Dunelm Group plc Annual report 2010
Dunelm Group plc
Fosse Way
Syston
Leicester
Leicestershire
LE7 1NF
Tel: 0116 264 4356
Email: investorrelations@dunelm-mill.co.uk
www.dunelm-mill.com
Dunelm Group plc Annual report 2010 Dunelm is a fast 
growing specialist 
out-of-town homewares 
retailer providing a 
comprehensive range 
of products to a wide 
customer base, under 
the brand name 
Dunelm Mill
Contents
Business review
01 Highlights
04 Chairman’s statement
06 Chief Executive’s review
10 Finance Director’s review
15 Directors
Governance
16 Letter from the Chairman
17 Corporate governance report
21 Letter from the Chairman of the Remuneration  
 Committee
23 Remuneration report
27 Directors’ report and business review
31 Corporate social responsibility
35 Statement of Directors’ responsibilities
Financial statements
36 Independent Auditor’s report
37 Consolidated income statement
38 Consolidated statement of comprehensive income
39 Consolidated statement of financial position
40  Consolidated statement of cash flows
41  Consolidated statement of changes in equity
42 Accounting policies
47  Notes to the annual financial statements
59 Parent Company financial statements
Advisers
Corporate Brokers UBS Investment Bank
and Financial Advisers 1 Finsbury Avenue
 London EC2M 2PP
 Tel: 020 7567 8000
 Oriel Securities Limited
 125 Wood Street
 London EC2V 7AN
 Tel: 020 7710 7600
Legal Advisers Allen & Overy LLP
 One Bishops Square
 London E1 6AO
 Tel: 020 3088 0000
Auditors KPMG Audit Plc
 1 Waterloo Way
 Leicester LE1 6LP
 Tel: 0116 256 6000
Principal Bankers Barclays Bank plc
 Midlands Corporate Banking
 PO Box 333
 15 Colmore Row
 Birmingham B3 2WN
 Tel: 0845 755 5555
Registrars Equiniti
 Aspect House
 Spencer Road
 Lancing 
 West Sussex BN99 6DA
 Tel: 0871 384 2030
Financial Public Relations Hogarth Partnership Limited
 No. 1 London Bridge
 London SE1 9BG
 Tel: 020 7357 9477  1
Dunelm Group plc
Annual report and accounts 2010
2006
£315.2m
2007
£354.7m
2008
£391.8m
2009
£423.8m
2010
£492.8m
2005
£282.5m
2006
£315.2m
2007
£354.7m
2008
£391.8m
2009
£423.8m
£417.1m
1
2006
£38.0m
2007
£37.8m
2008
£49.1m
2009
£53.5m
2010
£76.8m
2006
£38.2m
2007
£40.8m
2008
£49.4m
2009
£52.6m
2010
£75.5m
2005
£36.2m
2006
£38.2m
2007
£40.8m
2008
£49.4m
2009
£52.6m
£51.6m
1
2006
£24.1m
2007
£34.7m
2008
£45.0m
2009
£67.4m
2010
£72.0m
Revenue
†
Profit before tax*
†
Operating profit*
†
Net cash from operations
†
Operational highlights
94 superstores at 3 July 2010
10 new superstores opened in the year
Average superstore selling area of 
29,000 square feet
Around 20,000 lines in a superstore – 
broad and deep ranges
Financial highlights FY10
Revenue increase 16.3% (vs 53 weeks 
in FY09)
Operating margin 15.3%
Operating cash flow £72.0m after 
interest and tax
*  The 2007 figures for operating profit and profit before tax included non-recurring items in respect of IPO and warehouse relocation as well as a non-recurring gain on a 
property disposal. The combined effect of these was to reduce operating profit by £3.2m and profit before tax by £3.0m.
†
 The 2009 figures reflect a 53 week trading period, compared with 52 weeks in all other years. 2
Dunelm Group plc
Annual report and accounts 2010
Business review
Business strategy: These are our key priorities 3
Dunelm Group plc
Annual report and accounts 2010
Priority
 2
Further develop 
our specialist  
position
We will continue to focus on 
homewares and our ‘Simply 
Value for Money’ proposition 
– deep ranges of quality 
products at keen prices, with 
high availability and 
supported by friendly 
service. We intend to keep 
strengthening each element 
of the offer.
Priority
 3
Grow Dunelm 
Direct 
We see significant 
opportunity to grow our 
overall business by further 
developing direct channels 
to complement our 
expanding store base.
Priority
 4
Develop and 
exploit our 
infrastructure
We will continue to upgrade 
our infrastructure where 
necessary to support our 
ambitious growth plans.
Priority
1
Open more  
superstores 
We will continue to drive 
Dunelm’s growth by rolling 
out the successful 
superstore format. We see 
the potential to increase 
from 94 superstores last 
year-end to 150–200 
superstores across the UK. 4
Dunelm Group plc
Annual report and accounts 2010
Chairman’s statement
Business review
Our key strengths
 UK’s largest specialist • 
homewares retailer
Portfolio of established • 
out-of-town superstores, 
average sales area  
29,000 sq.ft.
 ‘Simply Value for Money’ • 
proposition: 
– Good quality products 
– Great prices 
– Industry leading choice 
– Deep availability 
– Friendly service
 On-line store featuring 14,000 • 
products
 Owner of ‘Dorma’ brand • 
Robust, scalable infrastructure • 
Experienced management • 
team, entrepreneurial culture
Highly cash generative • 
Strong balance sheet • 
Geoff Cooper Chairman
In my interim report to shareholders, I 
commented on the excellent performance 
delivered by Dunelm over the 26 weeks to 
2 January 2010. I am delighted to say that 
the business has remained very strong in 
the second half and we have delivered not 
only impressive sales growth for the full 
financial year, but also an outstanding 
43.5% increase in profit before tax.
The business has continued to generate 
very strong cash flows. As a result, we 
were able to return £43.2m of surplus 
capital to shareholders in the course of 
the year – in addition to our normal 
dividends whilst continuing to invest in 
the business to support our future 
growth. The proposed final dividend of 
5.0p (2009: 4.0p) brings the full year 
dividend to 8.0p (2009: 6.0p) – an 
increase of 33%.
Looking ahead, we remain cautious about 
the outlook for UK consumer spending 
and in turn the impact on the homewares 
market. However, we are very confident 
that Dunelm will continue to grow its 
share and become an even more 
significant player over the coming period.
I am excited about forthcoming changes 
in Board composition.
After almost 15 years as Dunelm’s Chief 
Executive, Will Adderley has decided to 
relinquish that role from February 2011, 
when he will assume the new role of 
Executive Deputy Chairman, a full-time 
Board position. In this new role, he will be 
able to focus on specific aspects of the 
Group where he has unique expertise and 
experience, under the direction of the 
newly appointed Chief Executive.
Nick Wharton will assume the role of Chief 
Executive Designate with effect from 1 
December 2010, and will take over as 
Chief Executive after the announcement 
of the Group’s interim results in February 
2011. Nick has been a Non-Executive 
Director of Dunelm since August 2009.
This change is a reflection of the Board’s 
desire to enhance and expand the 
executive management of the Group as it 
embarks on the next important phase of 
its development. 
The change represents the culmination of 
a detailed review by the Board, over many 
months, of the executive management 
resources required to maintain the pace of 
development through the next phase of 
our exciting growth plan. This review was 
instigated at Will’s request and has 
involved a thorough and formal 
recruitment process, including 
benchmarking of external candidates by 
an executive search firm. 
In his new role as Executive Deputy 
Chairman, he will be able to dedicate all 
his time and energy to aspects of the 
business which he is passionate about and 
where he has a unique level of insight and 
experience. At the same time, we are 
bringing increased strength in depth to 
the executive management team through 
the appointment of a new Chief Executive.
Nick will be a worthy successor to Will. As 
well as being a hugely experienced retailer 
he already has a good understanding of 
Dunelm’s business and, most importantly, 
of our business philosophy and values. He 
will maintain the drive and sense of 
purpose which Dunelm has been used to 
under Will’s leadership. Through his time 
as a Non-Executive Director, he has built 
strong relationships with both Will and 
David Stead, our Finance Director, and we 
are absolutely confident that the new 
team will combine to take Dunelm 
forward to further success.
The whole process typifies the foresight 
and objectivity shown both by Will, and by 
Bill and Jean Adderley before him, in 
considering the long-term interests of 
Dunelm and all its shareholders.
Geoff Cooper
Chairman
16 September 2010 5
Dunelm Group plc
Annual report and accounts 2010
Priority 1
Open more superstores
 Superstores as at 4 July 2009
 Superstores opened  
since 4 July 2009
New superstores
Since 4 July 2009 we have opened 
12 new superstores adding  
almost 400,000 square feet of 
selling space  6
Dunelm Group plc
Annual report and accounts 2010
Business review
Chief Executive’s review
Trading
I am delighted to report further 
outstanding growth during the last 
financial year. Our overall sales increased 
by 18.2% compared with the equivalent 
52 week period in the prior year. Like-for-
like sales were extremely strong in the 
first half and the momentum carried 
through to a full year increase of +8.0% 
(again on a 52 week basis) – significantly 
beating the overall homewares market. 
We have delivered these results by 
retaining a sharp focus on the four 
priorities which continue to form our 
growth strategy.
Priority 1 – open more superstores
We opened 10 new superstores in the 
year, adding over 300,000 square feet of 
selling space. As at the year-end, our 
superstore chain comprised 94 stores 
(including two stores previously treated 
as high street shops) with 2.8m square 
feet of selling space. 
We have opened two further stores since 
the year-end in Milton Keynes and Torquay 
and we are contractually committed  
to nine more units which are due to  
open in the current financial year, one 
being a relocation of an existing under-
spaced superstore. 
Our recent openings have all traded well. 
Our target is for new stores to pay back 
their ingoing investment within 36 
months on a discounted cash flow basis, 
but we have consistently beaten this.  
The actual payback period for the last  
30 openings is expected to be around  
26 months on average. 
Taking confidence from the performance 
of both new stores and the existing  
chain, we have increased our target for 
national coverage in the UK from 150 to 
200 superstores. 
Priority 2 – further develop our specialist 
position
We know that it is essential for us to keep 
evolving our retail proposition. We remain 
as passionate as ever about giving ‘Simply 
Value for Money’ to all our customers – a 
combination of good quality products at 
great prices, industry-leading choice, 
deep availability and friendly service. 
Recent developments in our offer include 
the following:
D o r ma •	 . We continue to roll out 
dedicated Dorma centres which are 
now represented in 32 stores. We have 
extended the range of products sold 
under the Dorma brand to include 
bathroom, gift and tableware lines.
W i n d o w	t r e a t m e n t s / D u n e l m	A t	H o m e •	 . 
We developed some time ago a more 
integrated and space-efficient way of 
merchandising products relating to 
windows (curtains, blinds, tracks and 
poles, fabrics, nets and voiles). This 
execution of the offer is now present in 
26 stores. In addition, we now 
supplement our in-store offer with a 
free home consultation service, 
branded Dunelm At Home, which 
allows customers to select from our 
range of window treatments with the 
help of an advisor in their own homes. 
This service is currently provided from 
30 stores.
F ur n i t ur e •	 . We have completed a  
full review of our furniture ranges,  
and created an extended furniture 
department in several of our 
larger stores.
K i tc h e n •	 . We have created a radically 
different version of our traditional 
kitchen department. The new concept 
divides the offer between cooking, 
dining and utility and offers much 
deeper ranges in each of these areas, 
supported by new display methods and 
greater space allocation. This concept 
has been introduced to 15 stores 
to date.
Business highlights
8.0% increase in like-for- • 
like sales
Exciting developments in  • 
our customer offer
10 new superstore openings  • 
in FY10
9 major refits of existing  • 
stores in FY10
Strong growth in Dunelm • 
Direct
Continuing investment in • 
infrastructure 7
Dunelm Group plc
Annual report and accounts 2010
•  Dorma centres in store
•  Roll-out of window treatment  
departments
•  Development of Dunelm At Home
•  Extended furniture department  
in larger stores
•  Extended kitchen ranges
Priority 2
Further develop our 
specialist position
“Miss It Miss Out” 
promotions
These special deals further add  
to the variety and interest in  
our stores. 8
Dunelm Group plc
Annual report and accounts 2010
Business review
Chief Executive’s statement co nt i n u e d
M i s s	I t	M i s s	O u t •	 . We have evolved our 
use of “Miss It Miss Out” campaigns to 
signpost great customer deals, and we 
are increasingly using this mechanism 
to clear discontinued lines outside of 
our traditional sale periods. This further 
adds to the variety and interest of our 
in-store offer.
We have continued investing to improve 
the shopping environment in our older 
stores. We completed nine major refits in 
the last financial year (2009 – six). The 
total cost of a refit including the impact of 
sales disruption is typically around £0.8m 
per store; this includes any expenditure 
necessary to maintain the fabric of the 
building. Sales uplifts in refitted stores 
have run approximately 10% ahead of 
trend. Going forward we plan to continue 
investing judiciously in major refits whilst 
also taking opportunities to refresh stores 
through smaller interventions. 
Priority 3 – grow Dunelm Direct
During the last financial year we 
successfully implemented a new software 
platform for our on-line business (www.
dunelm-mill.com and www.dorma.co.uk ). 
This has enabled us to offer a much 
improved experience for on-line visitors as 
well as giving customers the option of 
collecting on-line purchases in store.
At launch of the new platform we were 
able to offer approximately 7,000 lines for 
sale; this number has now doubled. 
We continue to invest in this channel, with 
regular enhancements to functionality 
and further expansion and strengthening 
of the Dunelm Direct team.
As a result of this focus, we continue to see 
strong growth in on-line sales. Dunelm 
Direct is now consistently ranked amongst 
our top 10 stores in sales terms and we  
are confident that further growth will 
be achieved.
Priority 4 – develop and exploit our 
infrastructure
We continue to extract further benefits 
from our IT systems, enabling us to 
improve stock control and make in-store 
processes more efficient. 
We have doubled the space available to us 
at our Stoke warehouse, to 500,000 
square feet. Assuming that the proportion 
of merchandise distributed via Stoke 
remains constant, this will give us the 
capacity to support growth in our store 
estate for the foreseeable future. 
To support our continuing growth, we 
have acquired a plot of freehold land for a 
new head office near to our existing base 
in Syston, Leicester. Construction of a new 
building is under way and we expect to 
relocate in mid-2011. 
Current trading 
We are clearly operating in challenging 
economic conditions, and we expect  
to see continuing pressure on 
consumer spending. 
Despite this backdrop, we are confident 
that Dunelm will demonstrate resilience, 
benefiting from our focus on continuing to 
deliver ‘Simply Value for Money’ and our 
low average transaction values, and that 
the business will continue to grow and to 
strengthen its position in the UK 
homewares market.
Performance in the early weeks of our new 
financial year has been pleasing, given 
strong performance in the comparative 
period last year.
Board change
As our Chairman explains in his statement, 
I will shortly be handing over my 
responsibilities as Chief Executive to Nick 
Wharton, allowing me to take on the new 
role of Executive Deputy Chairman.
I am delighted that we have been able to 
attract somebody with Nick’s talent and 
energy to become our next Chief 
Executive. He is a great addition to the 
Dunelm team and I very much look 
forward to working with him.
I have been privileged to run Dunelm over 
the last 15 years and I feel invigorated  
by my forthcoming new role which will 
allow me to spend much more time on  
the areas where I believe that I can add  
the most value.  
As the Group’s largest shareholders, my 
family remain totally committed, both 
emotionally and financially, to Dunelm  
for the long-term and we are as excited  
as ever about the next phase of its 
development which will take place under 
Nick’s leadership. We are convinced that 
these changes will underpin the long-term 
development and success of the Group.
Will Adderley
Chief Executive
16 September 2010 9
Dunelm Group plc
Annual report and accounts 2010
•  New technology platform 
launched September 2009
•  14,000 products available
• Collect in-store service
• Rapid growth
• Continuing enhancements
Priority 3
Grow Dunelm Direct 10
Dunelm Group plc
Annual report and accounts 2010
Business review
Finance Director’s review
Financial highlights
 Revenue increased by 16.3% • 
(18.2% on a 52 week basis)
Operating profit increased  • 
by £22.9m (£23.9m on a 52  
week basis)
Fully diluted EPS increased  • 
by 44.6% (47.0% on a 52  
week basis)
33% increase in dividend • 
£43.2m return of capital • 
delivered
Operating result
The year ended 3 July 2010 was a 52 week 
accounting period but the comparative 
year ended 4 July 2009 was a 53 week 
accounting period. The additional 53rd 
week last year represented £6.7m of 
revenue and approximately £1.0m of 
operating profit. Unless otherwise stated, 
reference to 2009 or the comparative year 
relate to this 53 week period.
Group revenue for the 52 weeks to 3 July 
2010 was £492.8m (2009: £423.8m) an 
increase of 16.3% (18.2% on a 52 week basis). 
Like-for-like sales (comparing stores which 
have traded throughout the last two financial 
years) increased by 8.0% on a 52 week basis 
and new space contributed a further 10.2%. 
The like-for-like sales growth was strongest in 
H1 at + 1 5.4% with H2 recording +0.8%, 
however the shift in our accounting calendar 
due to the 53rd week last year meant that 
more of our winter sale fell in the first half 
than in previous years. Adjusting for this the 
like-for-like performance would have been 
approximately 2.0% lower in H1 and 2.0% 
higher in H2. 
Gross margin has continued to increase 
year on year, due primarily in the most 
recent period to successful product life 
cycle management. As a result, gross 
margin ended the year at 46.8% (2009: 
44.9%) a 190 bps improvement. Gross 
margin is now calculated after taking into 
account all charges for inventory write-
downs, which were previously included in 
operating costs; the comparative figures 
for the 53 weeks to 4 July 2009 have been 
restated onto this new basis. 
Operating costs increased 12.8% 
compared with last year, with the increase 
primarily due to investment in the 
portfolio and supporting central 
infrastructure. Operating costs in 
like-for-like stores increased only 0.2% 
held down by improvements in labour cost 
ratios, a reduction in energy costs and 
lower than expected rent and rates 
settlements. Non-store costs grew by 
£3.4m (11.0%) to support the growth of 
the business.
Operating profit for the financial year was 
£75.5m (2009: £52.6) an increase of 
£22.9m (£23.9m on a 52 week basis).
 
