employee Benefit Trust shares issued | ( | ||||||||
Purchase of EBT shares | ( | ( | |||||||
Transfer of shares | ( | ||||||||
Share based payments | |||||||||
Settlement of shared based payments | ( | ( | |||||||
Tax recognised directly in equity | ( | ( | |||||||
Balance at | ( | ( |
Annual Report and Accounts 2026 DFS Furniture plc100
Financial Statements
Consolidated cash flow statement
for 52 weeks ended 28 June 2026 (52 weeks ended 29 June 2025)
| 52 weeks to | 52 weeks to | ||
| 28 June 2026 | 29 June 2025 | ||
| Note | £m | £m | |
Net cash from operating activities | 26 | ||
| Investing activities | |||
Proceeds from sale of property, plant and equipment | |||
Interest received | |||
Acquisition of property, plant and equipment | 8 | ( | ( |
Acquisition of PPE – right of use asset | ( | ( | |
Acquisition of other intangible assets | 10 | ( | ( |
Net cash used in investing activities | ( | ( | |
| Financing activities | |||
Interest paid | ( | ( | |
Interest paid on lease liabilities | 9 | ( | ( |
Payment of lease liabilities | 9 | ( | ( |
Net repayment of senior revolving credit facility | 27 | ( | ( |
Purchase of shares by Employee Benefit Trust | ( | ||
Proceeds from sale of own shares | |||
Ordinary dividends paid | ( | ||
Net cash used in financing activities | ( | ( | |
Net decrease in cash and cash equivalents | 27 | ( | |
Cash and cash equivalents at beginning of period | 27 | ||
Cash and cash equivalents (including bank overdraft) at end of period | 27 |
Annual Report and Accounts 2026 DFS Furniture plc 101
Strategic Report Corporate Governance Financial Statements Shareholder Information
Notes to the consolidated financial statements
at 28 June 2026
Annual Report and Accounts 2026 DFS Furniture plc102
Financial Statements
Notes to the consolidated financial statements continued
at 28 June 2026
1. Accounting policies continued
1.4 Gross sales and revenue continued
Annual Report and Accounts 2026 DFS Furniture plc 103
Strategic Report Corporate Governance Financial Statements Shareholder Information
Notes to the consolidated financial statements continued
at 28 June 2026
1. Accounting policies continued
1.7 Taxation continued
Annual Report and Accounts 2026 DFS Furniture plc104
Financial Statements
Notes to the consolidated financial statements continued
at 28 June 2026
1. Accounting policies continued
1.11 Leases continued
Lease liability – remeasurement continued
Annual Report and Accounts 2026 DFS Furniture plc 105
Strategic Report Corporate Governance Financial Statements Shareholder Information
Notes to the consolidated financial statements continued
at 28 June 2026
1. Accounting policies continued
Annual Report and Accounts 2026 DFS Furniture plc106
Financial Statements
Notes to the consolidated financial statements continued
at 28 June 2026
1. Accounting policies continued
1.19 Significant areas of estimation and judgement continued
External gross sales | Inter-segment sales | Total gross sales | ||||
| 52 weeks to | 52 weeks to | 52 weeks to | 52 weeks to | 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | 28 June 2026 | 29 June 2025 | 28 June 2026 | 29 June 2025 | |
| £m | £m | £m | £m | £m | £m | |
DFS | 1,113.6 | 1,091.3 | — | — | 1,113.6 | 1,091.3 |
Sofology | 305.7 | 297.0 | — | — | 305.7 | 297.0 |
Other segments | 0.8 | — | 200.6 | 195.5 | 201.4 | 195.5 |
Eliminations | — | — | (200.6) | (195.5) | (200.6) | (195.5) |
Gross sales | 1,420.1 | 1,388.3 | — | — | 1,420.1 | 1,388.3 |
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Total segments gross sales | 1,420.1 | 1,388.3 |
Value added and other sales taxes | (231.8) | (222.5) |
Customer credit subsidy | (102.5) | (108.8) |
Cost of aftercare products | (28.3) | (26.7) |
Revenue | 1,057.5 | 1,030.3 |
| Of which: | ||
Furniture sales | 1,006.6 | 977.5 |
Commission on sales of aftercare products | 50.9 | 52.8 |
Revenue | 1,057.5 | 1,030.3 |
Annual Report and Accounts 2026 DFS Furniture plc 107
Strategic Report Corporate Governance Financial Statements Shareholder Information
Notes to the consolidated financial statements continued
at 28 June 2026
2. Segmental analysis continued
Segment revenue and profit continued
| DFS | Sofology | Other segments | Eliminations | Total | |
| £m | £m | £m | £m | £m | |
Revenue | 823.9 | 232.8 | 201.4 | (200.6) | 1,057.5 |
Cost of sales | (379.4) | (98.6) | (52.7) | 87.2 | (443.5) |
Gross profit | 444.5 | 134.2 | 148.7 | (113.4) | 614.0 |
| Selling and distribution | |||||
| costs (excluding | |||||
property costs) | (242.3) | (68.7) | (118.9) | 84.2 | (345.7) |
| Brand contribution | |||||
(segment profit) | 202.2 | 65.5 | 29.8 | (29.2) | 268.3 |
Property costs | (31.0) | ||||
| Underlying | |||||
administrative expenses | (74.4) | ||||
Underlying EBITDA | 162.9 |
| DFS | Sofology | Other segments | Eliminations | Total | |
| £m | £m | £m | £m | £m | |
Revenue | 804.6 | 225.7 | 195.5 | (195.5) | 1,030.3 |
Cost of sales | (383.1) | (98.1) | (48.5) | 81.1 | (448.6) |
Gross profit | 421.5 | 127.6 | 147.0 | (114.4) | 581.7 |
| Selling and distribution | |||||
| costs (excluding | |||||
property costs) | (234.8) | (62.0) | (109.8) | 84.6 | (322.0) |
| Brand contribution | |||||
(segment profit) | 186.7 | 65.6 | 37.2 | (29.8) | 259.7 |
Property costs | (31.2) | ||||
| Underlying | |||||
administrative expenses | (71.3) | ||||
Underlying EBITDA | 157.2 |
| 52 weeks to | 52 weeks to | ||
| 28 June 2026 | 29 June 2025 | ||
| Note | £m | £m | |
Underlying EBITDA | 162.9 | 157.2 | |
Non-underlying administrative expenses | 3 | 0.2 | (0.6) |
Depreciation, amortisation and impairments | (87.9) | (85.5) | |
Operating profit | 75.2 | 71.1 | |
Finance income | 0.7 | 0.4 | |
Finance expenses | (32.2) | (38.6) | |
Profit before tax | 43.7 | 32.9 |
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
United Kingdom | 1,038.7 | 1,012.2 |
Republic of Ireland | 18.8 | 18.1 |
Total revenue | 1,057.5 | 1,030.3 |
| Depreciation, amortisation | ||||
| Additions to non-current assets | and impairment | |||
| 52 weeks to | 52 weeks to | 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | 28 June 2026 | 29 June 2025 | |
| £m | £m | £m | £m | |
DFS | 27.8 | 20.6 | 65.2 | 61.3 |
Sofology | 8.0 | 4.2 | 17.5 | 18.3 |
Other segments | 5.0 | 3.5 | 5.2 | 5.9 |
Total Group | 40.8 | 28.3 | 87.9 | 85.5 |
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Net foreign exchange losses/(gains) | 3.0 | (1.6) |
Depreciation on tangible assets (including depreciation on right of use assets) | 74.4 | 71.2 |
Amortisation of intangible assets | 13.3 | 13.0 |
Impairments | 0.2 | 1.3 |
Net loss on disposal of property, plant and equipment | 0.8 | 0.3 |