EBITDA
Earnings before interest, tax, depreciation 
and amortisation were £86.9m. This has 
been calculated as operating profit 
(£75.5m) plus depreciation and 
amortisation (£11.4m) and represents a 
37.3% increase on the previous year. The 
EBITDA margin achieved was 17.6% of 
sales (2009: 14.9%). 
Financial items and PBT
The Group generated £1.3m net financial 
income for the year ended 3 July 2010 
(2009: £0.9m). Financial items includes 
foreign exchange gains of £0.8m (2009: 
£1.0m) arising in respect of US dollar 
holdings; the Group held $1.8m in US 
dollar cash deposits and had forward 
contracts covering approximately 35% of 
the anticipated US dollar spend over the 
next 12 months. The balance of net 
financial income, £0.5m (2009: –£0.1 
expense), represents interest on surplus 
cash deposits.
After accounting for interest and foreign 
exchange impacts, profit before tax for 
the year amounted to £76.8m (2009: 
£53.5m), an increase of 43.5%.
Tax, PAT and EPS
The tax charge for the year was 29.2% of 
PBT (2009: 29.7%). Ineligible depreciation 
was at a similar absolute level to last year 
and this combined with a very significant 
increase in PBT at 28% has resulted in a 
lower effective rate.
Basic EPS for the year ended 3 July 2010 
was 27.1p (2009: 18.8p), an increase of 
44.1%. Fully diluted EPS increased by 
44.6% to 26.9p (2009: 18.6p or 18.3p on a 
52 week basis). 11
Dunelm Group plc
Annual report and accounts 2010
Priority 4
Develop and exploit our  
infrastructure
• Improved stock control
•  Distribution centre capacity 
doubled
•  Relocation to new head office 
in mid 2011 12
Dunelm Group plc
Annual report and accounts 2010
Business review
Finance Director’s review co nt i n u e d
Capital expenditure
Gross capital expenditure in the financial 
year was £24.6m compared with £26.0m 
last year, although the 2009 spend was 
boosted by the £5.1m acquisition of the 
Dorma brand. The major investments in 
the year were in stores, including fit-out 
costs for 10 new stores and nine major 
refits in the period as well as acquisition of 
the freehold interest in one existing 
leasehold store. In addition, important 
investment programmes were begun with 
the acquisition of land for a new head 
office building (expected to be completed 
during 2011) and the commencement of 
fit-out work on our expanded central 
warehouse facility.
Working capital
The Group reduced working capital in the 
year by £1.7m (2009: £14.8m). Investment 
in inventories was £62.6m, an increase of 
£4.7m compared with last year but with 
the growth in the portfolio this represents 
a reduction of 8.0% in like-for-like stores. 
Trade and other payables generated a 
positive cash movement of £6.1m, largely 
as a result of an increase in accruals and 
deferred income.
 
Cash position
The Group generated £72.0m (2009: 
£67.4m) net cash from operating activities 
in the last financial year, an increase of 
6.8%. In the second half, the Group 
returned excess capital to shareholders 
amounting to £43.2m. As a result, net 
cash resources at the end of the year were 
£15.4m (2009: £24.0m). A committed 
undrawn revolving loan facility of £40.0m 
remains in place until September 2011.
It is anticipated that the financial year to 
July 2011 will see an increase in the level of 
cash reinvested in the business. 
Continuing expansion of the store 
portfolio will require a typical investment 
cost of £1.2m per store, whilst the refit 
programme brings a typical investment of 
£0.8m per store. This year will also include 
completion of the fit-out of the central 
warehouse extension (approximately 
£1.0m) as well as development of the new 
head office facility, expected to cost a 
further £10.0m capital over the years to 
July 2011 and July 2012. In addition, 
freehold store acquisition opportunities 
have been identified with potential 
investment of up to £8.0m.
Dividend
An interim dividend of 3.0p was paid in 
April 2010 (2009: 2.0p). It is proposed to 
pay a final dividend of 5.0p per share 
(2009: 4.0p). The total dividend of 8.0p 
represents a 33% increase over last year 
and leaves dividend cover a little over the 
top end of our target range of 2.5x–3.0x. 
This reflects the fact that a high level of 
capital expenditure is anticipated in the 
next financial year, to support ongoing 
growth of the business.
Key performance indicators
In addition to the traditional accounting 
measures of sales and profits, the 
Directors review business performance 
each month using a range of other KPIs. 
These include those on the table opposite.
Key risks
The Directors also consider key risks to the 
business in the areas of strategic, 
operational and financial risks.
Strategic risks
Increased competition in the homewares 
market could materially impact returns 
and limit opportunities for growth. We 
will continue to monitor major competitor 
threats and activity and seek to modify 
our proposition if necessary.
Changes in political and economic 
conditions will continue to put pressure 
on consumer expenditure and a continued 
downturn could result, impacting the 
retail sector as a whole. We mitigate this 
risk by reacting quickly to changes in 
customer demand and adjusting our offer 
in response. Continued focus on a low cost 
base also enables us to maintain our 
‘Simply Value for Money’ proposition.  1 3
Dunelm Group plc
Annual report and accounts 2010
Sales growth
†
2010 +1 8.2%
2009 +6.4%
2008 +10.5%
Operating margin
2010 15.3%
2009 12.4%
2008 12.6%
Dividend (per share)
2010 8.0p
2009 6.0p
2008 5.5p
Like-for-like sales growth
†
2010 +8.0%
2009 +0.5%
2008 +2.5%
EBITDA £m
2010 £86.9m
2009 £63.2m
2008 £58.9m
New store openings
2010 10
2009 6
2008 8
Gross margin change (basis points)
2010 +190bps
2009 +120bps
2008 +60bps
Earnings per share (diluted)
2010 26.9p
2009 18.6p
2008 16.6p
Major refits
2010 9
2009 6
2008 1
Key performance indicators FY10 
†
 2009 is treated as a 52 week period for these measures (53 weeks for the rest). 14
Dunelm Group plc
Annual report and accounts 2010
Business review
Finance Director’s review co nt i n u e d
Dunelm, like many other retailers could 
experience upward pressure on input 
costs particularly in areas such as foreign 
currencies, freight rates and raw material 
costs. These could impact margins. We 
have protected our business from 
fluctuating currencies through hedging a 
greater proportion of our foreign spend. In 
addition our increased scale and rate of 
growth provide further protection.
Our growth plans rely heavily on our being 
able to gain access to additional trading 
locations. If for any reason the supply of 
vacant retail warehouse space declines 
significantly, we will be forced to accept a 
lower pace of expansion. However, with 
increasing pressures on retailers and 
landlords we anticipate continuing 
availability of space over the next 
few years.
Operational risks
Information systems and technology 
operate at the heart of our business. A 
major incident or interruption to key 
systems could constitute a significant 
threat to the business, at least in the short-
term. A disaster planning committee 
oversees the disaster recovery plan 
designed to ensure business continuity in 
such an event. In addition, certain key 
systems are either hosted offsite with full 
disaster recovery and the remainder are 
backed up in separate locations.
The business could suffer disruption in 
the event of a major incident within the 
supply chain, e.g. loss of our central 
warehouse or a major supplier. However, 
our use of a wide supply base, active 
management of key supplier 
relationships, high stock service levels 
and a high proportion of direct-to-store 
deliveries mitigate this risk. 
Dunelm has a number of staff members in 
specialist positions whose expertise is 
important to operations and who could 
not easily be replaced. We have mitigated 
this risk by incentivising loyalty through 
deferred share awards as well as 
continuing to build strength in depth 
within the operating management team 
over recent years. 
Financial risks
Dunelm has a committed bank facility 
under a revolving loan agreement with 
Lloyds Banking Group plc of £40m. This 
facility expires in September 2011. The 
Group also has existing cash resources 
which together with banking facilities are 
considered to provide sufficient funding 
for the Group’s operations. 
We do not consider our direct exposure to 
interest rate fluctuations to generate any 
significant downside risk and we are well 
placed to take advantage of any interest 
rate increases.
The Group invests surplus funds in 
overnight deposit accounts, fixed term 
facilities and in structured deposits. 
Counter parties are approved by the Board 
and risk associated with these 
counterparties is continually monitored. A 
credit rating of at least an ‘A’ is required.
David Stead
Finance Director
16 September 2010 15
Dunelm Group plc
Annual report and accounts 2010
Directors
3. Geoff Cooper
Non-Executive Chairman
Geoff Cooper, joined the 
Board in November 2004. 
Member of the Remuneration 
and Nominations 
Committees. He is currently 
Chief Executive of Travis 
Perkins plc, and is a former 
Director of Gateway (now 
Somerfield plc) and has also 
been Finance Director and 
then Deputy Chief Executive 
of Alliance UniChem plc.
4. Marion Sears
Senior Independent 
Non-Executive Director
Marion Sears, joined the Board 
in July 2004. Chairman of the 
Remuneration and 
Nominations Committees and 
Member of the Audit 
Committee. She is also a 
Non-Executive Director of 
Zetar Plc.
1. Will Adderley
Chief Executive
Will Adderley, joined the 
business in 1992. He has 
worked in and is familiar with 
all major areas of the business 
and took over the day-to-day 
running of the Group from his 
father in 1996.
During the coming year, Will  
is to take on the new role of 
Executive Deputy Chairman.
2. David Stead
Finance Director
David Stead, joined the Group 
in 2003. Previously he spent 
14 years at Boots where he 
was Finance Director of Boots 
The Chemists and Finance 
Director of Boots Healthcare 
International.
5. Simon Emeny
Independent Non-Executive 
Director
Simon Emeny, joined the 
Board in June 2007. Member of 
the Audit, Remuneration and 
Nominations Committees. 
Simon has recently been 
appointed Group Managing 
Director of Fuller Smith and 
Turner P.L.C. where he was 
previously responsible for the 
Fuller’s Inns division.
Bill Adderley
Founder and Life President
Bill Adderley founded 
Dunelm in 1979. He led the 
development of the business 
successfully for many years, 
then took a non-executive 
role before retiring in 
February 2008. He and his 
wife Jean remain passionate 
Dunelm supporters and 
major shareholders.
6. Nick Wharton
Independent Non-Executive 
Director
Nick Wharton, joined the 
Board in August 2009. 
Chairman of the Audit 
Committee, member of  
the Remuneration and 
Nominations Committees. 
Nick is Finance Director of 
Halfords Group plc. 
Nick will become Chief 
Executive of the Group in the 
coming year.
1. 2. 3. 4. 5. 6. 16
Dunelm Group plc
Annual report and accounts 2010
Governance
Letter from the Chairman
Dear Shareholder,
In an effort to improve communication and increase understanding of Dunelm, I thought it would be helpful to introduce the 
Corporate Governance section in our annual report. In addition, as remuneration is such an important subject, I have asked 
Marion Sears to write to you separately outlining our approach to executive pay and you will find this on page 21. It is my 
experience that whilst shareholders rightly expect the Board to take collective responsibility for all published information, 
they also appreciate a sharp sense of accountability where individual directors take the lead on a particular issue.
We are very clear at Dunelm that the Board should have an involved and active role in supporting the Executive Directors and 
the senior management team. We aim, as a minimum, to incorporate best practice and to comply with the UK Corporate 
Governance Code in all respects but we have also formed some guidelines of our own that we feel improve the role of the 
Board and are in keeping with our positive and energetic culture.
We have worked hard to compose a Board with diversity of thought. This includes appointing non-executive directors 
(‘NEDs’) with diverse backgrounds including executive positions in other companies. Our NEDs have experience and diverse 
perspectives of issues of direct interest to Dunelm, including a range of business models, challenges involved in consumer 
markets, City and investor experience and retail knowledge. With the help of the finance and Company secretarial 
departments we manage and administer corporate governance ourselves internally and the NEDs are actively involved in this. 
There is a strong collegiate and respectful relationship between the Executive and NEDs. All the NEDs aim to visit a store once 
a month, often with a member of the senior management team. This is helpful in fostering our understanding of business 
issues as well as communicating internally from head office to store teams and vice versa. In addition, Board meetings are 
often held in store or at other Company locations and include presentations from managers within the business.
Shareholder feedback is regularly monitored, with NEDs joining management in a selection of shareholder meetings 
following our results announcements. We will continue to attend a sample of meetings, however, if any shareholder wishes to 
meet with any of the NEDs without management present to discuss Dunelm then this can be arranged through our advisers.
We have announced a key development for Dunelm with the appointment of Will Adderley as Executive Deputy Chairman 
and of Nick Wharton as Chief Executive. These changes have been made following a thorough review by the Board of the 
needs of the business to support its future development. This review included benchmarking of external candidates for the 
Chief Executive role through an executive search company.
Yours faithfully,
Geoff Cooper
Chairman
16 September 2010 17
Dunelm Group plc
Annual report and accounts 2010
Corporate governance report
The Board is committed to high standards of corporate governance. This report explains how the Group has applied the 
principles of good governance and code of best practice set out in the 2008 version of the Combined Code on Corporate 
Governance (the ‘Combined Code’) during the financial year. The Board considers that the Group’s governance complied with 
the Combined Code. 
The Board has reviewed the new UK Corporate Governance Code (the ‘Corporate Governance Code’) published in June 2010 and 
has agreed actions during the 2010/1 1 financial year to bring its governance arrangements into line with this new code.
The Board
The Board has overall responsibility for controlling the Group, making decisions relating to the Group’s strategic direction and 
measuring progress towards strategic goals.
The Board has 10 scheduled meetings per annum, including one strategy meeting. There was full attendance at all Board 
meetings during the year except that Simon Emeny was absent from one Board meeting. 
The Board has reviewed the schedule of matters reserved to the Board for decision or approval, which is available on the 
Group’s website or from the Company Secretary. Examples of such matters include Group strategy and budget, Group capital 
structure, approval of financial results and report and accounts, significant capital or contractual commitments, maintaining 
internal control and risk management, and approval of Group-wide policies.
At each meeting, the Chief Executive reports on operational performance (including health and safety) and the Finance 
Director reports on financial performance. Other matters are discussed by the Board as required, supported by a briefing 
paper where a decision is to be made by the Board.
Minutes of all Board and Committee meetings are taken by the Company Secretary and committee secretaries respectively 
and circulated for approval. Any unresolved concerns raised by a Director are recorded in the minutes.
The Chairman and the other Non-Executive Directors meet from time to time without Executive Directors being present, and 
regularly have individual meetings with other senior managers in the business. In addition the Non-Executive Directors have 
the opportunity to meet at least once a year without the Chairman present as part of the Board effectiveness review process.
Directors
The Non-Executive Chairman is Geoff Cooper and the Chief Executive is Will Adderley. The Board has adopted a written 
statement setting out their respective responsibilities. In general terms, the Chairman is responsible for running the Board 
and the Chief Executive is responsible for running the Group’s business. 
The other Non-Executive Directors during the year were Marion Sears, Simon Emeny and Nick Wharton (appointed on 14 
August 2009). David Stead is an Executive Director.
The Senior Independent Director is Marion Sears.
Subsequent to the year-end, it has been announced that Will Adderley will take on the new role of Executive Deputy 
Chairman. He will be replaced as Chief Executive, after a handover period, in February 2011 by Nick Wharton.
The Board considers that Geoff Cooper was independent on appointment, and that Marion Sears and Simon Emeny are 
independent. The Board further considers that Nick Wharton was independent during the year ended 3 July 2010. Following 
the announcement of his appointment as Chief Executive he ceases to be so. It is the Board’s intention to recruit an 
appropriately skilled new Non-Executive Director in due course.
Directors are required to retire from the Board by rotation and offer themselves for re-election at least every three years.
Board committees
The Audit Committee was chaired during the year by Nick Wharton, the other members being Marion Sears and Simon 
Emeny. The Board considers that Nick has recent and relevant financial experience by virtue of his professional qualification 
and his executive role as Finance Director of Halfords Group plc. 
The committee has adopted terms of reference which are available on the Group’s website or from the Company Secretary.
The committee is scheduled to meet at least three times a year, to coincide with key dates in the Group’s financial reporting and 
audit cycle. During the period under review it met in September, February and May with full attendance. The Group Chairman 
and the Finance Director usually attend meetings by invitation, along with a representative from the external auditors.
The principal responsibilities of the committee are to:
monitor the integrity of the Group’s financial statements and public announcements relating to financial performance; • 
oversee the external audit process, including the appointment of the auditors, their objectiveness and independence and • 
the scope and effectiveness of the audit; 18
Dunelm Group plc
Annual report and accounts 2010
monitor the effectiveness of internal controls and consider annually the need for an internal audit function; and • 
review the process for identifying and managing risk throughout the Group. • 
 
During the year the committee:
approved the full year results issued in September 2009 and the interim results issued in February 2010; • 
decided that an internal audit function was not required in view of the adequacy of financial controls in place and low level • 
of complexity in the business;
confirmed the Group’s policy for use of the auditors for non-audit advice; and • 
verified the independence of the auditors, and approved the scope of the audit plan and the audit fee. • 
The committee met privately with the auditors in the course of each meeting during the period.
The committee has approved a policy that the auditors should only be used for non-audit work if they offer demonstrably 
better capability than alternative providers and there is no potential conflict with the independence of the audit.
The committee has approved a policy which allows employees to raise legitimate concerns in confidence without fear 
of discrimination.
The Nominations Committee is chaired by Marion Sears, the other members are Geoff Cooper and Simon Emeny. Nick 
Wharton was a member of the committee during the year but was not involved in meetings considering the selection of a 
new Chief Executive.
The committee has adopted terms of reference which are available on the Group’s website or from the Company Secretary.
The committee’s responsibilities include:
reviewing the composition and balance of the Board; • 
Board succession planning; and • 
making recommendations on appointments to the Board (including reappointments at Annual General Meeting). • 
The committee met in July 2009 with full attendance to approve the appointment of Nick Wharton as Non-Executive 
Director. In making this appointment, the committee chose to rely on its own research into potential candidates rather than 
engaging an external search consultancy, in the belief that committee members themselves would be better placed to 
identify individuals likely to fit well with Dunelm’s unique culture. The committee recognised in particular that Nick would 
bring a combination of retail business experience (from Halfords Group plc and Boots Group plc) and relevant finance 
experience to allow him to take over chairmanship of the Audit Committee.
The committee met on numerous occasions during 2010 to consider the appointment of a Chief Executive in succession to 
Will Adderley. An executive search consultancy was engaged to assist in this process. It was recognised that the qualities 
leading to Nick Wharton’s appointment as a Non-Executive Director also made him a strong candidate for the Chief Executive 
role. From that point, Nick Wharton did not participate in meetings concerning the Chief Executive succession.
The committee keeps under constant review the balance between Executive and Non-Executive Directors, as well as the mix 
of skill-sets and experience possessed by the Board as a whole. The committee remained satisfied that the Board contained 
an appropriate mix of individuals during the year.
The Remuneration Committee is chaired by Marion Sears, the other members are Geoff Cooper and Simon Emeny. Nick 
Wharton was a member of the committee during the year. The Chief Executive normally attends by invitation.
The committee has adopted terms of reference which are available on the Group’s website or from the Company Secretary.
The committee’s responsibilities include:
recommending to the Board the specific pay and benefits packages for the Executive Directors, including pensions and any • 
compensation payments;
recommending and monitoring the level and structure of pay and benefits for senior management; and • 
implementing any awards made under share incentive schemes. • 
During the year the committee met four times with full attendance and:
determined the pay reviews and incentive arrangements for Executive Directors; • 
determined the annual bonus payable to Executive Directors in respect of the year ending 3 July 2010; and • 
approved conditional share awards to be made to Executive Directors under the Group’s Long-Term Incentive Plan and • 
other share incentives to be offered to senior management and other employees.
Corporate governance report continued
Governance 19
Dunelm Group plc
Annual report and accounts 2010
Following the year end the committee met, without Nick Wharton, to determine the remuneration package of the new 
Chief Executive.
Further details of the committee’s activities are set out in the Remuneration Report on page 23.
Appointment and removal of Directors
The Articles of Association of the Company provide that a Director may be appointed by ordinary resolution of the Company’s 
shareholders in general meeting, or by the Board so long as the Director stands down and offers himself for election at the 
next Annual General Meeting of the Company. The Articles also provide that each Director must stand down and offer him or 
herself for re-election by shareholders at the Annual General Meeting at least every three years.
Directors may be removed by a special resolution of shareholders, or by an ordinary resolution of which special notice has 
been given in accordance with the Companies Act 2006. The Articles also provide that the office of a Director shall be vacated 
if he is prohibited by law from being a director, or is bankrupt; and that the Board may resolve that his office be vacated if he is 
of unsound mind or is absent from Board meetings without consent for six months or more. A Director may also resign from 
the Board.
The Nominations Committee makes recommendations to the Board on the appointment and removal of Directors.
Powers of Directors
In accordance with the Companies Act 2006 and the Articles of Association, the business of the Company is managed by the 
Board, which may exercise all of the powers of the Company, subject to the requirements of the Companies Acts, the 
Memorandum and Articles of Association of the Company, and any special resolution of the Company. As stated above, the 
Board has adopted internal delegations of authority in accordance with the Code, and these set out matters which are 
reserved to the Board or Committees and the powers and duties of the Chairman and Chief Executive respectively.
At the Annual General Meetings of the Company in 2007, 2008 and 2009 the Board sought and was given authority to issue 
shares and to buy back and reissue shares, subject to the limits imposed by law and those set out in the text of the resolution. 
Similar resolutions are being tabled at the 2010 Annual General Meeting, together with a waiver of any obligation of Will 
Adderley under the City Code on Takeovers and Mergers to make an offer for all of the shares of the Company if the authority 
to buy back shares is used. For further details see pages 27 and 28 of the Directors’ Report and Business Review, and the 
Notice of Annual General Meeting which is sent separately with this report.
Advice and insurance
All Directors have access to the advice and services of the Company Secretary. In addition Directors may seek legal advice at 
the Group’s cost if they consider it necessary in connection with their duties.
The Group purchases Directors’ and Officers’ Liability insurance cover for its Directors.
 
Training
Upon joining the Board, any new Director is offered a comprehensive induction programme with visits to key sites and 
meetings with senior managers and other staff members. As part of each Director’s annual review any additional training or 
development needs are addressed. Throughout the year all Directors have maintained a regular series of visits to stores and 
meetings with members of the senior management team. The Board has also received presentations from independent 
advisers on financial policy and on retail sector trends.
Evaluation
The Chairman appraises the performance of the Chief Executive with regard to personal objectives agreed at the start of each 
financial year. The Chief Executive similarly appraises the performance of the Finance Director.
There is a well established process for evaluating the performance of the Chairman, the other Non-Executive Directors, the 
Board Committees and the Board as a whole. This takes the form of a Board meeting convened solely for the purpose of such 
review. During the course of this meeting there is the opportunity for the Chairman or other individual Directors to be asked 
to leave the discussion whilst their performance is assessed.
Conflicts of interest
The Companies Act 2006 allows the Board of public companies to authorise conflicts and potential conflicts of interest of 
individual directors where the Articles of Association contain a provision to that effect. At the 2008 Annual General Meeting, 
new Articles of Association were adopted which give the Board this authority subject to the following safeguards:
Directors who have an interest in matters under discussion at a Board meeting must declare that interest and abstain  • 
from voting. 20
Dunelm Group plc
Annual report and accounts 2010
Corporate governance report continued
Governance
Only directors who have no interest in the matter being considered are able to approve a conflict of interest and, in taking • 
that decision and the Directors must act in a way they consider, in good faith, would be most likely to promote the success 
of the Company.
The Directors are able to impose limits or conditions when giving authorisation if they feel this is appropriate. • 
Following the adoption of the Articles of Association, all Directors were requested to disclose any actual or potential conflicts 
to the Board and the following matters were considered and approved:
Will Adderley is a major shareholder and connected to other major shareholders. Authorised on the basis that Will Adderley • 
continues to abide by the terms of the Relationship Agreement entered into between himself, other major shareholders     
Geoff Cooper is a director of Travis Perkins plc; and Nick Wharton is a director of Halfords Group plc, each of which • 
potentially competes with the Company for retail property. Authorised on the basis that Geoff Cooper is not involved in 
day to day decisions in relation to the property portfolio in either company; and Nick Wharton to absent himself from any 
meeting of the Company in which property matters are to be discussed and a conflict of interest might arise.
There were no other matters disclosed that were considered by the Board to give rise to a conflict of interest.
Any conflicts considered by the Board and any authorisations given are recorded in the Board minutes and reviewed annually 
by the Board. 
The Board considers that its procedures to approve conflicts of interest and potential conflicts of interest are 
operating effectively.
Significant shareholders
The Group’s significant shareholders are listed in the Directors’ report on page 29 and voting rights are stated on page 27.
Articles of Association
The Company’s Articles of Association may only be amended by a special resolution of shareholders. 
Risk management and internal control
Throughout the year and up to the date of approval of this Annual Report there has been in place an established, ongoing 
process for identifying, evaluating and managing the significant risks faced by the Group. The process has been reviewed by 
the Audit Committee and the Board and is in accordance with the Turnbull Guidance on Internal Control for Directors. This 
will be reviewed in the light of the revised Turnbull Guidance which is due to be issued later in 2010.
A register of major strategic and operational risks is maintained and reviewed regularly by the Board, which also monitors the 
status of agreed actions to mitigate key risks.
The Board is ultimately responsible for the Group’s system of internal control and for reviewing its effectiveness. However 
such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide 
only reasonable, and not absolute, assurance against material loss and misstatement.
The Group maintains a well established control framework comprising clear structures and accountabilities, well understood 
policies and procedures and budgeting and review processes. 
Each store manager has clear responsibilities and operates within defined policies and procedures covering such areas as 
financial targets, human resources management, customer service, health and safety etc. The Executive Directors monitor 
compliance with these policies and procedures in the course of regular reviews.
The Audit Committee considers annually whether an internal audit function is required. It does not consider that this is 
necessary in view of the adequacy of internal and risk management controls and reporting in place, and the low level of 
complexity of the business.
Investor relations
There is a formal investor relations programme based around results presentations and trading statements. In addition 
analyst/shareholder visits are arranged. All of the Non-Executive Directors are available to attend meetings at shareholder 
request. The Chairman and Executive Directors feed back any investor comments to the Board.
All Directors will be available at the Annual General Meeting to meet with shareholders and answer their questions. 21
Dunelm Group plc
Annual report and accounts 2010
Letter from the Chairman of  
the Remuneration Committee
Dear Shareholder,
I am writing to set out for you our approach to executive reward at Dunelm. I hope you find this adds to your understanding of 
our culture and our way of doing business. 
In preparation for our flotation on the main market in 2006, with the benefit of a clean sheet of paper, we designed the 
simplest, most transparent remuneration structure for Executive Directors that we could whilst following best practice, the 
Combined Code (as it then was) and the Association of British Insurers’ guidelines.
Our aims were to pay fairly for the role and responsibilities of each director and to incentivise strongly for value creation, with 
an emphasis on the long-term. In keeping with Dunelm’s family background our overriding principle was to design a structure 
where directors become strongly aligned with business goals by virtue of share ownership. We believe strong alignment of 
ownership by Executive Directors is the single most important factor in an effective remuneration structure. 
From flotation we adopted the traditional three-pronged remuneration structure comprising basic salary (including benefits), 
an annual cash bonus and a three-year share-based Long-Term Incentive Plan (‘LTIP’). Basic salary was initially set just below 
median levels for comparator companies at that time. However, a consequence of our growth, store roll-out programme and 
new business initiatives over the last few years has been to increase the operational scale of the executives’ roles and make 
them more complex. It is important to recognise this appropriately and for 2010/11 we have increased David Stead’s salary 
ahead of inflation and ahead of the Company-wide increase, to reflect both his performance and his increased responsibilities. 
Will Adderley has indicated that, as a large shareholder, he does not need or wish to take an increase in salary above the 
general Company level.
We initially set the maximum annual cash bonus opportunity at 60% of basic salary. From 2010/11 we have increased this to 
100%, which we see as a more typical level in peer companies. We set the maximum LTIP award at 120% of basic salary. This 
level will be maintained for the October 2010 conditional LTIP award, although we now recognise that 120% is lower than 
some competitor companies and we will review this against market practice prior to next year’s award. We feel that the 
balance between short-term bonus and longer-term reward is important in order to maintain the focus on the long-term as 
well as helping to build up a director’s alignment. To encourage alignment, we require Executive Directors to build a 
shareholding equivalent to at least 2x their basic salary. This is a high multiple relative to the market norm.
For both the annual bonus and LTIP we chose to use fully diluted earnings per share (‘EPS’) as the only financial performance 
measure. We did this after careful consideration on the basis that EPS is audited, easy to understand and simple to measure. It 
is also a main driver of share price and is a reasonable proxy for value, provided capital investment is monitored. We recognise 
that, with EPS as the only measure, it is essential that the Board controls both capital investment and leverage to ensure the 
business is driven to increase shareholder value, and these are part of our regular Board processes. 
Our approach has always been to do things properly whilst doing what is appropriate for Dunelm’s particular circumstances. 
Therefore we set a very high EPS hurdle requiring EPS compound annual growth to reach the increase in the retail price index 
(‘RPI’) plus 20% for maximum LTIP vesting. This was at the very top end of the benchmark spectrum for LTIPs but felt right for 
a growing company. However, in 2008 and 2009 we reduced this to RPI+12% given the worsening economic outlook. We 
remain committed to reviewing the hurdles carefully every year.
The remuneration of below-Board executive committee members is handled by the Chief Executive with guidance from the 
Remuneration Committee. This tier of management is incentivised by a discretionary annual bonus scheme with matching nil 
cost share options, deferred for three years. We are also considering a shareholding requirement for the executive committee 
and other senior managers.
In early 2010, following the first LTIP vesting, we conducted a full Remuneration Review with the whole Board where we 
looked at how our original policies have suited us and how the Directors involved have been rewarded. We concluded that we 
should leave the basic structure unchanged for as long as possible whilst looking carefully at the base salaries and 
performance conditions each year. 
As with all such decisions in Dunelm, the Remuneration Committee’s stance is to try and take decisions which are fair for the 
individuals and best for the business long-term. I hope therefore, that shareholders will feel that our approach to executive 
pay is aligned with their interests.  22
Dunelm Group plc
Annual report and accounts 2010
Governance
Letter from the Chairman of  
the Remuneration Committee continued
Following the year-end, we have set the remuneration terms for Nick Wharton when he becomes a full-time Executive 
Director – from 1 December 2010 as Chief Executive Designate, and from February 2011 as Chief Executive. Nick’s 
remuneration will follow Dunelm’s established policy. He will receive a basic salary of £400,000 per annum plus benefits 
including car allowance, medical and life insurance and a pension contribution equivalent to 10% of salary. He will participate 
in the annual bonus and the LTIP scheme, both of which will be adjusted pro-rata to length of employment in respect of 
FY2011. On joining, Nick will receive a one-off cash payment of £150,000 in lieu of his annual bonus foregone. Subject to 
shareholder approval, he will also receive a one-off grant of nil cost share options to a value of £1,000,000 at date of joining in 
compensation for long-term incentive payment foregone. This will vest, subject only to continuing employment, after five 
years. The Remuneration Committee believes this is an important incentive to ensure alignment of his interests with those of 
shareholders in the context of long-term commitment to the business. To reinforce this alignment, Nick will be required to 
build a shareholding of at least two times basic salary over time.
Yours faithfully,
Marion Sears
Chairman of the Remuneration Committee
16 September 2010 23
Dunelm Group plc
Annual report and accounts 2010
Remuneration report
The Directors present their Remuneration report for the period ended 3 July 2010.
Introduction
The Remuneration Committee has prepared this report in accordance with the requirements of Section 420 Companies Act 
2006 and the Listing Rules. The report and the Group’s remuneration policy comply with the UK Corporate Governance Code. 
An ordinary resolution to approve the report through a shareholder vote will be proposed at the Annual General Meeting.
The disclosures that the Group’s auditors are required to audit within the Remuneration report are contained in the section 
headed ‘Audited Information’. The auditors’ opinion is included in their report on page 36.
Non-audited information
Remuneration committee and advisers
During the year ended 3 July 2010, the Remuneration Committee was made up of four members, Marion Sears, Simon Emeny, 
Nick Wharton and Geoff Cooper. Marion Sears, who is the Senior Independent Non-Executive Director, chairs the committee 
and also acts as Secretary. The committee determines the Executive Directors’ annual remuneration packages and provides 
guidance on the remuneration packages of members of senior management. No Director determines their own pay.
Changes in policy during the year
There have been no changes to remuneration policy during the year. 
Executive remuneration policy
The Remuneration Committee’s policy is to provide an executive remuneration structure that will attract, motivate and 
retain the high quality individuals who are essential for the successful development of the business over the long-term. 
Executive remuneration aims to ensure that the Executive Directors are fairly rewarded for their success measured by the 
Group’s performance and are incentivised to enhance value for shareholders on a continuing and long-term basis.
There are three main elements of the remuneration package for Executive Directors:
base annual salary including benefits; • 
annual bonus; and • 
Long-Term Incentive Plan. • 
 