Net gain on disposal of right of use assets | (1.4) | (0.8) |
Cost of inventories recognised as an expense | 455.4 | 456.4 |
Release of provisions (note 20) | (0.7) | (0.5) |
Annual Report and Accounts 2026 DFS Furniture plc108
Financial Statements
Notes to the consolidated financial statements continued
at 28 June 2026
3. Operating profit continued
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Release of lease guarantee provision | (0.2) | (0.6) |
Restructuring costs | — | 0.7 |
Land slippage costs | — | 0.5 |
Fair value lease adjustment | — | (4.7) |
(0.2) | (4.1) |
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Audit of these financial statements | 0.4 | 0.4 |
Audit of the financial statements of Group subsidiaries | 0.5 | 0.5 |
| Amounts receivable by the Company’s auditor and its associates in respect of: | ||
All other services | 0.1 | 0.1 |
1.0 | 1.0 |
4. Staff numbers and costs
The average number of persons employed by the Group during the period, analysed by category,
was as follows:
| Number of employees | ||
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
Production | 703 | 674 |
Warehouse and transport | 1,106 | 1,184 |
Sales and administration | 2,842 | 2,822 |
4,651 | 4,680 |
The aggregate payroll costs of these persons were as follows:
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Wages and salaries | 179.2 | 176.6 |
Social security costs | 22.3 | 19.2 |
Other pension costs | 5.6 | 5.6 |
207.1 | 201.4 | |
Share based payment expense (equity settled) | 3.3 | 2.8 |
210.4 | 204.2 |
Aggregate remuneration payable to Directors in respect of qualifying services was as follows:
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Emoluments | 2.5 | 2.4 |
Pension contributions | — | — |
Gain on exercise of share options | — | — |
Three Directors accrued retirement benefits under pension schemes in the period (2025: three).
All of the Directors’ pension contributions were to defined contribution schemes.
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
| Finance income | ||
Interest income on bank deposits | 0.2 | 0.3 |
Interest on corporation tax | 0.5 | 0.1 |
Total finance income | 0.7 | 0.4 |
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
| Finance expense | ||
Interest payable on senior revolving credit facility | (4.2) | (8.7) |
Interest payable on private placement debt | (4.3) | (4.3) |
Bank fees | (1.4) | (1.4) |
Interest on lease liabilities | (22.2) | (24.2) |
Other interest | (0.1) | — |
Total finance expense | (32.2) | (38.6) |
Annual Report and Accounts 2026 DFS Furniture plc 109
Strategic Report Corporate Governance Financial Statements Shareholder Information
Notes to the consolidated financial statements continued
at 28 June 2026
6. Taxation
Recognised in the income statement
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
| Current tax | ||
Current period | 10.2 | 8.2 |
Adjustments for prior years | (2.6) | (0.8) |
Current tax expense | 7.6 | 7.4 |
| Deferred tax | ||
Origination and reversal of temporary differences | 1.1 | 0.4 |
Adjustments for prior years | 0.1 | 0.9 |
Deferred tax expense | 1.2 | 1.3 |
Total tax expense in income statement | 8.8 | 8.7 |
| Total tax expense in income statement | ||
– Underlying | 11.5 | 8.7 |
| – Non-underlying | (2.7) | — |
8.8 | 8.7 |
During the year ended 28 June 2026, a cross-border tax evaluation relating to previous accounting
periods was successfully resolved, resulting in a tax credit of £2.7m shown above as an adjustment
for prior years. This has been presented as non-underlying on the face of the income statement as
it is a significant non-recurring tax credit.
Reconciliation of effective tax rate
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Profit before tax for the period from continuing and discontinued operations | 43.7 | 32.9 |
Tax using the UK corporation tax rate of 25% (2025: 25%) | 10.9 | 8.2 |
Non-deductible expenses | 0.4 | 0.8 |
Effect of tax rates in foreign jurisdictions | 0.1 | 0.1 |
Adjustments in respect of share options | (0.1) | (0.5) |
Adjustment in respect of prior years | (2.5) | 0.1 |
Total tax expense | 8.8 | 8.7 |
Deferred taxation is measured at tax rates that are expected to apply in the periods in which temporary
differences are expected to reverse based on tax rates 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 28 June 2026 (25% at 29 June 2025).
Income tax recognised in other comprehensive income
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Effective portion of changes in fair value of cash flow hedges | 0.3 | (2.1) |
Net change in fair value of cash flow hedges reclassified to profit or loss | 0.6 | (0.6) |
Realised gain from equity | 1.4 | 0.9 |
2.3 | (1.8) |
7. Earnings per share
Statutory earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for 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 average number of shares reflects the movements 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 corresponding change in resources are reflected
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 for the financial period
attributable to ordinary equity holders of the parent company, but increasing the weighted average
number of ordinary shares by the dilutive effect of potential ordinary shares. Potential ordinary shares
arise from employee share based payment arrangements (note 25). Where share based payments are
subject to 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 Directors’ Remuneration Report.
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| pence | pence | |
Basic earnings per share | 15.1 | 10.5 |
Diluted earnings per share | 14.8 | 10.3 |
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Profit for the period attributable to equity holders of the parent company | 34.9 | 24.2 |
Annual Report and Accounts 2026 DFS Furniture plc110
Financial Statements
Notes to the consolidated financial statements continued
at 28 June 2026
7. Earnings per share continued
Statutory earnings per share continued
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| No. | No. | |
Weighted average number of shares in issue for basic earnings per share | 231,268,058 | 230,954,285 |
Dilutive effect of employee share based payment awards | 4,281,540 | 4,018,845 |
Weighted average number of shares in issue for diluted earnings per share | 235,549,598 | 234,973,130 |
Underlying earnings per share
Underlying basic earnings per share and underlying diluted earnings per share are calculated by
dividing the profit for the period attributable to ordinary equity holders of the parent company,
as adjusted to exclude the effect of non-underlying items, by the applicable weighted average
numbers of ordinary shares.
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
| Profit for the period attributable to equity holders of the parent company | 34.9 | 24.2 |
Non-underlying profit after tax | (2.9) | (3.1) |
Underlying profit for the period attributable to equity holders of the parent company from continuing operations | 32.0 | 21.1 |
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| No. | No. | |
Weighted average number of shares in issue for basic earnings per share | 231,268,058 | 230,954,285 |
Dilutive effect of employee share based payment awards | 4,281,540 | 4,018,845 |
Weighted average number of shares in issue for diluted earnings per share | 235,549,598 | 234,973,130 |
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| pence | pence | |
Underlying basic earnings per share | 13.8 | 9.2 |
Underlying diluted earnings per share | 13.6 | 9.0 |
| Land and | Plant and | Motor | Right of | ||
| buildings | equipment | vehicles | use assets | Total | |
| £m | £m | £m | £m | £m | |
| Cost | |||||
Balance at 30 June 2024 | 14.4 | 223.5 | 7.1 | 573.8 | 818.8 |
Reclassifications | (0.8) | — | — | 0.8 | — |
Additions | — | 8.7 | 0.3 | 8.0 | 17.0 |
Remeasurements | — | — | — | 9.7 | 9.7 |
Disposals | — | (6.0) | (3.7) | (5.8) | (15.5) |
Balance at 29 June 2025 | 13.6 | 226.2 | 3.7 | 586.5 | 830.0 |
Additions | — | 16.5 | — | 13.7 | 30.2 |
Remeasurements | — | — | — | 13.7 | 13.7 |
Disposals | — | (13.2) | (1.2) | (17.8) | (32.2) |
Balance at 28 June 2026 | 13.6 | 229.5 | 2.5 | 596.1 | 841.7 |
| Depreciation and impairments | |||||
Balance at 30 June 2024 | 2.4 | 151.8 | 7.0 | 258.8 | 420.0 |
Reclassifications | (1.4) | — | — | 1.4 | — |
Depreciation charge for the period | 0.3 | 16.7 | 0.2 | 54.0 | 71.2 |
Impairments | — | 0.7 | — | 0.6 | 1.3 |
Disposals | — | (5.7) | (3.7) | (5.2) | (14.6) |
Balance at 29 June 2025 | 1.3 | 163.5 | 3.5 | 309.6 | 477.9 |
Depreciation charge for the period | 0.3 | 16.1 | 0.1 | 57.9 | 74.4 |
Disposals | — | (12.3) | (1.2) | (17.4) | (30.9) |
Balance at 28 June 2026 | 1.6 | 167.3 | 2.4 | 350.1 | 521.4 |
| Net book value | |||||
At 30 June 2024 | 12.0 | 71.7 | 0.1 | 315.0 | 398.8 |
At 29 June 2025 | 12.3 | 62.7 | 0.2 | 276.9 | 352.1 |
At 28 June 2026 | 12.0 | 62.2 | 0.1 | 246.0 | 320.3 |
Annual Report and Accounts 2026 DFS Furniture plc 111
Strategic Report Corporate Governance Financial Statements Shareholder Information
Notes to the consolidated financial statements continued
at 28 June 2026
| Property | Vehicles | Equipment | Total | |
| £m | £m | £m | £m | |
| Cost | ||||
At 30 June 2024 | 535.2 | 36.7 | 1.9 | 573.8 |
Reclassifications | 0.8 | — | — | 0.8 |
Additions | 2.0 | 6.0 | — | 8.0 |
Remeasurements | 9.7 | — | — | 9.7 |
Disposals | (1.5) | (4.3) | — | (5.8) |
At 29 June 2025 | 546.2 | 38.4 | 1.9 | 586.5 |
Additions | 8.2 | 5.5 | — | 13.7 |
Remeasurements | 13.7 | — | — | 13.7 |
Disposals | (13.1) | (4.7) | — | (17.8) |
At 28 June 2026 | 555.0 | 39.2 | 1.9 | 596.1 |
| Depreciation and impairment | ||||
At 30 June 2024 | 241.2 | 15.9 | 1.7 | 258.8 |
Reclassifications | 1.4 | — | — | 1.4 |
Depreciation charge for the period | 47.2 | 6.7 | 0.1 | 54.0 |
Disposals | (1.5) | (3.7) | — | (5.2) |
Impairments | 0.6 | — | — | 0.6 |
At 29 June 2025 | 288.9 | 18.9 | 1.8 | 309.6 |
Depreciation charge for the period | 51.3 | 6.6 | — | 57.9 |
Disposals | (12.7) | (4.7) | — | (17.4) |
At 28 June 2026 | 327.5 | 20.8 | 1.8 | 350.1 |
| Net book value | ||||
At 30 June 2024 | 294.0 | 20.8 | 0.2 | 315.0 |
At 29 June 2025 | 257.3 | 19.5 | 0.1 | 276.9 |
At 28 June 2026 | 227.5 | 18.4 | 0.1 | 246.0 |
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Current lease liabilities | 66.8 | 64.2 |
Non-current lease liabilities | 246.7 | 288.7 |
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Interest on lease liabilities | (22.2) | (24.2) |
Variable lease payments not included in the measurement of lease liabilities | (2.2) | (1.9) |
Income from subleasing right of use assets | 0.7 | 0.1 |
Expenses relating to short term leases and low value leases | (0.1) | — |
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Total cash outflow for lease liabilities | 86.6 | 88.7 |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Less than one year | — | 0.1 |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Within one year | 0.9 | 0.7 |
One to two years | 0.9 | 0.9 |
Two to three years | 0.9 | 0.9 |
Three to four years | 0.6 | 0.6 |
Four to five years | 0.6 | 0.6 |
Over five years | 2.0 | 2.8 |
5.9 | 6.5 |
Annual Report and Accounts 2026 DFS Furniture plc112
Financial Statements
Notes to the consolidated financial statements continued
at 28 June 2026
| Computer | Brand | |||
| software | names | Goodwill | Total | |
| £m | £m | £m | £m | |
| Cost | ||||
Balance at 30 June 2024 | 80.4 | 14.8 | 509.3 | 604.5 |
Additions | 11.3 | — | — | 11.3 |
Disposals | (0.5) | — | — | (0.5) |
Balance at 29 June 2025 | 91.2 | 14.8 | 509.3 | 615.3 |
Additions | 10.6 | — | — | 10.6 |
Disposals | (1.1) | — | — | (1.1) |
Balance at 28 June 2026 | 100.7 | 14.8 | 509.3 | 624.8 |
| Amortisation and impairments | ||||
Balance at 30 June 2024 | 60.8 | 9.8 | 1.0 | 71.6 |