Two of these main elements are performance based, which means that there is significant emphasis in the Group’s executive 
remuneration policy on its performance.
The Remuneration Committee oversees the two performance-based plans: an annual bonus plan and a Long-Term Incentive 
Plan (‘LTIP’). In accordance with governance guidelines and the requirements of the Combined Code, the Remuneration 
Committee implemented these two performance based plans to ensure alignment of interests between shareholders and 
Executive Directors. The annual bonus plan is short-term and provides cash rewards. The LTIP is long-term and rewards are in 
the form of shares. 
Base salary and benefits
Prior to the beginning of each financial year the Remuneration Committee sets the base salaries of Executive Directors. The 
committee examines the salaries of Directors in a comparator group of public companies and considers the operational scale 
and complexity of the role each Director performs. It also reviews published research and surveys, and considers the wage 
increases across the Group as a whole. The committee aims to set salaries at around the median level provided by similar 
companies. In addition to base salary, the Executive Directors are entitled to benefits comprising a car allowance, a 
contribution to a personal pension, private medical insurance and life insurance.
Annual bonus
The Group operates a discretionary annual cash bonus scheme. Any bonus amounts determined to be payable are paid after 
the year-end results are finalised. The Remuneration Committee has established bonus objectives that are principally 
financial but also include personal objectives for the year relevant to each Director. The bonus payment for on target EPS  
is 24% of salary, subject to personal performance, and the maximum bonus payable for the year ended 3 July 2010 was 60%  
of salary. 24
Dunelm Group plc
Annual report and accounts 2010
For the year ended 3 July 2010, EPS exceeded target. After due consideration of job performance, the committee awarded an 
annual bonus to Will Adderley of £195,840 and to David Stead of £134,640.
Long-Term Incentive Plan
Under the LTIP, Executive Directors are awarded nominal cost share options annually. These awards will vest three years after 
date of grant, to the extent that the applicable performance target is met. 
The Remuneration Committee has chosen growth in fully diluted EPS over each three-year performance period as the 
performance target for the awards under the LTIP. The committee believes that this measure is closely aligned to the drivers 
of growth of the business, and that in the long-term, EPS performance will be reflected in shareholder value. The committee  
is satisfied that capital expenditure controls exercised by the Board are sufficiently rigorous to avoid EPS accretion by means 
of ineffective investment of capital, and in any event reserves the right to adjust the target in the event of a major 
capital transaction. 
The LTIP is structured as follows (awards vest on a straight line basis between the threshold and maximum points):
 Compound annual growth in EPS 
Periods ending     2009, 2010  2011, 2012 Vesting percentage
Threshold     RPI + 5%  RPI + 3%  25%
Maximum     RPI + 20%  RPI + 12%  100%
The committee decided to reduce the performance hurdle in respect of the schemes maturing in 2011 and 2012, recognising 
the challenging market conditions expected to result from global recession. 
The committee meets after the results for each three-year performance period are available to determine the extent to 
which performance conditions have been satisfied. There is no retesting.
Awards cannot be granted under discretionary schemes, including the LTIP, over Ordinary Shares in excess of 5% of the issued 
Ordinary Share capital in any rolling 10 year period. 
Awards of Ordinary Shares worth 120% of base salary were made to Will Adderley and David Stead in March and September 
2007, in September 2008 and in September 2009. The March 2007 award was in respect of the three-year performance 
period to 4 July 2009, over which the compound annual growth in EPS was 14.8% (12.4% above RPI). Accordingly, 62% of the 
conditional shares awarded in March 2007 vested in March 2010 and the entitlements were exercised by both Will Adderley 
(93,809 shares) and David Stead (61,461 shares) on 23 March 2010.
The Remuneration Committee has reviewed the Company’s EPS record over the three year performance period which ended 
on 3 July 2010. Reported EPS, grew at a compound annual rate of 30.1%. This is 27.3% above RPI over the same period. 
Accordingly, 100% of the September 2007 LTIP award will vest in September 2010, representing 190,130 shares in favour of 
Will Adderley and 127,792 shares in favour of David Stead. 
Other share options
The Group operates an all-employee SAYE scheme in which Executive Directors are also entitled to participate.
Non-executive remuneration policy
Non-Executive Directors’ remuneration is determined by the Executive Directors. The Non-Executive Directors do not 
receive bonuses or participate in any incentive plans. They are paid annual fees which reflect additional responsibilities taken 
when chairing a committee of the Board. All Non-Executives have letters of appointment, detailed in the table on page 25.
Remuneration report continued
Governance 25
Dunelm Group plc
Annual report and accounts 2010
Dunelm FTSE All Share General Retailers FTSE 250 
350 
0 
50 
100 
150 
200 
250 
300 
18.10.06 18.02.07 18.06.07 18.10.07 18.02.08 18.06.08 18.10.08 18.02.09 18.06.09 18.10.09 18.02.10 18.06.10
Service contracts
In accordance with the Group’s policy, the service contracts of the Executive Directors have no fixed term, the notice period 
for termination is 12 months from either party and payments on termination are restricted to a maximum of the value of 
salary for the notice period.
The Non-Executive Directors have letters of appointment for an initial period of three years with a provision for termination 
of one month’s notice from either party, or three months’ notice from either party in the case of Geoff Cooper, the Chairman.
       Unexpired   
     Date of  remaining  Notice 
     Initial contract   term  period
Will Adderley     28.09.06  n/a  12 months
David Stead     15.09.03  n/a  12 months
Geoff Cooper     08.10.04  1 month  3 months
Marion Sears     22.07.04  34 months  1 month
Simon Emeny     25.06.07  33 months  1 month
Nick Wharton     10.08.09  23 months  1 month
Retirement plans
The Remuneration Committee has decided not to use final salary pension plans as a way of remunerating its Executive 
Directors. Instead the Group contributes to the Executive Directors’ personal pension plans. The Remuneration Committee 
believes this is an efficient way to assist Executives to prepare for retirement. When determining the mixture of fixed and 
performance based pay, the Remuneration Committee takes account of contributions to pension plans.
Performance graph
The graph below shows the Group’s performance since flotation, measured by total shareholder return, compared with the 
FTSE General Retail Index and the FTSE 250. The Remuneration Committee has chosen these indices for comparison because 
they provide a range of comparator companies which have similar market capitalisation, which are in the same sector and 
which face similar market and economic challenges in the long-term.
The shares traded in the range 202.5p to 438.4p during the year, and stood at 325.3p at 3 July 2010. 26
Dunelm Group plc
Annual report and accounts 2010
Audited information
Details of Directors’ remuneration
Details of individual Directors’ remuneration in respect of the year ended 3 July 2010 are as follows:
      Contribution 
   Base salary  Vehicle Taxable to personal Annual 2010 2009 
   or fees  allowance benefits pension bonus Total Total 
   £’000 £’000 £’000 £’000 £’000  £’000 £’000
Executive Directors       
Will Adderley   326 10 1 waived 196 533 481
David Stead   224 10 waived 20 135 389 348
Non-Executive Directors
Geoff Cooper   86 – – – – 86 84
Marion Sears   32 – – – – 32 32
Simon Emeny   27 – – – – 27 26
Nick Wharton   24 – – – – 24 –
Total   719 20 1 20 331 1,091 971
Will Adderley waived pension contributions totalling £20,000 and David Stead waived other taxable benefits totalling 
approximately £1,000.
Directors’ interests in share options
The Directors’ beneficial interests in options granted under the Long-Term Incentive Plan, all of which will vest only if EPS 
performance conditions are met, are as follows:
      Share  End of Market Price 
     Date of options at  performance of shares at 
Director     award 3 July 2010   period date of award
Will Adderley     Sept 2007 190,130  June 2010 193p
     Sept 2008 259,459  June 2011 148p
     Sept 2009 123,949  June 2012 316p
David Stead     Sept 2007 127,792  June 2010 193p
     Sept 2008 178,378  June 2011 148p
     Sept 2009 85,215  June 2012 316p
The Directors’ beneficial interests in options granted under other schemes are as follows:
  Shares Shares     Market 
   under under     price 
  option option Granted Exercised Lapsed Exercise of shares 
 Type of at 5 July at 3 July during during during price per at date of Vesting Expiry 
Director option 2009 2010 period period period share exercise date date
Will Adderley SAYE 7,710 7,710 – – – 124p – Jan 2012 Jun 2012 
David Stead SAYE 7,710 7,710 – – – 124p – Jan 2012 Jun 2012
Approval
This report was approved by the Board of Directors on 16 September 2010 and signed on its behalf by:
Marion Sears
Chairman of Remuneration Committee
16 September 2010
Remuneration report continued
Governance 27
Dunelm Group plc
Annual report and accounts 2010
Directors’ report and business review
The Directors present their report together with the audited financial statements for the year ended 3 July 2010. Together 
with certain information in the reports from the Chief Executive and the Finance Director on pages 6 to 14 which are 
incorporated into this report by reference, this report satisfies the requirements of the Companies Act 2006 to produce a 
Business Review.
The purpose of this Business Review is to provide to shareholders a review of the Group’s business over the period, and to 
describe the principal risks and uncertainties facing the Group.
Principal activity
The principal activity of the Group is that of a specialist UK homewares retailer selling to customers through stores and over 
the internet.
Review of business and future developments
A review of the business and future developments of the Group is given in the Chief Executive’s Review on pages 6 to 8.
Shareholder and voting rights
All members who hold Ordinary Shares are entitled to attend and vote at the Annual General Meeting. On a show of hands at 
a general meeting every member present in person shall have one vote and on a poll, every member present in person or by 
proxy shall have one vote for every Ordinary Share held.
On 2 October 2006, Jean Adderley, Bill Adderley and Will Adderley (all shareholders) entered into a Relationship Agreement 
with the Company, pursuant to which each of Jean Adderley, Bill Adderley and Will Adderley undertook to the Company that, 
for so long as, individually or together, they are entitled to exercise, or to control the exercise of, 30% or more of the rights to 
vote at general meetings of the Company or they are able to control the appointment of directors who are able to exercise a 
majority of votes at Board meetings of the Company, they will:
(a) conduct all transactions and relationships with any member of the Group on arms length terms and on a normal 
commercial basis;
(b) not take any action which precludes or inhibits any member of the Group from carrying on its business independently of 
Jean and Bill Adderley and their associates (as defined in the Listing Rules);
(c) not exercise any of their voting rights or other powers to procure any amendment to the Articles of Association of the 
Company which would be inconsistent with or undermine any of the provisions of the Relationship Agreement;
(d) abstain from voting on any resolution to which LR11.7.R(4) of the Listing Rules applies involving Jean Adderley, Bill 
Adderley or Will Adderley or any of their associates as the related party;
(e) not carry on (other than through their holding of securities of the Company) or have any financial interest (other than a 
financial interest in securities which are held for investment purposes only) in any person who carries on a business as a 
homewares retailer, to the extent that it would be inconsistent with or undermine any provisions of the Relationship 
Agreement; and
(f) only enter into, amend or terminate any transaction, agreement or relationship between themselves or any of their 
associates and any member of the Group with the approval of a majority of the independent Non-Executive Directors.
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 and marketing requirements relating to close periods) and requirements of the Listing 
Rules whereby Directors and certain employees of the Company require Board approval to deal in the Company’s securities.
Change of control
The Company is not party to any significant agreements which take effect, alter or terminate solely on a change of control of 
the Company following a takeover bid.
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.
Results and dividends
The consolidated profit for the year after taxation was £54.4m (2009: £37.6m). The results are discussed in greater detail in 
the Finance Director’s review on pages 10 to 14.
A final dividend of 5.0p per share (2009: 4.0p) is proposed in respect of the year ended 3 July 2010 to add to an interim 
dividend of 3.0p per share paid on 1 April 2010 (2009: 2.0p per share). The final dividend will be paid on 10 December 2010 to 
shareholders on the register at 26 November 2010. 28
Dunelm Group plc
Annual report and accounts 2010
Financial statements
Directors
Details of the Directors in office at the year end are set out on page 15. 
Directors serving at the year end and their interests in the shares of the Company were:
        At  At 
        3 July 2010 4 July 2009 
        1p ordinary  1p ordinary 
        shares shares
WL Adderley        69,953,809 50,000,000
D Stead        466,546 430,085
G Cooper         181,611 181,611
M Sears         100,000 100,000
S Emeny        24,000 19,000
N Wharton         12,500 –
Will Adderley’s beneficial shareholding has increased during the period as a result of receipt of a gift of 20,000,000 ordinary 
shares from Bill Adderley on 14 December 2010, and the exercise of nil cost options over 93,809 shares under the Long Term 
Incentive Plan on 23 March 2010. The total shown above includes 2,093,809 Ordinary Shares held by Will Adderley’s wife 
Nadine Adderley, which were transferred to her by way of a gift during the period. On 2 March 2010 Will Adderley transferred 
140,000 Ordinary Shares to The Leicester Foundation, a charitable trust of which he is a trustee. He is deemed to retain a legal 
interest in these shares which are not included in the above total.
On 14 July 2010, The Leicester Foundation sold 48,200 shares to a family trust of which Will Adderley is a trustee but not a 
beneficiary. Following this transaction, The Leicester Foundation holds 91,800 Ordinary Shares and the family trust holds 
48,200 Ordinary Shares. Will Adderley is deemed to retain a legal interest in these shares which are not included in the total in 
the table above.
David Stead exercised nil cost options over 61,641 shares under the Long-Term Incentive Plan on 23 March 2010. On the same 
day he sold 25,000 Ordinary Shares to cover his tax and national insurance liability.
Nick Wharton purchased 12,500 Ordinary Shares on 25 February 2010 and Simon Emeny purchased 5,000 Ordinary Shares on 
26 February 2010.
There were no changes in the Directors’ shareholdings between the year end and 16 September 2010.
Details of share options held by Directors at the year end are given in the Remuneration report.
Simon Emeny and Will Adderley will be retiring by rotation at the 2010 Annual General Meeting and will be offering 
themselves for re-election. Biographical details of these Directors are set out on page 15 and details of their service contracts 
are in the Remuneration report on page 23.
Share capital and treasury shares
The Company has only one class of shares, Ordinary Shares of 1p each. 
During the year the Company effected a return of capital to shareholders amounting to £43.2m (21.5p per share). This was 
achieved through the issue of redeemable B shares. By year end all B shares had been redeemed and cancelled.
The issued share capital of the Company has increased by 248,748 during the period due to the exercise of share options by 
Directors and some senior managers pursuant to bonus schemes, and by other employees in connection with the Group’s 
Savings Related Share Option Plan. 
At 3 July 2010 the Company held 99,628 shares in treasury. During the period 737,507 Ordinary Shares were transferred out of 
treasury to employees on the exercise of share options. Details of option exercises by directors are set out in the Remuneration 
report on page 23. The remaining shares in treasury are held by the Company for the purpose of delivery to employees under 
employee share schemes. There have been no movements of shares into or out of treasury since the period end. 
 
Directors’ report and business review continued 29
Dunelm Group plc
Annual report and accounts 2010
Significant shareholders
At 16 September 2010 the following had notified the Company of a disclosable interest in 3% or more of the nominal value of 
the Company’s Ordinary Shares:
         Percentage 
        Ordinary  of share 
        shares capital
WL Adderley        69,953,809 34.8
W Adderley        48,070,000 24.0
Standard Life Investments Ltd        8,457,936 4.2
  
WL Adderley is also deemed to hold a legal interest in 91,800 Ordinary Shares held by The Leicester Foundation and 48,200 
Ordinary Shares held by a private family trust, by virtue of the fact that he is a trustee of those trusts.
  
Powers of Directors
Specific powers of Directors in relation to shares and the Company’s Articles of Association are referred to in the Corporate 
Governance Report on page 19.
  
Charitable donations
The Group’s charity of the year in the last financial year was Children’s Hospices UK. Collections are made in stores for the 
nominated charity throughout the financial year, specific fund-raising events are organised and the Group makes its own 
donations, from time to time the Group also makes adhoc donations to local charities. The total value of donations made by 
the Group in the year ended 3 July 2010 was £60,000 (2009: £49,000). 
The Group made no donations to political parties in either financial year.
Treasury and risk management
The Group’s approach to treasury and financial risk management is explained in the Finance Director’s Review on page 14.
 