Amortisation charge for the period | 11.6 | 1.4 | — | 13.0 |
Disposals | (0.5) | — | — | (0.5) |
Balance at 29 June 2025 | 71.9 | 11.2 | 1.0 | 84.1 |
Amortisation charge for the period | 11.9 | 1.4 | — | 13.3 |
Disposals | (0.6) | — | — | (0.6) |
Impairment | — | 0.2 | — | 0.2 |
Balance at 28 June 2026 | 83.2 | 12.8 | 1.0 | 97.0 |
| Net book value | ||||
At 30 June 2024 | 19.6 | 5.0 | 508.3 | 532.9 |
At 29 June 2025 | 19.3 | 3.6 | 508.3 | 531.2 |
At 28 June 2026 | 17.5 | 2.0 | 508.3 | 527.8 |
| Goodwill | ||
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
DFS Trading Limited | 479.9 | 479.9 |
Sofology Limited | 28.4 | 28.4 |
508.3 | 508.3 |
Annual Report and Accounts 2026 DFS Furniture plc 113
Strategic Report Corporate Governance Financial Statements Shareholder Information
Notes to the consolidated financial statements continued
at 28 June 2026
| Principal activity | |
Diamond Holdco 2 Limited 1 | Intermediate holding company |
Diamond Holdco 7 Limited 1 | Intermediate holding company |
DFS Furniture 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 |
Haydock Furniture Limited 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 |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
| Non-current | ||
| Foreign exchange contracts | 0.1 | — |
| Current | ||
Foreign exchange contracts | 1.1 | — |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Fixed asset temporary differences | 3.0 | 2.8 |
IFRS 16 transition impact | 3.8 | 5.1 |
Remeasurement of derivatives to fair value | 0.2 | 2.1 |
Brand names | (0.5) | (0.8) |
Share based payments | 1.2 | 1.9 |
Other temporary differences | 0.1 | 0.5 |
Net deferred tax assets | 7.8 | 11.6 |
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
At start of period | 11.6 | 10.8 |
| (Charged)/credited to the income statement: | ||
Fixed asset temporary differences | 0.2 | 1.0 |
Unwind of IFRS 16 transition impact | (1.3) | (2.7) |
Brand names | 0.3 | 0.3 |
Share based payments | (0.5) | 0.9 |
Other temporary differences | 0.1 | (1.0) |
Recognised in the statement of comprehensive income | (2.3) | 1.8 |
Recognised in the statement of changes in equity | (0.3) | 0.5 |
At end of period | 7.8 | 11.6 |
Annual Report and Accounts 2026 DFS Furniture plc114
Financial Statements
Notes to the consolidated financial statements continued
at 28 June 2026
14. Inventories
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Raw materials and consumables | 6.3 | 6.6 |
Finished goods and goods for resale | 57.4 | 59.8 |
63.7 | 66.4 | |
Write down to net realisable value | (10.2) | (9.8) |
53.5 | 56.6 |
In applying its accounting policy for inventory, the Group identifies those items where there is a
risk that net realisable value does not exceed cost, due to 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.
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Trade receivables | 11.6 | 10.5 |
Prepayments | 4.7 | 4.7 |
Accrued income | 0.2 | 0.2 |
Other receivables | 1.0 | 0.4 |
17.5 | 15.8 |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
| Current | ||
Payments received on account | 47.8 | 50.4 |
Trade payables | 111.4 | 91.6 |
Other creditors including other tax and social security | 29.4 | 36.1 |
Accruals | 50.7 | 53.7 |
239.3 | 231.8 |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
| Non-current | ||
Foreign exchange contracts | 0.1 | 0.3 |
| Current | ||
Foreign exchange contracts | 0.3 | 8.1 |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Senior revolving credit facility | 19.0 | 57.0 |
Private placement debt | 50.0 | 50.0 |
Unamortised issue costs | (1.2) | (1.7) |
67.8 | 105.3 |
19. Employee benefits
Annual Report and Accounts 2026 DFS Furniture plc 115
Strategic Report Corporate Governance Financial Statements Shareholder Information
Notes to the consolidated financial statements continued
at 28 June 2026
| Guarantee | Property | Other | ||
| provision | provisions | provisions | Total | |
| £m | £m | £m | £m | |
Balance at 29 June 2025 | 8.3 | 8.5 | 2.3 | 19.1 |
Provisions made during the period | 7.6 | 4.8 | 1.2 | 13.6 |
Provisions used during the period | (7.8) | (2.7) | (1.1) | (11.6) |
Provisions released during the period | — | (0.9) | — | (0.9) |
Balance at 28 June 2026 | 8.1 | 9.7 | 2.4 | 20.2 |
Current | 6.9 | 5.2 | 2.2 | 14.3 |
Non-current | 1.2 | 4.5 | 0.2 | 5.9 |
8.1 | 9.7 | 2.4 | 20.2 |
21. Dividends
The following dividends were recognised and paid during the period:
| 52 weeks to | 52 weeks to | ||
| Pence per | 28 June 2026 | 29 June 2025 | |
| ordinary share | £m | £m | |
Interim ordinary dividend for FY26 | 1.0p | 2.3 | — |
The Directors recommend a final dividend of 2 .0 p per share in respect of the financial period ended 28 June
2026, resulting in a total proposed dividend of £4. 6 m. Subject to approval by the shareholders at the AGM on
13 November 2026, the final dividend will be paid on 24 December 2026 to all shareholders on the register
at 4 December 2026. The Company’s shares will trade ex-dividend from 3 December 2026. As the dividend
has not yet been approved it has not been recognised as a liability in these financial statements.
22. Capital and reserves
| Number of shares | Ordinary shares | |
| ‘000 | £m | |
Ordinary shares of £0.10 each Allotted, called up and fully paid | ||
At the start and end of the financial period | 236,000 | 23.6 |
Annual Report and Accounts 2026 DFS Furniture plc116
Financial Statements
Notes to the consolidated financial statements continued
at 28 June 2026
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
| Financial assets | ||
Derivatives in designated hedging relationships | 1.2 | — |
Financial assets at amortised cost | 12.6 | 10.9 |
Cash | 10.9 | 13.9 |
| Financial liabilities | ||
Derivatives in designated hedging relationships | (0.4) | (8.4) |
Senior revolving credit facility | (17.8) | (55.3) |
Private placement debt | (50.0) | (50.0) |
Bank overdraft | (10.9) | (13.9) |
Trade and other payables | (162.1) | (145.3) |
Lease liabilities | (313.5) | (352.9) |
| Less than | |||||
| 1 year | 1 to 2 years | 2 to 5 years | Over 5 years | Total | |
| 28 June 2026 | £m | £m | £m | £m | £m |
Trade and other payables | 162.1 | — | — | — | 162.1 |
Lease liabilities | 84.0 | 74.1 | 151.4 | 87.9 | 397.4 |
Senior revolving credit facility | 1.2 | 1.2 | 19.7 | — | 22.1 |
Private placement debt | 4.3 | 4.3 | 55.1 | — | 63.7 |
251.6 | 79.6 | 226.2 | 87.9 | 645.3 | |
Derivatives: net settled | — | — | — | — | — |
Derivatives: gross settled | — | — | — | — | — |
Cash in flows | (109.3) | (20.9) | — | — | (130.2) |
Cash out flows | 107.7 | 20.7 | — | — | 128.4 |
Total cash flows | 250.0 | 79.4 | 226.2 | 87.9 | 643.5 |
| Less than | |||||
| 1 year | 1 to 2 years | 2 to 5 years | Over 5 years | Total | |
| 29 June 2025 | £m | £m | £m | £m | £m |
Trade and other payables | 145.3 | — | — | — | 145.3 |
Lease liabilities | 87.6 | 78.2 | 171.0 | 112.9 | 449.7 |
Senior revolving credit facility | 4.2 | 4.2 | 63.6 | — | 72.0 |
Private placement debt | 4.3 | 4.3 | 34.0 | 25.4 | 68.0 |
Other liabilities | 13.0 | 4.5 | 1.1 | 0.5 | 19.1 |
254.4 | 91.2 | 269.7 | 138.8 | 754.1 | |
Derivatives: net settled | — | — | — | — | — |
Derivatives: gross settled | — | — | — | — | — |
Cash in flows | (111.1) | (10.7) | — | — | (121.8) |
Cash out flows | 119.4 | 11.0 | — | — | 130.4 |
Total cash flows | 262.7 | 91.5 | 269.7 | 138.8 | 762.7 |
Annual Report and Accounts 2026 DFS Furniture plc 117
Strategic Report Corporate Governance Financial Statements Shareholder Information
Notes to the consolidated financial statements continued
at 28 June 2026
24. Financial instruments: risk management continued
28 June 2026 | 29 June 2025 | |||
| Notional amount | Fair value | Notional amount | Fair value | |
| £m | £m | £m | £m | |
| Derivatives in designated hedging relationships | ||||
US Dollar | 128.4 | 0.8 | 130.5 | (8.4) |
Assets | Liabilities | |||
| 28 June 2026 | 29 June 2025 | 28 June 2026 | 29 June 2025 | |
| £m | £m | £m | £m | |
US Dollar | 3.8 | 1.1 | (25.5) | (18.2) |
Euro | 1.5 | 5.7 | (1.7) | (0.3) |
Income statement | Equity | |||
| 52 weeks to | 52 weeks to | 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | 28 June 2026 | 29 June 2025 | |
| £m | £m | £m | £m | |
US Dollar | 2.2 | 1.7 | (12.9) | (12.2) |
Euro | — | (0.5) | — | — |
Annual Report and Accounts 2026 DFS Furniture plc118
Financial Statements
Notes to the consolidated financial statements continued
at 28 June 2026
25. Share based payments
The Group has five share based payment schemes in operation:
DFS Group Share Plan (DSP)
The DSP is a discretionary reward plan that allows the Group to grant conditional share awards or nil-cost
options to Executive Directors and other individuals in key roles in the Group. This scheme was established
in the year ended June 2025 to replace the LTIP, DBS and RSP schemes. Under this plan, the
Remuneration Committee may award annual grants of restricted share awards in the form of nil-cost
options or conditional shares. Awards will ordinarily vest three years from the grant date of the awards,
subject to performance underpins based around a combination of key financial, strategic and
sustainability measures, with performance being assessed over the three year vesting period. If one or
more of the performance underpins are not met at the date of vesting, the Remuneration Committee
would consider whether it was appropriate to scale back the number of shares that vest under the award.
A two year holding period normally applies to awards granted to Executive Directors. No such holding
period applies to other awards. Further information on performance targets and awards made to
Directors is given in the Directors’ Remuneration Report on pages 70 to 83.
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%.
LTIP awards vest after a three year performance period subject to the achievement of performance
measures based on earnings per share, total shareholder return targets and ESG targets. Further
information on LTIP performance targets and awards made to Directors is given in the Directors’
Remuneration Report on pages 70 to 83.
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 (2025: nil), and no cash payments were made to participating employees
(2025: £nil). 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 DBS. 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’.
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, excluding Executive Directors and
other recipients of LTIP awards. Awards may not exceed 50% of an individual’s salary for a particular
financial year.
RSP awards vest after a three year performance period. 50% of awards made to each individual
are subject to an underlying profit before tax performance target.