Going concern
The Directors have made appropriate enquiries and formed a judgement at the time of approving the financial statements that 
there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable 
future. For this reason the Directors continue to adopt a going concern basis in preparing the financial statements. 
Disclosure of information to auditors 
The Directors who held office at the date of approval of this Directors’ report confirm that, so far as they are each aware, 
there is no relevant audit information of which the Group’s auditors are unaware; and each Director has taken all the steps 
that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that 
the Group’s auditors are aware of that information.
Disclaimer
This Directors’ Report and Business Review and the Financial Statements contain certain forward-looking statements with 
respect to the financial condition, results, operations and business of Dunelm Group 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 and Business Review or in these 
Financial Statements should be construed as a profit forecast. 30
Dunelm Group plc
Annual report and accounts 2010
Financial statements
Annual General Meeting
The Annual General Meeting will be held at 10.30am on Tuesday 16 November 2010 at the Dunelm Group Distribution 
Centre, Birmingham Road, Stoke-on-Trent, ST4 4DG. Special business at the Annual General Meeting will be:
Requesting authority pursuant to section 551 of the Companies Act 2006, to issue shares to the value of one third of the • 
issued Ordinary Share capital of the Company. The nominal amount of shares covered by this authority is £669,826 
(66,982,602 Ordinary Shares), 33.3% of the issued share capital at 16 September 2010. At that date the Company also held 
99,628 Ordinary Shares in treasury, which represents approximately 0.05% of the total Ordinary Share capital. This 
authority will lapse at the 2011 Annual General Meeting or, if earlier, on 31 December 2011. The Directors have no present 
intention to exercise this authority except to issue shares pursuant to the Group’s employee share schemes.
Requesting authority pursuant to section 561 of the Companies Act 2006 to distribute Ordinary Shares to the value of • 
£100,474 (10,047,390 Ordinary Shares), which constitutes 5% of the Company’s issued share capital (excluding treasury 
shares) at 16 September 2010, without offering them to existing shareholders. This authority will lapse at the 2011 Annual 
General Meeting or, if earlier, on 31 December 2011. The Directors do not intend to issue more than 7.5% of the issued 
share capital of the Company for cash on a non pre-emptive basis in any rolling three year period without prior 
consultation with the Investment Committees of the Association of British Insurers and the National Association of 
Pension Funds.
Requesting that the Directors be authorised pursuant to section 701 of the Companies Act 2006 to buy up to 5,000,000 • 
Ordinary Shares, approximately 2.5% of issued Ordinary Share capital (excluding treasury shares) in the Company. The 
Directors will only exercise this authority if it enhances earnings per share and is in the interests of shareholders generally. 
Shares purchased may be cancelled or held in treasury. If held in treasury and used to satisfy share options, the NAPF’s 
(National Association of Pension Funds) guidelines would be complied with.
Requesting a waiver of any obligation that could arise on WL Adderley to make a general offer for the entire issued capital • 
of the Company as a result of: purchases by the Company of Ordinary Shares; and/or the grant to and exercise by  
WL Adderley of options granted to him under the Company’s Long-Term Incentive Plan. Voting on these resolutions will 
take place on a poll; WL Adderley and persons connected with him will not be eligible to vote.
Authorising the Board to convene a general meeting other than an Annual General Meeting on at least 14 days’ notice. The • 
Companies (Shareholders’ Rights) Regulations require that all meetings other than an Annual General Meeting must be 
held on at least 21 days’ notice unless shareholders agree to a shorter period. Under the Companies Act 2006 and the 
Company’s Articles of Association, the Company can call meetings other than an Annual General Meeting on 14 days’ 
notice. This resolution will allow the Company to continue to do so, and will be effective until the next Annual General 
Meeting when it is intended that a similar resolution will be proposed. The Company will also need to meet the 
requirements for electronic voting under the Regulations before it can call a meeting on 14 days’ notice.
Requesting a waiver of the rules of the Dunelm Group Long-Term Incentive Plan to allow the following conditional awards • 
to be made to Nick Wharton: (i) over Ordinary Shares with a market value at the date of the award equivalent to £280,000, 
being 120% of his basic salary for the period between 1 December 2010 to 2 July 2011; and (ii) over Ordinary Shares with a 
market value at the date of the award equivalent to £1,000,000. It is proposed that the awards be made on the 
commencement of his employment as a full time Executive Director of the Company.
 
The Notice of Annual General Meeting is set out in the separate booklet enclosed with this report.
Auditors
KPMG Audit Plc offer themselves for reappointment as auditors in accordance with section 489 of the Companies Act 2006.
Directors’ report and business review continued 31
Dunelm Group plc
Annual report and accounts 2010
The Group recognises that it has a duty on behalf of all stakeholders to minimize its business related social, ethical and 
environmental impacts. As part of this commitment the Dunelm’s Corporate Social Responsibility programme has focused 
on reducing key impacts in many significant areas such as waste management, energy reduction and carbon emissions.
The Board places particular emphasis on maintaining good relationships with its customers, employees and suppliers; on 
ethical sourcing; on environmental issues; and on charitable contributions.
The Chief Executive reports regularly to the Board on all of these issues. 
Customers
The Group is committed to delivering consistently high standards of customer service and satisfaction. We constantly strive 
to provide high quality, safe products at a fair price supported by our ‘Simply Value for Money’ ethos. 
The Group aims to ensure that it complies fully with relevant legislation in all areas affecting its customers including 
marketing, product quality, the environment and customer data.
The Group has a dedicated Customer Service team that deals with customer contact whether it is by letter, e-mail, fax or 
phone and supports the store teams in delivering a strong customer experience. Weekly communications are sent to all stores 
highlighting areas of good customer service and also opportunities for improvement. 
Employees
Dunelm employs over 6,000 staff engaged throughout the Group’s stores, distribution and head office locations and in a 
range of disciplines including Buying, Marketing, Warehousing, IT, Finance, HR as well as many customer facing roles.
The Group is a growing business and offers competitive benefits as well as personal and career enhancement opportunities. 
We have recently launched our ‘Dunelm Directions’ programme to support the development of talented staff and 
management. We also offer further support for employees to obtain relevant professional skills and qualifications.
The Group is an equal opportunities employer. We are committed to recruit, develop, promote and retain skilled and 
motivated people regardless of disability, race, religion, gender, colour, nationality, sex, sexual orientation, marital  
status or age.
The Group places considerable value on the involvement of its employees and continues its practice of consulting with 
employees on matters likely to affect their interests, through its partners’ council.
Information on matters of concern to employees is also given through bulletins, reports and an in-house newsletter.
The Group recognises its obligations towards disabled people and endeavours to provide employment where possible having 
regard to the physical demands of the Group’s operations and the abilities of the disabled persons. In the event of employees 
becoming disabled, every effort is made to retrain them in order that their employment with the Group may continue. It is 
the policy of the Group that training, career development and promotion opportunities should be available to all employees 
and this is reflected in its Equal Opportunities Policy.
Health and safety
Dunelm is responsible for the health and safety of our employees, contractors, customers and any other visitors to our premises. 
A dedicated Health & Safety manager ensures that key operational risks are fully understood and that all mitigating action has 
been taken to ensure a safe environment for everyone. A programme of risk assessments and independent audits helps us to 
identify areas of concern whether in workplace transport, safety during store development or a safe shopping environment. 
Training programmes are key to ensuring a safe and clean environment and we adopt a number of methods for keeping these 
live ranging from documented SSOW (‘safe systems of work’) to web based ‘e-learning’ and testing modules.
During the past year the number of reportable accidents was 46 (2009: 56).
The Group undertakes a full programme of self-audit through site management, health & safety representatives and the 
operational audit team designed to identify issues with compliance or training. Results of these audits are escalated 
appropriately and communicated back to the executive committee at least monthly.
Corporate social responsibility  32
Dunelm Group plc
Annual report and accounts 2010
0
10
20
30
40
50
60
70
80
2008 – 09 2009 –10 Target 2010 –11
Financial statements
Suppliers 
Dunelm sources the products it sells from many countries around the world. We work with suppliers to stress the importance 
of ethical trading and we encourage contractors and suppliers to manage the environmental impact of their activities and to 
support the Group’s environmental policy.
The Group has a firm policy on ethical sourcing which all suppliers are required to sign up to. This policy seeks to ensure that 
products are produced in clean and safe environments, that workers are treated with respect and earn a reasonable wage and 
that suppliers work within the relevant laws and legislation. Independent audits of suppliers’ facilities, particularly in the Far 
East are carried out on a regular basis.
Payment policy and average payment period
Dunelm trades with all stock suppliers on an electronic basis providing an efficient payment process. This process ensures 
that all suppliers are treated on the same basis and operate to standard terms and conditions. All new suppliers are made 
aware of the basis of trade with Dunelm and in particular our standard payment terms in advance of commencing trade.
The number of days’ purchases outstanding for payment at 3 July 2010 was 36 days (2009: 33 days).
Contractual or other arrangements
The Directors consider that there are no contractual or other arrangements, with major suppliers, which are likely to 
influence, directly or indirectly, their performance of the business and its value.
 
Environment
Dunelm recognises that the business has an impact on the environment both directly, through its store portfolio, head office 
and distribution infrastructure but also indirectly through partnerships with suppliers and through customers when it comes 
to buying products for their home.
Dunelm continues to be committed to achieving high standards of environmental performance in all aspects of its business activities.
The Group has in place an Environmental Committee tasked with understanding our environmental impact and to continually 
improve in the key areas of energy usage, waste and carbon emissions. We have launched a ‘T urning Dunelm Greener’ campaign 
designed to place environmental impact at the heart of what we do. Specific objectives for the forthcoming year are outlined below:
1. Increasing the proportion of waste which is recycled 
Dunelm is aiming to maximise the volume of waste which is recycled and in so doing reduce the volume going to landfill. Over 
the past year we have worked to deliver more effective waste management procedures. We have doubled the number of sites 
with balers to 43 (2009: 21) and commenced the recycling of plastic, in addition to cardboard, in all locations. We intend to 
double this again in the coming year.
We have also introduced ‘Dry Mixed Recycling’ into 12 sites (2009: nil) which has enabled us to recycle all plastics, paper and 
tin/aluminium cans. This initiative will be rolled out to many more sites in the forthcoming year.
Annual waste to landfill (like-for-like stores) – 1000m
3
We have engaged with a waste management company to identify 
further opportunities for recycling and aim to either reuse or recycle all 
of our waste fabric and soft furnishings going forward.
These initiatives, together with enhanced reporting of site by site 
performance has enabled Dunelm to reduce the proportion of waste to 
landfill in like-for-like stores by 25.8%.
Our target for the forthcoming year is to reduce the cube volume of waste sent to landfill by a further 25%.
Corporate social responsibility continued 33
Dunelm Group plc
Annual report and accounts 2010
0
5
10
15
20
25
2008 – 09 2009 –10 Target 2010 –11
2. Reducing the level of product packaging
Dunelm continues to work with suppliers to reduce the level of packaging in our products. We have completed a trial to 
introduce reusable delivery totes into our supply chain and we expect to launch this with a number of key suppliers in the 
second half of the financial year ending 2 July 2011. This will reduce product packaging for those suppliers by up to 50%.
In the year we have audited many of our waste streams to divert materials from landfill where possible. Most recently we have 
identified a particular specification of clear plastic or wrap that should be used by suppliers – Low Density Polyethylene.  
This product has a much greater recyclable content and will be standard for all suppliers going forward.
Eco-bags are offered in all stores to promote reusable customer packaging and plastic bags are no longer being encouraged 
with each transaction. The number of plastic carrier bags used during the year ended 3 July 2010 declined by 6.8%, despite 
the increase in business.
Our target for the forthcoming year is to reduce the number of carrier bags used per store by a further 10%.
3. Reducing energy consumption across all locations
Dunelm has completed the roll out of new electricity meters to all stores. We are also halfway through implementation of a 
similar technology for our sites with gas meters. We expect this to be completed by the end of December 2010 . These meters 
have allowed us to monitor energy consumption on a half-hourly basis and to provide a range of site by site exception reports 
targeted at reducing the level of consumption and eliminating waste. Energy usage has also been added to monthly bonus 
targets for all stores which is encouraging store management to challenge performance.
Electricity usage (like-for-like stores) – GWh
The Group has also commenced a trial of Building Management Systems 
(‘BMS’) in 1 1 stores. These systems are designed to optimise energy usage 
across the store and cut out unnecessary wastage. This investment will be 
reviewed over the next few months and, if successful, we intend to roll 
these out in all new stores, refits and progressively to other stores in 
the chain.
As a result of these actions we have reduced electricity usage by 2.4% in 
like-for-like stores. 
Our target for the forthcoming year is to reduce electricity and gas usage by 10% on a like-for-like basis. 34
Dunelm Group plc
Annual report and accounts 2010
Financial statements
4. Carbon Reduction (CO
2
)
Dunelm’s energy carbon footprint for the period ended 3 July 2010 was 23,371 tonnes of CO
2
. This is a reduction year on year of 
2.6% of CO
2
, despite a growth of 12% in the number of superstores trading.
Over the year ended 3 July 2010, 80% of the power used by Dunelm was on a renewable combined heat and power (‘GQCHP’) 
tariff, where CO
2
 emissions are 30% lower than the national average. The remaining supplies will be transferred to these ‘green 
tariffs’ as from October 2010.
As a result of the work being undertaken, apart from those supplies picked up through our continued expansion, which take 
several months to transfer, all power used by Dunelm will be on either a renewable or green tariff by the end of June 201 1.
Investment has also been made at our Stoke distribution centre where we have fitted the new 250,000 square feet extension 
with energy efficient lighting and taken the opportunity to retrofit the existing 250,000 square feet facility. Company car fuel 
efficiency has also been targeted and we have reduced the maximum CO2 emissions to 155g/km for all new cars. We will reduce 
this further in the coming year.
In the coming year we will focus on investments in stores to reduce energy consumption. The most significant investment is likely 
to be in building management systems but we will further roll out energy efficient lighting, motion detectors and climatic sensors 
to moderate the use of heating and cooling systems.
Over the past year Dunelm has worked with an external consultancy to drive reductions in our carbon emissions. We have 
registered for the Carbon Trust Standard as part of the new Carbon Reduction Commitment legislation. A full application will 
be made by the end of October 2010. 
Our target for the forthcoming year is to reduce absolute CO
2
 levels year on year.
By order of the Board
David Stead
Company Secretary
16 September 2010
Corporate social responsibility continued 35
Dunelm Group plc
Annual report and accounts 2010
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 IFRSs as adopted by the European 
Union (‘EU’) and applicable law and have elected to prepare the Parent Company financial statements on the same basis.
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 their 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 and prudent; • 
state whether they have been prepared in accordance with IFRSs as adopted by the EU; and • 
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the • 
Parent Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent 
Company’s transaction 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 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 Directors’ Report, Directors’ 
Remuneration Report and Corporate Governance Statement that comply 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.
Responsibility Statement
We confirm that to the best of our knowledge:
(a) 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
(b) the management report includes a fair review of the development and performance of the business and the position of 
the Company and the undertakings included in the consolidation taken as a whole, together with a description of the 
principal risks and uncertainties that they face.
By order of the Board
Geoff Cooper   Will Adderley
Chairman   Chief Executive
16 September 2010 36
Dunelm Group plc
Annual report and accounts 2010
Financial statements
Independent Auditor’s report to the members 
of Dunelm Group plc
We have audited the financial statements of Dunelm Group plc for the financial year ended 3 July 2010 set out on pages 37 to 
41. The financial reporting framework that has been applied in their preparation is applicable law and International Financial 
Reporting Standards (‘IFRSs’) as adopted by the EU and, as regards the Parent Company financial statements, as applied in 
accordance with the provisions of the Companies Act 2006.
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 auditors’ 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.
Respective responsibilities of Directors and auditors
As explained more fully in the Directors’ Responsibilities Statement set out on page 35, the Directors are responsible for the 
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit 
the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those 
standards require us to comply with the Auditing Practices Board’s (‘APB’s’) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/UKP .
Opinion on 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 3 July • 
2010 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU; • 
the Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and • 
as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as • 
regards the Group financial statements, Article 4 of the IAS Regulation.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the • 
Companies Act 2006; 
the information given in the Directors’ Report for the financial year for which the financial statements are prepared is • 
consistent with the financial statements; and
the information given in the corporate governance statement with respect to internal control and risk management systems • 
in relation to financial reporting processes and about share capital structures is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
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; or • 
a Corporate Governance Statement has not been prepared by the company. • 
Under the Listing Rules we are required to review:
the Directors’ statement, set out on page 35, in relation to going concern; and • 
the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the • 
June 2008 Combined Code specified for our review.
Wayne Cox 
(Senior Statutory Auditor)
for and on behalf of KPMG Audit Plc, Statutory Auditor
Chartered Accountants
Leicester
16 September 2010 37
Dunelm Group plc
Annual report and accounts 2010
Consolidated income statement
For the 52 weeks ended 3 July 2010
        52 weeks 53 weeks 
        2010 2009  
       Note £’000 £’000
Revenue       1 492,839 423,783
Cost of sales        (262,253) (233,628)
Gross profit        230,586 190,155
Operating costs       3 (155,126) (137,560)
Operating profit       2 75,460 52,595
Financial income       5 1,361 1,563
Financial expenses       5 (65) (667)
Profit before taxation        76,756 53,491
Taxation       6 (22,406) (15,870)
Profit for the period attributable to equity shareholders of the parent    54,350 37,621
Earnings per Ordinary Share – basic       8 27.1p 18.8p
Earnings per Ordinary Share – diluted      8 26.9p 18.6p
Dividend proposed per Ordinary Share      7 5.0p 4.0p
Dividend paid per Ordinary Share       7 3.0p 2.0p
All activities relate to continuing operations.  38
Dunelm Group plc
Annual report and accounts 2010
Financial statements
Consolidated statement of comprehensive income
For the 52 weeks ended 3 July 2010
         Restated 
        52 weeks 53 weeks 
        2010 2009  
        £’000 £’000
Profit for the period        54,350 37,621
Effective portion of movement in fair value of cash flow hedges     (545) –
Deferred tax on hedging movements       153 –
Total comprehensive income for the period       53,958 37,621 39
Dunelm Group plc
Annual report and accounts 2010
Consolidated statement of financial position
As at 3 July 2010
        3 July 4 July  
        2010 2009  
       Note £’000 £’000
Non-current assets   
Intangible assets       9 5,202 5,843
Property, plant and equipment       10 102,599 88,771
Total non-current assets        107,801 94,614
Current assets    
Inventories       12 62,583 57,895
Trade and other receivables       13 10,470 10,739
Cash and cash equivalents       14 15,369 24,016
Total current assets        88,422 92,650
Total assets        196,223 187,264
Current liabilities   
Trade and other payables       15 (71,638) (65,550)
Liability for current tax        (11,200) (8,797)
Financial instruments       17 (545) –
Interest-bearing loans and borrowings      16 – (18)
Total current liabilities        (83,383) (74,365)
Non-current liabilities
Deferred tax liability       11 (152) (127)
Total non-current liabilities        (152) (127)
Total liabilities        (83,535) (74,492)
Net assets        112,688 112,772
Equity   
Issued capital       18 2,010 2,008
Share premium        580 345
Capital redemption reserve        43,155 –
Hedging reserve        (392) –
Retained earnings        67,335 110,419
Total equity attributable to equity holders of the Parent     112,688 112,772
The financial statements on pages 37 to 58 were approved by the Board of Directors on 16 September 2010 and were signed 
on its behalf by:
Will Adderley
Chief Executive 40
Dunelm Group plc
Annual report and accounts 2010
Financial statements
Consolidated statement of cash flows
For the 52 weeks ended 3 July 2010
        52 weeks 53 weeks 
        2010 2009  
       Note £’000 £’000
Profit before taxation        76,756 53,491
Adjustment for net financing costs        (1,296) (896)
Operating profit        75,460 52,595
Depreciation and amortisation        11,370 10,555
Loss on disposal of property, plant and equipment      13 26
Operating cash flows before movements in working capital     86,843 63,176
(Increase)/decrease in inventories        (4,688) 2,815
Decrease in receivables        269 897
Increase in payables        6,094 11,132
Net movement in working capital        1,675 14,844
Share-based payments expense        1,330 599
Foreign exchange losses        516 323
        90,364 78,942
Interest paid        (71) (821)
Interest received        557 523
Tax paid        (18,899) (11,200)
Net cash generated from operating activities      71,951 67,444
Cash flows from investing activities
Proceeds on disposal of property, plant and equipment      7 1
Acquisition of property, plant and equipment       (23,344) (19,647)
Acquisition of intangible assets        (1,233) (6,295)
Net cash utilised in investing activities       (24,570) (25,941)
Cash flows from financing activities
Proceeds from issue of share capital        244 –
Purchase of treasury shares        – (186)
Proceeds from issue of treasury shares       642 124
Repayment of bank loan        (10,000) (10,000)
Proceeds from bank loan         10,000 –
Return of capital to shareholders        (43,155) –
Dividends paid        (14,029) (10,993)
Net cash flows utilised in financing activities       (56,298) (21,055)
Net (decrease)/increase in cash and cash equivalents      (8,917) 20,448
Foreign exchange revaluations        288 717
Cash and cash equivalents at the beginning of the period      23,998 2,833
Cash and cash equivalents at the end of the period     14 15,369 23,998 41
Dunelm Group plc
Annual report and accounts 2010
Consolidated statement of changes in equity
For the 52 weeks ended 3 July 2010
    Issued  Capital 
    share  Share redemption Hedging Retained Total 
    capital  premium reserve reserve earnings equity 
    £’000 £’000 £’000 £’000 £’000 £’000
As at 28 June 2008    2,008 345 – – 83,036 85,389
Profit and total comprehensive income for the financial year – – – – 37,621 37,621
Purchase of treasury shares    – – – – (186) (186)
Treasury shares reissued in respect of share option schemes – – – – 123 123
Share-based payments    – – – – 599 599
Deferred tax on share-based payments   – – – – 139 139
Current corporation tax on share options exercised  – – – – 80 80
Dividends    – – – – (10,993) (10,993)
Total transactions with owners, recorded directly in equity – – – – (10,238) (10,238)
As at 4 July 2009    2,008 345 – – 110,419 112,772
Profit for the financial year    – – – – 54,350 54,350
Movement in fair value of cash 
 flow hedges    – – – (545) – (545)
Deferred tax on hedging movements   – – – 153 – 153
Total comprehensive income for the financial year  – – – (392) 54,350 53,958
Issue of share capital    2 235 – – – 237
Issue of B shares    43,155 – – –  (43,155)  –
Redemption of B shares    (43,155) – 43,155 –  (43,155) (43,155)
Treasury shares reissued in respect 
 of share option schemes    – – – – 649 649 
 
Share-based payments    – – – – 1,330 1,330
Deferred tax on share-based payments   – – – – 320 320
Current corporation tax on share 
 options exercised    – – – – 606 606
Dividends    – – – –  (14,029) (14,029)
Total transactions with owners, recorded directly in equity 2 235 43,155 – (97,434) (54,042)
As at 3 July 2010    2,010 580 43,155 (392) 67,335 112,688
2009 financial year was 53 weeks. 42
Dunelm Group plc
Annual report and accounts 2010
Financial statements
Accounting policies
Basis of preparation
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the ‘Group’). The 
Parent Company financial statements present information about the Company as a separate entity and not about its Group.
The Group financial statements have been prepared and approved by the Directors in accordance with International Financial 
Reporting Standards as adopted by the EU (‘Adopted IFRSs’) and in accordance with the provisions of the Companies Act 
2006 and these are presented on pages 37 to 58.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in 
these Group financial statements.
The annual financial statements are prepared under the historical cost convention except where financial instruments have 
been stated at fair value. The financial statements are prepared in pounds sterling, rounded to the nearest thousand.
Going concern 
The Group has considerable financial resources together with long standing relationships with a number of key suppliers and 
an established reputation in the retail sector across different geographic areas. As a consequence, the Directors believe that 
the Group is well placed to manage its business risks successfully despite the current economic outlook. The Directors have a 
reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for 
the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and 
financial statements.
Further information regarding the Group’s business activities, together with the factors likely to affect its future 
development, performance and position is set out in the Directors’ Report and Business Review on pages 27 to 30. The 
financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Finance Director’s 
review on pages 10 to 14. In addition note 17 to the financial statements includes the Group’s objectives, policies and 
processes for managing its capital; its financial risk management objectives; and its exposures to credit risk and liquidity risk.
Use of estimates and judgements
The presentation of the annual financial statements requires the Directors to make judgements, estimates and assumptions 
that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and 
associated assumptions are based on historical experience and various other factors that are believed to be reasonable under 
the circumstances. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in 
the period in which the estimate is revised and in any future periods affected.
The key estimates and judgements used in the financial statements are as follows:
Inventory provisions
The Group provides against the carrying value of inventories held, based upon average losses incurred to clear old and 
discounted lines.
Dilapidations
The Group provides for the full estimated costs of any dilapidations on stores where required.
Taxation
There are transactions whose ultimate tax treatment is uncertain. The Group makes provision for anticipated tax issues based 
on the likelihood of whether additional taxes may arise. The Group recognises deferred tax assets and liabilities based on 
estimates of future taxable income and recoverability. If these estimates do not materialise or change, or there are changes in 
tax rates or to the period over which losses might be recognised, then the value of the deferred tax assets or liability will need 
to be revised in a future period. 43
Dunelm Group plc
Annual report and accounts 2010
Equity-settled share-based payments
Certain employees and Directors of the Group receive equity-settled remuneration in the form of equity-settled share-based 
payment transactions, whereby employees render services in exchange for shares or rights over shares. The cost equity-
settled transactions with employees is measured by reference to the fair value, determined using an appropriate pricing 
model, at the date at which they are granted. The cost of equity-settled transactions is recognised, together with a 
corresponding increase in equity, over the period in which the non-market vesting conditions are expected to be fulfilled, 
ending on the relevant vesting date. The cumulative expense recognised for equity-settled transactions at each reporting 
date until the vesting date reflects the extent to which the vesting period and is adjusted to reflect the Directors’ best 
available estimate of the number of equity instruments that will ultimately vest based upon non-market conditions.
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to 
govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, 
potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of 
subsidiaries are included in the consolidated financial statements from the date that control commences until the date that 
control ceases.
Transactions eliminated on consolidation
Intragroup balances, and any unrealised gains and losses or income and expenses arising from intragroup transactions, are 
eliminated in preparing the consolidated financial statements.
Revenue
Revenue represents the proceeds from sales of goods and related services. It excludes sales between Group companies and is 
after deducting returns, discounts given and VAT. For the majority of sales, revenue is recognised at the point of sale with the 
exception of make-up charges for custom made products, where revenue is recognised at the point that the goods are 
collected, and gift vouchers, where revenue is recognised when the vouchers are redeemed.
Foreign currencies
Transactions in foreign currencies are recorded at the prevailing rate at the date of the transaction. Monetary assets and 
liabilities denominated in foreign currency are translated at the rates ruling at the balance sheet date. Resulting exchange 
gains or losses are recognised in the income statement for the period.
Intangible assets
These comprise software development and implementation costs and trademarks and are stated at cost less amortisation 
(see below).
Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated useful life of the asset. These are 
as follows:
software development 3 years • 
trademarks 5 years • 
Property, plant and equipment
Owned assets
Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items 
of property, plant and equipment.
Depreciation
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an 
item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:
computer equipment 3 years • 
freehold buildings 50 years • 
fixtures and fittings 4 years • 
motor vehicles 4 years • 
office equipment 5 years • 
plant and machinery 4 years • 
leasehold improvements over the period of the lease • 
The residual value of an asset, if significant, is reassessed annually. 44
Dunelm Group plc
Annual report and accounts 2010
Financial statements
Current assets
Trade and other receivables
Trade and other receivables are initially recognised at fair value and then carried at amortised cost net of impairment provisions.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is derived using the average cost method and includes 
costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling 
price less cost to sell in the ordinary course of business.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form 
an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose 
of the statement of cash flows.
Bank borrowings and borrowing costs
Interest-bearing bank loans and overdrafts are recorded at the proceeds received. 
Borrowing costs are recognised as an expense in the financial period in which they are incurred.
Borrowings are classed as current liabilities unless the Group has an unconditional right to defer settlement of the liability for 
at least 12 months from the balance sheet date.
Derivative financial instruments
Derivative financial instruments used are forward exchange contracts and are measured at fair value. The fair values are 
determined by reference to the market prices available from the market on which the instruments involved are traded.
Certain derivative financial instruments are designated as hedges in line with the Group’s treasury policy. Cash flow hedges 
that hedge exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised 
asset or a liability or a highly probable forecasted transaction.
For cash flow hedges that proportion of the gain or loss on the hedging instrument that is determined to be an effective 
hedge, as defined by IAS 39 ‘Financial Instruments: Recognition and Measurement’, is recognised in equity, directly in the 
hedge reserve with any ineffective portion recognised in the income statement. Such hedges are tested, both at inception to 
ensure they are expected to be effective and periodically throughout their duration to assess continuing effectiveness. When 
the forecast transaction results in the recognition of a non-financial asset or liability, the associated gains or losses previously 
recognised in equity are included in the initial measurement of the asset or liability. For all other cash flow hedges, the gains 
or losses that are recognised in equity are transferred to the income statement in the same period in which the hedge cash 
flows affect the income statement.
Any gains or losses arising from changes in fair value derivative financial instruments not designated as hedges are recognised 
in the income statement.
Impairment
The carrying amounts of the Group’s assets, other than inventories and deferred tax assets, are reviewed at each balance 
sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable 
amount is estimated.
The recoverable amount is the greater of net selling price and value in use. In assessing value in use, the estimated future cash 
flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the 
time-value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, 
the recoverable amount is determined for the cash-generating unit to which the asset belongs.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds the 
recoverable amount. Impairment losses are recognised in the income statement.
 