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, the Group settled part of the vested RSP shares by offering cash payments to participating
employees of £1.0m (2025: £nil). 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)
SAYE schemes are currently available to all employees in the UK and Republic of Ireland, with invitations
to participate generally issued on an annual basis and subject to HMRC rules. The current maximum
monthly savings limit for the schemes is £500. Options are granted at the prevailing market share price
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 ended 28 June 2026 | |||||
| DSP | LTIP | DBS | RSP | SAYE | |
| No. | No. | No. | No. | No. | |
Outstanding at the beginning of the period | 2,370,184 | 2,707,156 | 41,606 | 3,914,195 | 10,692,209 |
Granted | 2,123,823 | — | 93,942 | — | 2,060,958 |
Forfeited | (358,034) | — | — | (161,359) | (207,702) |
Exercised | — | — | (41,606) | (850,511) | (5,185,601) |
Lapsed | — | (1,427,818) | — | (850,434) | (145,350) |
Cancelled | — | — | — | — | (747,161) |
Outstanding at the end of the period | 4,135,973 | 1,279,338 | 93,942 | 2,051,891 | 6,467,353 |
| Weighted average remaining contractual | |||||
life (months) | 22.9 | 3.6 | 15.9 | 3.6 | 16.9 |
Weighted average share price at exercise | — | — | £1.56 | £1.60 | £1.68 |
| 52 weeks ended 29 June 2025 | |||||
| DSP | LTIP | DBS | RSP | SAYE | |
| No. | No. | No. | No. | No. | |
Outstanding at the beginning of the period | — | 3,934,713 | 121,355 | 5,013,705 | 11,003,088 |
Granted | 2,414,615 | — | — | — | 1,628,837 |
Forfeited | (44,431) | (771,752) | (19,538) | (509,456) | (256,082) |
Exercised | — | — | (60,211) | (286,163) | (49,491) |
Lapsed | — | (455,805) | — | (303,891) | (385,263) |
Cancelled | — | — | — | — | (1,248,880) |
Outstanding at the end of the period | 2,370,184 | 2,707,156 | 41,606 | 3,914,195 | 10,692,209 |
| Weighted average remaining contractual | |||||
life (months) | 29.9 | 9.3 | 3.8 | 11.5 | 16.2 |
Weighted average share price at exercise | — | — | — | £1.34 | £1.41 |
Annual Report and Accounts 2026 DFS Furniture plc 119
Strategic Report Corporate Governance Financial Statements Shareholder Information
Notes to the consolidated financial statements continued
at 28 June 2026
25. Share based payments continued
Save as You Earn (SAYE) continued
At 28 June 2026 the weighted average exercise price of outstanding SAYE options was £1.00
(2025: £0.91) and the range of exercise prices was £0.88 to £1.29 (2025: £0.82 to £2.18). At 28 June 2026
there were 471,497 (2025: 126,056) exercisable SAYE options, with a weighted average exercise price of
£0.88 (2025: £2.18). There were no exercisable DSP, LTIP, DBP or RSP options at 28 June 2026 (2025: nil).
Fair value calculations
During the year awards were granted under the DFS Group Share Plan and the SAYE scheme. No awards
were granted under any other schemes. All awards are accounted for as equity settled under IFRS 2.
The fair value of the awards is calculated using a Black-Scholes option pricing model, with a Chaffe
protective put method applied for awards that are subject to a holding period, to estimate a discount
for the lack of marketability. The inputs to these models for awards granted during the financial period
are detailed below:
| DSP – no holding | DSP – two year | |||
| period | holding period | DBS | SAYE | |
Grant date | 23 October 2025 | 23 October 2025 | 21 October 2025 | 25 November 2025 |
Share price at date of grant | £1.60 | £1.60 | £1.54 | £1.57 |
Exercise price | — | — | — | £1.29 |
Volatility | — 1 | 24.94% | — 1 | 32.55% |
Expected life | 3 years | 5 years | 2 years | 3.44 years |
Risk free rate | — 1 | 4.15% | — 1 | 3.67% |
Dividend yield | — 2 | — 2 | — 2 | 0.70% |
Fair value per share | £1.60 | £1.40 | £1.54 | £0.55 |
1. Volatility and risk free rates do not impact the fair value calculation for awards with no exercise price or market
based performance condition. In the Chaffe model applied for awards that are subject to a holding period, volatility
has been calculated over the period commensurate with the holding period immediately prior to the grant date,
and the risk-free rate is the rate obtained over a term equal to the vesting period plus the holding period.
2. DSP and DBS 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 £3.3m (2025: £2.8m).
26. Net cash from operating activities
| 52 weeks to | 52 weeks to | ||
| 28 June 2026 | 29 June 2025 | ||
| Note | £m | £m | |
Profit for the period | 34.9 | 24.2 | |
| Adjustments for: | |||
Income tax expense | 6 | 8.8 | 8.7 |
Finance income | 5 | (0.7) | (0.4) |
Finance expenses | 5 | 32.2 | 38.6 |
Depreciation of property, plant and equipment | 8 | 16.5 | 17.2 |
Depreciation of right of use assets | 9 | 57.9 | 54.0 |
Amortisation of intangible assets | 10 | 13.3 | 13.0 |
Impairment of assets | 8 | 0.2 | 1.3 |
Loss on sale of property, plant and equipment | 3 | 0.8 | 0.3 |
Gain on disposal of right of use assets | 3 | (1.4) | (0.8) |
Settlement of share based payments | (1.0) | — | |
Share based payment expense | 25 | 3.3 | 2.8 |
Foreign exchange impact on cash flow hedges | (1.6) | 1.1 | |
Increase in trade and other receivables | (1.7) | (3.8) | |
Decrease in inventories | 3.1 | 2.4 | |
Increase in trade and other payables | 7.7 | 22.5 | |
Increase in provisions | 1.1 | 3.8 | |
Net cash from operating activities before tax | 173.4 | 184.9 | |
Tax paid | (6.6) | (3.7) | |
Net cash from operating activities | 166.8 | 181.2 |
27. Net debt
| Other non-cash | ||||
| 29 June 2025 | Cash flow | changes | 28 June 2026 | |
| £m | £m | £m | £m | |
Cash in hand, at bank | 13.9 | (3.0) | — | 10.9 |
Bank overdraft | (13.9) | 3.0 | — | (10.9) |
| Cash and cash equivalents (including | ||||
bank overdraft) | — | — | — | — |
Senior revolving credit facility | (55.3) | 38.0 | (0.5) | (17.8) |
Private placement debt | (50.0) | — | — | (50.0) |
Lease liabilities | (352.9) | 86.6 | (47.2) | (313.5) |
Total net debt | (458.2) | 124.6 | (47.7) | (381.3) |
Annual Report and Accounts 2026 DFS Furniture plc120
Financial Statements
Notes to the consolidated financial statements continued
at 28 June 2026
27. Net debt continued
| Other non-cash | ||||
| 30 June 2024 | Cash flow | changes | 29 June 2025 | |
| £m | £m | £m | £m | |
Cash in hand, at bank | 26.8 | (12.9) | — | 13.9 |
Bank overdraft | (2.6) | (11.3) | — | (13.9) |
| Cash and cash equivalents (including | ||||
bank overdraft) | 24.2 | (24.2) | — | — |
Senior revolving credit facility | (137.4) | 82.0 | 0.1 | (55.3) |
Private placement debt | (50.0) | — | — | (50.0) |
Lease liabilities | (401.7) | 88.7 | (39.9) | (352.9) |
Total net debt | (564.9) | 146.5 | (39.8) | (458.2) |
Non-cash changes include the addition of leases within the period excluding incremental costs of
obtaining the leases £13.2m (2025: £7.4m), lease remeasurements £13.7m (2025: £9.7m), disposals of
leases (£1.9m) (2025: (£1.4m)), lease interest £22.2m (2025: £24.2m) and the (amortisation)/prepayment
of capitalised debt issue costs (£0.5m) (2025: £0.1m).
| 52 weeks to | 52 weeks to | |
| 28 June 2026 | 29 June 2025 | |
| £m | £m | |
Emoluments | 5.0 | 5.0 |
Share based payments expense | 0.7 | 0.4 |
Company contributions to money purchase schemes | 0.2 | 0.2 |
5.9 | 5.6 |
Annual Report and Accounts 2026 DFS Furniture plc 121
Strategic Report Corporate Governance Financial Statements Shareholder Information
Company balance sheet
at 28 June 2026
Note
28 June 2026
£m
29 June 2025
£m
Non-current assets
Investments 2 264.0 260.5
Amounts due from Group companies 3 275.0 275.0
539.0 535.5
Current liabilities
Amounts due to Group companies 4 (79.8) (72.8)
Net assets 459.2 462.7
Capital and reserves
Called up share capital 5 23.6 23.6
Share premium 5 40.4 40.4
Merger reserve 5 18.6 18.6
Capital redemption reserve 5 360.1 360.1
Treasury shares 5 — (2.9)
Employee Benefit Trust shares 5 (7.0) (5.3)
Retained earnings 23.5 28.2
Equity shareholders’ funds 459.2 462.7
The Company’s profit for the period was £nil (2025: £nil).
These financial statements were approved by the Board of Directors on 24 September 2026 and were signed on its behalf by:
Tim Stacey
Chief Executive Officer
Company registered number: 07236769
Annual Report and Accounts 2026 DFS Furniture plc122
Financial Statements
Company statement of changes in equity
at 28 June 2026
Share
capital
£m
Share
premium
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Treasury
shares
£m
Employee
Benefit Trust
shares
£m
Retained
earnings
£m
Total
equity
£m
Balance at 30 June 2024 23.6 40.4 18.6 360.1 (2.9) (5.9) 26.0 459.9
Profit for the period — — — — — — — —
Other comprehensive income — — — — — — — —
Total comprehensive income for the period — — — — — — — —
Employee Benefit Trust shares issued — — — — — 0.6 (0.6) —
Share based payments — — — — — — 2.8 2.8
Balance at 29 June 2025 23.6 40.4 18.6 360.1 (2.9) (5.3) 28.2 462.7
Profit for the period — — — — — — — —
Other comprehensive income — — — — — — — —
Total comprehensive income for the period — — — — — — — —
Dividends paid — — — — — — (2.3) (2.3)
Employee Benefit Trust shares issued — — — — — 9.3 (5.0) 4.3
Purchase of EBT shares — — — — — (8.1) — (8.1)
Transfer of shares — — — — 2.9 (2.9) — —
Share based payments — — — — — — 3.3 3.3
Settlement of share based payments — — — — — — (0.7) (0.7)
Balance at 28 June 2026 23.6 40.4 18.6 360.1 — (7.0) 23.5 459.2
Annual Report and Accounts 2026 DFS Furniture plc 123
Strategic Report Corporate Governance Financial Statements Shareholder Information
Notes to the Company financial statements
at 28 June 2026
1. Accounting policies
Basis of preparation
The financial statements are prepared in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework (“FRS 101”).
In preparing these financial statements, the 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 the Companies Act 2006. The Company has applied the exemption available under FRS
101 in respect of the following disclosures:
•
a cash flow statement and related notes
•
comparative period reconciliations
•
disclosures in respect of transactions with wholly owned subsidiaries
•
disclosures in respect of capital management
•
the impact of new but not yet effective IFRSs
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 not required to present its own profit and loss account. The Company’s profit for the
period was £nil (2025: £nil).
The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next
financial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all
periods presented in these financial statements.
Going concern
The Company heads a Group that is currently operating with total available debt of £250.0m.
The Group’s debt facilities comprise a £200.0m revolving credit facility maturing in September 2027,
of which £175.0m has been extended to January 2029, and £50.0m of fixed rate private placement
debt notes, £25.0m maturing in September 2028 and £25.0m maturing in September 2030.
At 17 September 2026, the last practicable date prior to approval of the Annual Report, £150.6m of
the revolving credit facility remained undrawn, in addition to cash in hand, at bank of £5.3m.
The Directors have considered the projected trading and cash flow forecasts for the Company,
including the inherent uncertainty in forecasting the impact of the current economic and political
environment, and are confident that the Company has adequate resources to continue to meet all
liabilities as and when they fall due for the foreseeable future and at least twelve months from the
date of approval of these financial statements. Accordingly, the financial statements are 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 are recognised in profit or loss.
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 allowances for expected credit losses.
Taxation
Tax on the profit 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. Deferred tax is provided on temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used 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 own financial statements as an increase in
the cost of investment in subsidiaries. The amount recognised is equivalent to the equity settled share
based payment charge recognised in the consolidated financial statements. The corresponding credit
is recognised directly in equity.
Treasury shares
Where the Company purchases the Company’s equity 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.
Employee Benefit Trust shares
The Employee Benefit Trust holds ordinary shares which are issued for the purpose of satisfying future
employee share based payment awards and is consolidated into the Group financial statements.
Transactions with the Employee Benefit Trust are recognised directly in equity.
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 financial statements have not
been disclosed as the information is required instead to be disclosed on a consolidated basis in the
consolidated financial 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. The Directors
consider any allocation of their time spent on matters relating solely to the Company to be trivial.
See note 28 to the consolidated financial statements for key management personnel compensation.
Annual Report and Accounts 2026 DFS Furniture plc124
Financial Statements
Notes to the Company financial statements continued
at 28 June 2026
2. Investments
Shares in subsidiary undertakings
28 June 2026
£m
29 June 2025
£m
Cost and net book value
At the start of the financial period 260.5 257.7
Additions 3.5 2.8
At the end of the financial period 264.0 260.5
Details of the Company’s investments are given in note 11 to the consolidated financial statements.
Additions in the current and prior period relate to capital contributions made in respect of share based
payments schemes for the Group’s employees.
As a consequence of the Company’s share price at 28 June 2026, a value in use calculation was performed to
test the carrying value of the investments for impairment. The key assumptions used were in line with those
set out in note 10 to the consolidated financial statements. The value in use calculations assessed the value
in use of equity only, and showed a significant headroom between the calculated value in use and the carrying
value of the investments in the Company financial statements. A number of sensitivities were then applied to
the base case model to assess whether any reasonably possible changes in assumptions, including a
simultaneous shortfall in revenue and gross margin, could cause an impairment that would be material to
these Company financial statements. Amounts due from subsidiary undertakings have been considered and
assessed for recoverability by calculating the ECL which is considered to be immaterial. No assumption of
payment has been made in the cash flow calculations on the basis that there is no intention for the
intercompany balances to be recalled for at least 12 months from the date of the accounts being signed.