Share capital
Where the Company purchases its own equity share capital (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 or reissued. Where such shares are subsequently sold or reissued, any consideration received net of any directly 
attributable incremental transactions costs and the related income tax effects, is included in equity attributable to the 
Company’s equity holders. 
Accounting policies continued 45
Dunelm Group plc
Annual report and accounts 2010
Provisions
A provision is recognised in the balance sheet when the Group has a current legal or constructive obligation as a result of a 
past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. A provision for 
onerous contracts is recognised when the expected benefit to be derived by the Group from a contract is lower than the 
unavoidable costs of meeting its obligations under the contract.
Expenses
Property leases
Lease incentives received are recognised in the income statement evenly over the full term of the lease.
Where leases for land and buildings provide for fixed rent review dates and amounts, the Group accounts for such reviews  
by recognising, on a straight-line basis, the total implicit minimum lease payments over the non-cancellable period of the 
lease term.
Financing income/expense
Financing income/expense comprises interest payable on borrowings calculated using the effective interest rate method, 
interest receivable on funds invested and foreign exchange gains and losses.
Retirement benefits
The Group operates a defined contribution pension plan using a third-party provider. Obligations for the contributions to this 
plan are recognised as an expense in the income statement as incurred.
Share-based payment transactions
The Group operates an employee share save scheme open to all employees with over six months’ service, enabling them to 
save money which may be used after three years to acquire shares in the Company at a predetermined price.
The Group also operates other share option schemes enabling certain employees to acquire shares of the Company.
The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. Fair value is 
measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. 
Fair value is measured using the binomial model, taking into account the terms and conditions applicable to the options.
At each balance sheet date the Group revises its estimates of the number of share incentives that are expected to vest and 
amends the charge accordingly. 
Dividends
Dividends are recognised as a liability in the period in which they are approved such that the Company is obligated to pay  
the dividend.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to 
the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax represents the expected tax payable on the taxable income for the year, using tax rates enacted or substantively 
enacted at the balance sheet date, together with any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying 
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against 
which the asset can be recognised. Deferred tax assets are reduced to the extent that it is no longer probable that the related 
tax benefit will be recognised. 46
Dunelm Group plc
Annual report and accounts 2010
Financial statements
Adopted IFRS and IFRIC not yet applied
IFRS 8  Operating segments
IAS 27 (revised) Consolidated and Separate Financial Statements
The effect of the revision of IAS 27 is disclosed on page 41.
At the date of approval of these financial statements, the following standards, amendments and interpretations were in place 
but not yet effective:
IFRS 1 Revised IFRS 1  – First time adoption of IFRSs
IFRS 7  Revised IFRS 7  – Financial Instruments
IFRS 9  Revised IFRS 9  – Financial Instruments
IAS 1 Revised IAS 1  – Presentation of Financial Statements
IAS 27  Revised IAS 27  – Consolidated and Separate Financial Statements
IAS 34  Revised IAS 34  – Interim Financial Reporting
IFRIC 13  Revised IFRIC 13  – Customer Loyalty Programmes
The above will be adopted in the Group and Company’s financial statements when they become effective. 
When adopted none of the above standards or amendments are expected to have any significant impact on the financial 
statements of the Group or Company.
Revised IFRS 7 requires additional disclosure to better enable users to evaluate an entity’s exposure to risks arising from 
financial instruments. Revised IAS 1 requires a reconciliation of each component of equity to be presented in the statement of 
changes in equity showing separately changes arising from items recognised in profit or loss, in other comprehensive income, 
and from transactions with owners acting in their capacity as owners. 
Accounting policies continued 47
Dunelm Group plc
Annual report and accounts 2010
Notes to the annual financial statements
For the 52 weeks ended 3 July 2010
1 Segmental reporting
The Group has one reportable segment, retail of homewares. Management believe that these measures are the most 
relevant in evaluating the performance of the segment and for making resource allocation decisions.
The Chief Operating Decision Maker is the Group’s Executive Committee. Internal management reports are reviewed by them 
on a monthly basis. Performance of the segment is assessed based on profit before interest and taxation.
All material operations of the reportable segment are carried out in the UK. The Group’s revenue is driven by the 
consolidation of individual small value transactions and as a result Group revenue is not reliant on a major customer or group 
of customers.
2 Operating profit
Operating profit is stated after charging the following items:
        2010 2009 
        £’000 £’000
Inventories
 Cost of inventories included in cost of sales       262,253 229,701
 Write down of inventories        1,120 2,758
Amortisation of intangible assets        1,876 2,550
Depreciation of property, plant and equipment
 Owned         9,494 8,005
Operating lease rentals
 Land and buildings        22,544 21,683
 Plant and machinery        1,351 1,151
Loss on disposal of property, plant and equipment and intangible assets    13 26
The analysis of auditors’ remuneration is as follows:
        2010 2009 
        £’000 £’000
Fees payable to the Company’s auditors for the audit of the Parent and consolidated annual accounts  15 15
Fees payable to the Company’s auditors and their associates for other services to the Group  
– audit of the Company’s subsidiaries pursuant to legislation     52 52
– tax compliance        30 29
– other tax services        88 8
– all other services        17 –
3 Operating costs
         Restated 
        2010 2009 
        £’000 £’000
Selling and Distribution        130,606 117,933
Administrative         24,507 19,601
Loss on disposal of property, plant and equipment and intangible assets    13 26
        155,126 137,560
4 Employee numbers and costs
The average number of people employed by the Group (including Directors) was:
      2010 2010 2009 2009 
      Number Full time Number Full time 
      of heads equivalents of heads equivalents
Selling      5,608 3,493 5,003 3,302
Distribution      285 274 250 240
Administration      198 194 161 158
      6,091 3,961 5,414 3,700 48
Dunelm Group plc
Annual report and accounts 2010
Financial statements
4 Employee numbers and costs continued
The aggregate remuneration of all employees including Directors comprises:
        2010 2009 
        £’000 £’000
Wages and salaries including bonuses and termination benefits     61,994 52,696
Social security costs        4,324 3,429
Share-based payment expense (note 20)       1,330 599
Defined contribution pension costs        196 206
        67,844 56,930
Details of Directors’ remuneration, share options, long-term incentive schemes and pension entitlements are disclosed in the 
Remuneration Report on pages 23 to 26.
5 Financial income and expense
        2010 2009 
        £’000 £’000
Finance income
Interest on bank deposits        557 523
Foreign exchange gains        804 1,040
        1,361 1,563
Finance expenses
Interest on bank borrowings and overdraft       (65) (667)
Net finance income        1,296 896
6 Taxation
        2010 2009 
        £’000 £’000
Current taxation
UK corporation tax charge for the period       22,146 16,143
Adjustments in respect of prior periods       (238) 94
        21,908 16,237
Deferred taxation
Origination of temporary differences       324 (332)
Adjustment in respect of prior periods       174 (35)
        498 (367)
Total taxation expense in the income statement      22,406 15,870
The tax charge is reconciled with the standard rate of UK corporation tax as follows:
        2010 2009 
        £’000 £’000
Profit before tax        76,756 53,491
UK corporation tax at standard rate of 28.0% (2009: 28.0%)     21,492 14,977
Factors affecting the charge in the period:
Non-deductible expenses        128 7
Ineligible depreciation        972 947
Lease incentive deductions        (122) (125)
Adjustments to tax charge in respect of prior years      (64) 59
Profit on disposal in excess of capital gain       – 5
        22,406 15,870
The taxation charge for the period as a percentage of profit before tax is 29.2% (2009: 29.7%).
Notes to the annual financial statements continued
For the 52 weeks ended 3 July 2010 49
Dunelm Group plc
Annual report and accounts 2010
7 Dividends
All dividends relate to the 1p Ordinary Shares. 
        2010 2009 
        £’000 £’000
Final for the period ended 28 June 2008  – paid 3.5p      – (6,994)
Interim for the period ended 4 July 2009 – paid 2.0p      – (3,999)
Final for the period ended 4 July 2009  – paid 4.0p      (8,008) –
Interim for the period ended 3 July 2010 – paid 3.0p      (6,021) –
        (14,029) (10,993)
The Directors are proposing a final dividend of 5.0p per Ordinary Share for the period ended 3 July 2010 which equates to 
£10.0m. The dividend will be paid on 10 December 2010 to shareholders on the register at the close of business on  
26 November 2010. 
8 Earnings per share
Basic earnings per share is calculated by dividing the profit for the period attributable to equity shareholders by the weighted 
average number of Ordinary Shares in issue during the period.
For diluted earnings per share, the weighted average number of Ordinary Shares in issue is adjusted to assume conversion of 
all dilutive potential Ordinary Shares. These represent share options granted to employees where the exercise price is less 
than the average market price of the Company’s Ordinary Shares during the period.
Weighted average numbers of shares:
        52 weeks  53 weeks 
        ended ended 
        3 July 2010 4 July 2009 
        ’000 ‘000
Weighted average number of shares in issue during the period     200,264 199,874
Impact of share options        2,047 2,559
Number of shares for diluted earnings per share      202,311 202,433
9 Intangible assets
       Software  Rights to 
       development  Dorma 
       and licences  brand Total 
       £’000 £’000 £’000
Cost
At 28 June 2008       6,613 – 6,613
Additions       1,237 5,036 6,273
Disposals       (153) – (153)
Transfers from property, plant and equipment      41 – 41
At 4 July 2009       7,738 5,036 12,774
Additions       1,233 – 1,233
Disposals       (5,444) – (5,444)
Transfers from property, plant and equipment      2 – 2
At 3 July 2010       3,529 5,036 8,565
Amortisation
At 28 June 2008       4,516 – 4,516
Charge for the financial period       1,627 923 2,550
Disposals       (135) – (135)
At 4 July 2009       6,008 923 6,931
Charge for the financial period       869 1,007 1,876
Disposals       (5,444) – (5,444)
At 3 July 2010       1,433 1,930 3,363
Net book value
At 28 June 2008       2,097 – 2,097
At 4 July 2009       1,730 4,113 5,843
At 3 July 2010       2,096 3,106 5,202
All additions were acquired and do not include any internal development costs.
Transfers relate to assets which were classified initially as fixtures and fittings and leasehold improvements. 50
Dunelm Group plc
Annual report and accounts 2010
Financial statements
10 Property, plant and equipment
    Land and  Leasehold Plant and Motor Fixtures 
    buildings improvements  machinery vehicles and fittings Total 
    £’000  £’000 £’000  £’000  £’000 £’000
Cost
At 28 June 2008    41,769 40,246 102 99 29,092 111,308
Additions    6,969 7,179 93 – 5,428 19,669
Transfers to intangible assets    – (10) – – (31) (41)
Disposals    – (7) – (13) (151) (171)
At 4 July 2009    48,738 47,408 195 86 34,338 130,765
Additions    4,144 10,049 281 – 8,870 23,344 
Transfers to intangible assets    – 66 – – (68) (2)
Disposals    – (319) – (33) (13,206) (13,558)
At 3 July 2010    52,882 57,204 476 53 29,934 140,549
Depreciation
At 28 June 2008    2,054 9,871 52 99 22,075 34,151
Charge for financial period    661 3,405 44 – 3,895 8,005
On disposals    – (4) – (13) (145) (162)
At 4 July 2009    2,715 13,272 96 86 25,825 41,994
Charge for financial period    802 3,996 43 – 4,653 9,494
On disposals    – (314) – (33) (13,191) (13,538)
At 3 July 2010    3,517 16,954 139 53 17,287 37,950
Net book value
At 28 June 2008    39,715 30,375 50 – 7,017 77,157
At 4 July 2009    46,023 34,136 99 – 8,513 88,771
At 3 July 2010    49,365 40,250 337 – 12,647 102,599
11 Deferred tax
Deferred tax is provided in full on temporary differences under the liability method using a taxation rate of 28% (2009: 28%).
Deferred taxation assets and liabilities are attributable to the following:
    Assets  Liabilities  Net
    2010  2009 2010 2009 2010 2009 
    £’000 £’000 £’000 £’000 £’000 £’000
Property, plant and equipment    – – (1,187) (634) (1,187) (634)
Other temporary differences    153 – (169) (51) (16) (51)
Share-based payments    1,051 558 – – 1,051 558
    1,204 558 (1,356) (685) (152) (127)
The movement in the net deferred tax balance is as follows: 
      Balance at  Recognised Recognised Balance at 
      28 June 2008  in income in equity 4 July 2009 
      £’000 £’000  £’000  £’000
Property, plant and equipment      (813) 179 – (634)
Employee benefits      182 236 140 558
Short-term temporary differences      (3) (48) – (51)
      (634) 367 140 (127)
Notes to the annual financial statements continued
For the 52 weeks ended 3 July 2010 51
Dunelm Group plc
Annual report and accounts 2010
11 Deferred tax continued
      Balance at  Recognised Recognised Balance at 
      5 July 2009  in income in equity 3 July 2010 
      £’000 £’000  £’000  £’000
Property, plant and equipment      (634) (553) – (1,187)
Employee benefits      558 173 320 1,051
Short-term temporary differences      (51) (118) 153 (16)
      (127) (498) 473 (152)
12 Inventories
        2010 2009 
        £’000 £’000
Goods for resale        62,583 57,895
13 Trade and other receivables
        2010 2009 
        £’000 £’000
Trade receivables        122 463
Other receivables        628 1,113
Prepayments and accrued income        9,720 9,163
        10,470 10,739
All amounts fall due within one year. All trade receivables are current. No interest is charged on trade receivables, whilst these 
remain current. 
14 Cash and cash equivalents
        2010 2009 
        £’000 £’000
Cash at bank and in hand        15,369 23,998
Cash and cash equivalents include the following for the purpose of the cash flow statement:  
Cash at bank and in hand        15,369 24,016
Bank overdraft        – (18)
        15,369 23,998
 
15 Trade and other payables
        2010 2009 
        £’000 £’000
Trade payables        32,451 28,850
Accruals and deferred income        35,509 31,462
Other taxation and social security        3,283 3,971
Other creditors        395 1,267
        71,638 65,550
16 Interest bearing loans and borrowings
        2010 2009 
        £’000 £’000
Bank overdraft        – 18
        – 18
On 26 September 2006 the Group entered into a £50m revolving credit facility, repayable in full on 26 September 2011 and 
sub-divided into two elements: a £40m facility and a £10m facility. The £10m facility was cancelled on 26 May 2009. The 
£40m facility remains available but was not utilised at the balance sheet date.
Interest is payable on funds utilised under the £40m facility at the rate of LIBOR plus 0.35%. LIBOR is fixed for a given loan at 
the date of draw down.
The facility is guaranteed by the Parent Company and its subsidiaries. 52
Dunelm Group plc
Annual report and accounts 2010
Financial statements
16 Interest bearing loans and borrowings continued
Interest rate risk profile of financial assets and liabilities
The interest rate profile of the Group’s financial liabilities as at the period end was:
  2010  2010 2010 Effective 2009 2009 2009 Effective 
  Total Floating rate Fixed rate interest rate Total Floating rate Fixed rate interest rate 
  £’000 £’000 £’000  % £’000 £’000 £’000    %
Overdraft  – – – – 18 18 – 2.00
  – – – – 18 18 – 2.00
All liabilities are denominated in sterling.
The floating rate on the overdraft is linked to Barclays Bank Base Rate and the Group believes that an increase in the rate of 1% 
would not have had a material impact on profit before tax for the period.
Financial assets at 3 July 2010 consisted of £122,000 (2009: £463,000) trade receivables and £15,369,000 (2009: 
£24,016,000) cash at bank and on deposit; interest earned is at normal commercial rates.
17 Financial risk management
The Board of Directors has overall responsibility for the oversight of the Group’s risk management framework. A formal 
process for reviewing and managing risk in the business has been developed. A register of strategic and operational risks is 
maintained and reviewed quarterly by the Board, who also monitor the status of agreed actions to mitigate key risks.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its 
contractual obligations and arises principally from the Group’s receivables from customers. The Group only deals with 
creditworthy counterparties, and uses publicly available financial information to rate its customers. 
As the principal business of the Group is retail related, trade receivables consist of a relatively small number of customers, 
which tend to be charity or local authority based. The carrying amount of financial assets recorded in the financial statements 
represents the Group’s maximum exposure to credit risk. 
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach 
to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when 
due, under both normal and extreme circumstances. The Group manages this risk by continuously monitoring cash flow 
forecasts. The Group’s available facilities can be found in note 16.
Group policy is that surplus funds are placed on deposit with counterparties approved by the Board, with a minimum of ‘A’ 
credit rating. Credit limits with approved counterparties are limited to £20m for any individual party.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the 
Group’s income. 
Interest rate risk
The Group’s bank borrowings incur variable interest rate charges linked to LIBOR and Barclays Bank Base Rate. The Directors 
do not consider that future changes in interest rates are likely to cause a material direct impact on profitability. The Group’s 
exposure to interest rates on financial assets and liabilities are detailed in note 16.
Foreign currency risk
The Group is exposed to foreign currency risk on purchases denominated in US dollars. These amounted to approximately 
11% of the total purchases in the year ended 3 July 2010. The outstanding US dollar liabilities at the year end were $139,000 
(2009: $400,000).
During the year the Group entered into exchange rate swaps for $18.8m to sell sterling and buy US dollars. These swaps are 
accounted for as cash flow hedges. During the year the mark to market loss on foreign currency hedging instruments taken to 
equity was £0.5m (2009: nil). At the balance sheet date the Group had eight swap contracts outstanding with a maximum 
value of $30.0m.
Notes to the annual financial statements continued
For the 52 weeks ended 3 July 2010 53
Dunelm Group plc
Annual report and accounts 2010
17 Financial risk management continued
All of the Group’s revenues are in sterling. Purchases of promotional goods are generally in US dollars. Purchase of regular 
range goods are generally in sterling, although some lines are now being imported directly and paid for in dollars. We will 
cover exchange rate exposure on expected promotional product purchases up to a maximum of 100% of forecast purchases 
over a four month horizon. We will cover exchange rate exposure on expected regular range purchases up to a maximum of 
50% of forecast purchases over a 12 month horizon. We will use various means to cover the above currency exposures; hold 
excess funds in US dollars, take out forward contracts for the purchase of US dollars, enter into forward rate options.
In the event of a significant adverse movement in the US dollar exchange rate, the Group would seek to minimise the impact 
on profitability by changing the selling price of goods.
Sensitivity analysis
The Group’s principal foreign currency exposure is to the US dollar. 
The Directors believe that an increase or decrease of 10% in the US dollar/sterling exchange rates would not have a material 
effect on the Statement of comprehensive income.
The US dollar year end exchange rate applied in the above analysis is 1.5186 (2009: 1.5870). Strengthening and weakening of 
sterling may not produce symmetrical results depending on the proportion and nature of foreign exchange derivatives which 
do not qualify for hedge accounting.
Fair values
The fair value of the Group’s financial assets and liabilities is not materially different from their carrying value. The fair value of 
foreign currency contracts are sums required by the counterparties to cancel the contracts at the end of the year.
Fair value hierarchy
Financial instruments carried at fair value are required to be measured by reference to the following levels:
Level 1: quoted prices in active markets for identical assets or liabilities; • 
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly • 
(i.e. as prices) or indirectly (i.e. derived from prices); and 
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). • 
All financial instruments carried at fair value have been measured by a Level 2 valuation method.
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to 
sustain future development of the business.
From time to time the Group purchases its own shares on the market; the timing of these purchases depends on market 
prices. The shares are intended to be used for issuing shares under the Group’s share option programmes. Buy and sell 
decisions are made on a specific transaction basis by the Board. The Group does not have a defined share buy-back plan.
The following table is a comparison by category of the carrying amounts and fair values of the Group’s financial assets and 
liabilities at 3 July 2010 and 4 July 2009.
      2010  2010 2009  2009 
      Carrying value  Fair value Carrying value  Fair value 
      £’000 £’000 £’000 £’000
Cash and cash equivalents      15,369 15,369 23,998 23,998
Trade receivables      122 122 463 463
Total financial assets      15,491 15,491 24,461 24,461
Trade payables      (32,451) (32,451) (28,850) (28,850)
Forward exchange contracts      (545) (545) – –
Total financial liabilities      (32,996) (32,996) (28,850) (28,850)
Net financial liabilities      (17,505) (17,505) (4,389) (4,389)
The fair value on trade receivables and trade payables are approximate to the carrying value. 54
Dunelm Group plc
Annual report and accounts 2010
Financial statements
17 Financial risk management continued
The currency profile of the Group’s cash and cash equivalents is as follows:
        2010 2009 
        £’000 £’000
Sterling        14,057 22,669
US dollar        1,209 1,329
Euro        103 –
        15,369 23,998
As at 3 July 2010, the analysis of trade receivables that were past due but not impaired is as follows:
     Neither    More 
     past due nor Less than 31–60 61–90 than 90 
    Total  impaired 30 days days days days 
    £’000 £’000 £’000 £’000 £’000 £’000
3 July 2010    122 26 49 1 10 36
4 July 2009    463 43 407 7 4 2
18 Share capital
       Number of Number of Number of 
         ordinary shares B shares of ordinary shares 
       of 1p each 21.5p each of 1p each 
       2010 2010 2009
In issue at the start of the period       200,791,400 – 200,791,400
B shares issued via a bonus issue       – 200,723,131 –
B shares redeemed in the year       – (200,723,131) –
Issued during the period in respect of share option schemes    248,748 – 
In issue at the end of the period       201,040,148 – 200,791,400
Proceeds received in relation to shares issued during the period were £238,000 (2009: £nil).
      2010   2009 
      number  2010 number 2009 
      of shares £’000 of shares £’000
Ordinary shares of 1p each:    
Authorised      500,000,000 5,000 500,000,000 5,000
Allotted, called up and fully paid      201,040,148 2,010 200,791,400 2,008
During the year the authorised share capital of the Group was increased by £43,155,000 from £5,000,000 to £48,155,000 by 
the creation of 200,723,131 21.5p non cumulative redeemable preference shares (‘B shares’). £43,155,000 was capitalised 
standing to the credit of the Group’s merger reserve to pay up in full the B shares. The B shares were allotted and issued to 
Shareholders on the basis of one B share for each Ordinary Share held on 22 February 2010. All of the B shares were redeemed 
and cancelled by the end of the financial year.
The holders of the B shares were not entitled, in their capacity as holders of such shares, to receive notice of any general 
meeting of the Group nor to attend, speak or vote at any such general meeting.
19 Treasury shares 
      2010   2009 
      number  2010 number 2009 
      of shares £’000 of shares £’000
Outstanding at beginning of year       837,135 1,301 951,500 1,522
Purchased during year      – – 127,000 186
Reissued during the period in respect of share option schemes   (737,507) (1,173) (241,365) (407)
Outstanding at end of year      99,628 128 837,135 1,301
In the past the Company has acquired its own shares (‘treasury shares’) for the purpose of delivery to employees under 
employee share schemes. No such purchases were made during the financial year. 
The Company reissued 737,507 (2009: 241,365) treasury shares for a total consideration of £641,843 (2009: £124,453). 
The Company has the right to reissue the remaining treasury shares at a later date.
Notes to the annual financial statements continued
For the 52 weeks ended 3 July 2010 55
Dunelm Group plc
Annual report and accounts 2010
20 Share-based payments
As at 3 July 2010, the Group operated three share award plans:
a) Dunelm Group Share Option Plan (‘GSOP’)
b) Dunelm Group Savings Related Share Option Plan (‘Sharesave’)
c) Long-Term Incentive Plan (‘LTIP’)
There were 6,241 exercisable options in total under these schemes as at 3 July 2010.
a) Dunelm Group Share Option Plan
The GSOP was established in December 2003. Options have a vesting period of three years from date of grant and a 
maximum life of 10 years. All options granted prior to October 2006 have an exercise price equal to the market value as 
agreed with HMRC at date of grant; all subsequent grants have had an exercise price equal to market price at date of grant. 
There are no performance conditions but there is a requirement that the Group’s shares be traded on a public exchange at 
date of exercise, and the awards are also subject to continued employment with the Group.
The fair value of services received in return for share options granted is measured by reference to the fair value of the options, 
assessed using a binomial model. The fair value per option granted and the assumptions used in the calculations are as follows:
    January June  August  September December September 
    2010 2008 2006  2005 2004 2004 
    grant grant grant grant grant grant
Fair value at measurement date    133.5p 65.6p 7.0p 6.3p 6.0p 6.2p
Exercise price    405.0p 137.0p 62.1p 57.0p 46.0p 46.0p
Expected volatility (weighted average volatility 
 used in modelling – based on historical volatility
 of comparable quoted companies)    35% 35% 35% 35% 35% 35%
Option life (weighted average life used in modelling)  3 years 3 years 3 years 3 years 3 years 3 years
Expected dividends    2.5% 8.7% 8.7% 8.7% 8.7% 8.7%
Risk-free interest rate    2.8% 4.8% 4.8% 4.8% 4.8% 4.8%
The number and weighted average exercise price of options under the GSOP is as follows:
      Weighted   Weighted 
      average  Number average Number 
      exercise  of shares exercise  of shares 
      price under option price under option 
      2010  2010  2009  2009
Outstanding at beginning of year       60.5p 427,331 52.4p 610,500
Granted during year      405.0p 12,345 137.0p 36,496
Retrospective adjustment to prior year     – – 46.0p 21,700
Exercised during year      54.9p (390,836) 56.1p (241,365)
Outstanding at end of year      203.8p 48,840 60.5p 427,331
b) Dunelm Group Savings Related Share Option Plan
The Sharesave scheme was established in 2006 and is open to all staff with eligible length of service. One grant was made 
under the scheme during the year, in October 2009. Options may be exercised under the scheme on completion of the three 
year savings contract and must be exercised within six months from that date. There is provision for early exercise in certain 
circumstances such as death, disability, redundancy and retirement. 56
Dunelm Group plc
Annual report and accounts 2010
Financial statements
20 Share-based payments continued
The fair value per option granted and the assumptions used in the calculations are as follows:
      October October October  November 
      2009 2008 2007 2006
Fair value at measurement date      180.4p 47.0p 70.0p 69.0p
Share price      376.3p 125.0p 212.0p 202.0p
Exercise price      253.0p 124.5p 157.0p 153.0p
Expected volatility (weighted average volatility used in modelling 
– based on historical volatility of comparable quoted companies)   57% 58% 30% 30%
Option life (weighted average life used in modelling)    3.5 years 3.5 years 3.5 years 3.5 years
Expected dividends      2.5% 2.5% 2.5% 2.5%
Risk-free interest rate      2.8% 3.0% 4.8% 4.8%
Forfeiture rate      48% 29% 10% 0%
The number and weighted average exercise price of options outstanding under the Sharesave at 3 July 2010 is as follows:
      Weighted   Weighted 
      average  Number average Number 
      exercise  of shares exercise  of shares 
      price under option price under option 
      2010  2010  2009  2009
Outstanding at beginning of year       142.9p 867,972 154.0p 1,001,273
Granted during year      253.0p 347,376 124.5p 362,125
Exercised during the year      153.0p (440,150) – –
Forfeited during year      161.5p (103,426) 151.4p (495,426)
Outstanding at end of year      190.4p 671,772 142.9p 867,972
c) Long-Term Incentive Plan
The LTIP was approved by the Board in 2006 enabling the Group to award shares to particular individuals, normally in the 
form of nominal cost options. The LTIP is administered by the Remuneration Committee. Two grants were made in the year, 
to the Executive Directors and senior management. The Executive Directors’ grant in September 2009 is exercisable in 
September 2012 and the senior management grant in September 2009 is exercisable in July 2011. The grant to the Executive 
Directors is dependent on the level of growth in Group EPS relative to RPI, as well as continuing employment. The grant to 
senior management is dependent on continuing employment within the Group. The maximum life of options under the LTIP 
is 10 years from the date of grant. Full details of this plan are included in the Remuneration Report on pages 23 to 26.
The fair value of services received in return for share options granted is measured by reference to the fair value of the options.
This has been calculated as follows:
      September September September  March 
      2009 2008 2007  2007 
Share price at date of grant      316.0p 148.0p 193.0p 229.0p
Discount factor, based on dividend yield of 3.0% to vesting date   0.913 0.889 0.913 0.913
Fair value of option      288.5p 132.5p 178.9p 209.0p
The number and weighted average exercise price of options under the LTIP at 3 July 2010 is as follows:
      Weighted   Weighted 
      average  Number average Number 
      exercise  of shares exercise  of shares 
      price under option price under option 
      2010  2010  2009  2009
Outstanding at beginning of year       – 1,263,571 – 568,356
Granted during year      – 384,164 – 713,554
Exercised during year      – (155,270) – –
Forfeited during year      – (165,997) – (18,339)
Outstanding at end of year      – 1,326,468 – 1,263,571
Notes to the annual financial statements continued
For the 52 weeks ended 3 July 2010 57
Dunelm Group plc
Annual report and accounts 2010
20 Share-based payments continued
The total expense recognised in the income statement arising from share-based payments is as follows:
        2010 2009 
        £’000 £’000
GSOP        2 6
Sharesave        93 128
LTIP        1,235 465
        1,330 599
21 Commitments
As at 3 July 2010 the Group had entered into capital contracts amounting to £15.4m. The equivalent figure as at 4 July 2009 
was £2.0m.
The future minimum lease payments under non-cancellable operating leases were as follows:
    2010  2010 2010 2009 2009 2009 
    Motor  Land and Plant and Motor Land and Plant and 
    vehicles  buildings machinery vehicles buildings machinery 
    £’000 £’000 £’000 £’000 £’000 £’000
Within one year    428 23,723 292 368 20,852 280
In the second to fifth year inclusive    374 86,794 535 398 76,915 578
After five years    – 115,241 – – 103,199 –
    802 225,758 827 766 200,966 858
The Group has 91 operating leases in respect of properties. These leases run for periods of up to 20 years, with an option to 
renew leases on expiry. Lease payments are typically reviewed every five years.
The Group also leases a number of vehicles, shop fittings and items of computer hardware under operating leases. These vary 
in length.
22 Contingent liabilities
The Group had no contingent liabilities at either period end date.
23 Related parties
Identity of related parties
The Group has related party relationships with its subsidiaries and with its Directors. Transactions between the Company and 
its subsidiaries, which are related parties, have been eliminated on consolidation for the Group.
Key management personnel
The key management personnel of the Group comprise members of the Board of Directors and the executive team.
Directors of the Company and their immediate relatives control 59.1% of the voting shares of the Company.
Disclosures relating to remuneration of Directors are set out in the Remuneration Report on pages 23 to 26. The 
remuneration of the key management personnel (Executive Committee excluding Directors) of the Group is set out below:
        2010 2009 
        £’000 £’000
Salaries and other short-term benefits       1,269 637
Post-employment benefits        22 13
Share-based payments        4 45
        1,295 695 58
Dunelm Group plc
Annual report and accounts 2010
Financial statements
23 Related parties continued
From time to time the Group makes purchases on behalf of a major shareholder, Bill Adderley, and sells fully depreciated 
vehicles to him that the Group no longer requires. These amounts are billed based on normal market rates for such supplies 
and payable under normal payment terms. No balances remained unsettled at either period end. The aggregate value of 
these transactions in the year ended 3 July 2010 was £766 (2009: £1,000).
From time to time Directors of the Group, or their related entities, may purchase goods from the Group. These purchases are on 
the same terms and conditions as those entered into by other Group employees or customers and values involved are trivial.
24 Ultimate controlling party
The Directors consider that the Adderley family is the ultimate controlling party of Dunelm Group plc by virtue of their 
combined shareholding.
25 Subsequent events
There are no material post-balance sheet events.
 