On the basis of this analysis the Directors concluded that a reasonably possible change in assumptions
would not lead to an impairment being recognised.
Coin Furniture Limited (Company number 08586227) and DFS Spain Limited (Company number
09668511) are exempt from the requirement of the Companies Act relating to the audit of individual
financial statements by virtue of 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.
3. Debtors
28 June 2026
£m
29 June 2025
£m
Amounts due from subsidiary undertakings (non-interest bearing,
repayable on demand) 275.0 275.0
Amounts due from subsidiary undertakings have been classified as non-current assets as they are not
expected to be settled within the next 12 months. The Directors have reviewed for expected credit
losses and consider the amount of any such losses to be immaterial.
4. Creditors: amounts due in less than one year
28 June 2026
£m
29 June 2025
£m
Amounts due to subsidiary undertakings
(non-interest bearing, repayable on demand) 79.8 72.8
5. Capital and reserves
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 and end of the financial period 236,000 23.6
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 Company purchases the Company’s equity 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.
At 29 June 2025 the Company had 1,855,580 ordinary shares of £0.10 each, representing 0.8% of the
Company’s issued share capital, held in treasury. On 8 December 2025 the Company transferred all of
these to the DFS Furniture plc Employee Benefit Trust for the purpose of satisfying future obligations
arising under the Company’s share schemes. No consideration was received by the Company in relation
to the transfer.
At 28 June 2026 the Company held no ordinary shares in treasury (2025: 1,855,580).
Employee Benefit Trust shares
The Employee Benefit Trust holds ordinary shares which are issued for the purpose of satisfying future
employee share based payments awards and is consolidated into the Group financial statements.
At 29 June 2025 the Employee Benefit Trust held 3,060,209 of the Company’s ordinary shares.
On 8 December 2025 the Company transferred 1,855,580 treasury shares to the Employee Benefit
Trust. During the period ended 28 June 2026 the Company used 5,478,480 shares from the Employee
Benefit Trust to satisfy employee share based payments awards (2025: 395,865). During the period
ended 28 June 2026 the Employee Benefit Trust purchased 4,933,354 shares from the market
(2025: nil). At 28 June 2026 the Employee Benefit Trust held 4,370,663 of the Company’s ordinary
shares (2025: 3,060,209). Dividends are waived on all shares held by the Employee Benefit Trust.
Annual Report and Accounts 2026 DFS Furniture plc 125
Strategic Report Corporate Governance Financial Statements Shareholder Information
Financial history
at 28 June 2026
FY26 FY25 FY24 FY23 FY22
Gross sales £m 1,420.1 1,388.3 1,311.8 1,423.6 1,474.6
Revenue £m 1,057.5 1,030.3 987.1 1,088.9 1,149.8
Underlying EBITDA £m 162.9 157.2 142.0 157.4 175.9
Underlying profit before tax excluding brand amortisation £m 44.9 30.2 10.5 30.6 60.3
Profit/(loss) before tax from continuing operations £m 43.7 32.9 (1.7) 29.7 58.5
Basic earnings/(loss) per share from continuing operations p 15.1 10.5 (2.0) 9.8 17.3
Ordinary dividends per share p 3.0 — 1.1 4.5 7.4
Special dividends per share p — — — — 10.0
Purchase of own shares for share buyback schemes £m — — — 30.9 4.4
Annual Report and Accounts 2026 DFS Furniture plc126
Shareholder Information
Contacts
Chief Executive Officer
Tim Stacey
Chief Financial Officer
Dominique Highfield
Group General Counsel and
Company Secretary
Elizabeth McDonald
liz.mcdonald@dfs.co.uk
Investor relations
Phil Hutchinson
investor.relations@dfs.co.uk
Registered office
DFS Furniture plc
1 Rockingham Way
Redhouse Interchange
Adwick-le-Street
Doncaster DN6 7NA
Corporate website
www.dfscorporate.co.uk
Corporate advisers
Legal adviser
Linklaters LLP
20 Ropemaker Street
London EC2Y 9AR
Remuneration adviser
Deloitte LLP
2 New Street Square
London EC4A 3BZ
Brokers
Peel Hunt Limited and Panmure Liberum
Peel Hunt
7th Floor, 100 Liverpool Street
London EC2M 2AT
Panmure Liberum
25 Ropemaker Street
London EC2Y 9LY
Auditor
KPMG LLP
1 St Peter’s Square
Manchester M2 3AE
Shareholder enquiries
The Company’s registrar is Equiniti. The Equiniti
team 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. Equiniti’s contact
details are:
Equiniti Limited
Highdown House
Yeoman Way
Worthing
West Sussex 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
can manage their shareholding online and
facilities include electronic communications,
account enquiries, amendment of address and
dividend mandate instructions.
Electronic communications
Shareholders will receive the Annual Report
and Accounts and other documentation
electronically, unless they inform our registrar
that they would like to continue to receive
printed materials. This is in line best practice and
underpins our commitment to reducing waste.
Shareholders may view shareholder
communications online instead of receiving
them in hard copy. Shareholders may elect
to receive notifications by email whenever
shareholder communications are added to
the website by visiting www.shareview.co.uk
and registering online.
For institutional investor enquiries,
please contact:
Teneo
The Carter Building
11 Pilgrim Street
London EC4V 6RN
+44 (0)20 7353 4200
Financial calendar
Event Date
FY26 full year results 24 September 2026
Annual General Meeting 13 November 2026
Annual General Meeting 2026
This year’s AGM will be held at 2.30pm on
13 November 2026 at DFS Group Support
Centre, 1 Rockingham Way, Redhouse
Interchange, Adwick-le-Street, Doncaster,
DN6 7NA.
Shareholder information
DFS Furniture plc’s commitment to environmental
issues is reflected in this Annual Report, which has
been printed on Accent Recycled White and Amadeus
Silk, FSC
®
certified materials. This document was
printed by L&S using its environmental print
technology, which minimises the impact of printing
on the environment, with 99% of dry waste diverted
from landfill. The printer is a CarbonNeutral
®
company.
Both the printer and the paper mill are registered
to ISO 14001.
Produced by Design Portfolio
www.design-portfolio.co.uk
Annual Report and Accounts 2026 DFS Furniture plc 127
Strategic Report Corporate Governance Financial Statements Shareholder Information
www.dfscorporate.co.uk
www.dfs.co.uk
www.sofology.co.uk
DFS Furniture plc Annual Report and Accounts 2026
DFS Furniture plc Annual Report and Accounts 2026