Notes to the annual financial statements continued
For the 52 weeks ended 3 July 2010 59
Dunelm Group plc
Annual report and accounts 2010
Parent Company financial statements
Parent Company statement of financial position
As at 3 July 2010
        Restated Restated 
       2010 2009 2008 
      Note £’000 £’000 £’000
Non-current assets   
Investment in subsidiaries      4 46,134 45,771 45,438
Deferred tax asset       5 630 202 43
Total non-current assets       46,764 45,973 45,481
   
Current assets   
Trade and other receivables      6 47,910 64,107 64,413
Total current assets       47,910 64,107 64,413
Total assets       94,674 110,080 109,894
Current liabilities    
Trade and other payables       7 (855) (591) (879)
Liability for current tax        (102) (278) 89
Interest bearing loans and borrowings     8 – (18) (20)
Total current liabilities       (957) (887) (810)
Non-current liabilities
Interest bearing loans and borrowings      – – (10,000)
Total non-current liabilities
Total liabilities       (957) (887) (10,810)
Net assets       93,717 109,193 99,084
Capital and reserves   
Issued capital      10 2,010 2,008 2,008
Share premium        580 346 346
Non-distributable reserves       979 616 283
Capital Redemption Reserve       43,155 43,155 43,155
Retained earnings        46,993 63,068 53,292
Equity shareholders’ funds       93,717 109,193 99,084
The financial statements on pages 59 to 68 were approved by the Board of Directors on 16 September 2010 and were signed 
on its behalf by:
David Stead
Director
16 September 2010
Company number 4708277 60
Dunelm Group plc
Annual report and accounts 2010
Parent Company statement of cash flows
For the 52 weeks ended 3 July 2010
        52 weeks 53 weeks 
        2010 2009 
        £’000 £’000
Profit before tax        38,922 20,773
Adjusted for:  
Net financing costs        (2,390) (2,550)
Operating profit        36,532 18,223
Operating cash flows before movements in working capital  
Decrease in receivables        16,200 306
Increase/(Decrease) in payables        266 (134)
Net movement in working capital        16,466 172
Investment income        (40,000) (20,000)
Share-based payments expense        935 266
Cash flows from operating activities        13,933 (1,339)
Dividends received        40,000 20,000
Interest paid        (71) (870)
Interest received        2,454 3,266
Net cash generated from operating activities      56,316 21,057
   
Cash flows from financing activities   
Proceeds from issue of share capital        244 –
Purchase of treasury shares        – (186)
Proceeds from issue of treasury shares       642 124
Proceeds from bank loan        10,000 –
Repayment of bank loan        (10,000) (10,000)
Return of capital        (43,155) –
Dividends paid        (14,029) (10,993)
Net cash flows utilised in financing activities       (56,298) (21,055)
Net increase in cash and cash equivalents       18 2
Cash and cash equivalents at the beginning of the period      (18) (20)
Cash and cash equivalents at the end of the period      – (18)
 
Parent Company financial statements 61
Dunelm Group plc
Annual report and accounts 2010
Parent Company statement of changes in equity
For the 52 weeks ended 3 July 2010
      Capital   
   Issued share Share Merger redemption  Non- Retained 
   capital premium reserve reserve distributable earnings Total 
   £’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 28 June 2008   2,008 346 – – 283 53,292 55,929
Prior year adjustment   – – 43,155 – – – 43,155
Restated as at 28 June 2008   2,008 346 43,155 – 283 53,292 99,084
Profit for the financial year   – – – – – 20,545 20,545
Total comprehensive income for the
  financial year   – – – – – 20,545 20,545
Purchase of treasury shares   – – – –  –  (186) (186)
Treasury shares reissued in respect 
  of share option schemes   – – – – – 123 123
Share-based payments   – – – – 333 266 599
Deferred tax on share-based payments  – – – – – 21 21
Dividends   – – – –  – (10,993) (10,993)
Total transactions with owners, recorded
  directly in equity   – – – – 333 (10,769) (10,436)
Restated as at 4 July 2009   2,008 346 43,155 – 616 63,068 109,193
Profit for the financial year   – – – – – 39,205 39,205
Total comprehensive income for the
  financial year   – – – –  –  39,205 39,205
Issue of share capital   2 234 – – – – 236
Treasury shares reissued in respect 
  of share option schemes   – – – – – 649 649
Issue of B shares as bonus issue   43,155 – (43,155)  – – – –
Redemption of B shares for cash   (43,155) – – –   – – (43,155)
Creation of capital redemption reserve  – – – 43,155 – (43,155) –
Share-based payments   – – – – 363 935 1,298
Deferred tax on share-based payments  – – – – – 284 284
Current corporation tax on share 
  options exercised   – – – – – 36 36
Dividends   – – – –  – (14,029) (14,029)
Total transactions with owners, recorded
  directly in equity   2 234 (43,155) 43,155 363 (55,280) (54,681)
As at 3 July 2010   2,010 580 – 43,155 979 46,993 93,717
The non-distributable reserve’s purpose is to reflect movements in share-based payments in respect of awards given by the 
Parent Company to employees of subsidiaries. 
The 2009 financial year was 53 weeks.
  62
Dunelm Group plc
Annual report and accounts 2010
Accounting policies
Basis of preparation
The Company financial statements have been prepared and approved by the Directors in accordance with International 
Financial Reporting Standards as adopted by the EU (‘Adopted IFRSs’) and as applied in accordance with the provisions of the 
Companies Act 2006. 
The accounts of the Company are prepared under the historical cost convention, in accordance with the Companies Act 
2006, applicable accounting standards and specifically in accordance with the accounting policies set out below.
After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in 
operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing 
the financial statements.
The revision of IAS 27 became applicable and in line with its provisions, the Group elected to restate the share for share 
acquisition which occurred in 2003. No further acquisitions have occurred since this date. The impact of this adjustment is to 
increase the cost of the investment in Dunelm (Soft Furnishings) Limited to the value of the net assets at the date of the 
acquisition. This increases the investment by £43,155,000 and creates a merger reserve of the same amount within 
shareholders’ funds.
Investments
Investments in subsidiary undertakings are stated at the adjusted cost of the investment, IFRIC 8 ‘Scope of IFRS 2 share-based 
payments’ requires the Parent Company to recognise an increase in the cost of its investment in a subsidiary which has issued 
share options in the Parent Company’s shares to its employees. 
Bank borrowings and borrowing costs
Interest bearing bank loans and overdrafts are recorded at the proceeds received. 
Borrowing costs are recognised as an expense in the financial period in which they are incurred.
Borrowings are classed as current liabilities unless the Group has an unconditional right to defer settlement of the liability for 
at least 12 months from the balance sheet date.
Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a 
component of cash and cash equivalents for the purpose of the statement of cash flows.
Where a Group Company enters into financial guarantee contracts to guarantee the indebtedness of other Group Companies 
within the Group, the Company considers these to be insurance arrangements for them as such. In this respect, the Company 
treats the guarantee contract as a contingent liability until such time as it becomes probable the Company will be required to 
make a payment under the guarantee.
Share capital
Where the Company purchases its own equity share capital (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 or reissued. Where such shares are subsequently sold or reissued, any consideration received net of any directly 
attributable incremental transactions costs and the related income tax effects, is included in equity attributable to the 
Company’s equity holders.
Share-based payments
The Company operates two share options schemes details of which are set out in note 12. 
The fair value of options granted is realised as an employee expense with a corresponding increase in equity. Fair value is 
measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. 
Fair value is measured using the binomial model, taking into account the terms and conditions applicable to the options.
At each balance sheet date the Company revises its estimates of the number of share incentives expected to vest. Any impact 
of this revision is recognised as an adjustment to equity with a corresponding adjustment to investments.
Parent Company financial statements 63
Dunelm Group plc
Annual report and accounts 2010
Dividends
Dividends are recognised as a liability in the period in which they are approved such that the Company is obligated to pay 
the dividend.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to 
the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax represents the expected tax payable on the taxable income for the year, using tax rates enacted or substantively 
enacted at the balance sheet date, together with any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying 
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against 
which the asset can be recognised. Deferred tax assets are reduced to the extent that it is no longer probable that the related 
tax benefit will be recognised.
 
Adopted IFRS and IFRIC not yet applied
IFRS 8  Operating segments
IAS 27 (revised) Consolidated and Separate Financial Statements
The effect of the revision of IAS 27 is disclosed on page 61.
At the date of approval of these financial statements, the following standards, amendments and interpretations were in place 
but not yet effective:
IFRS 1 Revised IFRS 1  – First time adoption of IFRSs
IFRS 7  Revised IFRS 7  – Financial Instruments
IFRS 9  Revised IFRS 9  – Financial Instruments
IAS 1 Revised IAS 1  – Presentation of Financial Statements
IAS 27  Revised IAS 27  – Consolidated and Separate Financial Statements
IAS 34  Revised IAS 34  – Interim Financial Reporting
IFRIC 13  Revised IFRIC 13  – Customer Loyalty Programmes
The above will be adopted in the Group and Company’s financial statements when they become effective. 
When adopted none of the above standards or amendments are expected to have any significant impact on the financial 
statements of the Group or Company.
Revised IFRS 7 requires additional disclosure to better enable users to evaluate an entity’s exposure to risks arising from 
financial instruments. Revised IAS 1 requires a reconciliation of each component of equity to be presented in the statement of 
changes in equity showing separately changes arising from items recognised in profit or loss, in other comprehensive income, 
and from transactions with owners acting in their capacity as owners.  64
Dunelm Group plc
Annual report and accounts 2010
1 Income statement
The Company made a profit after tax of £39,206,000 (2009: £20,544,000). The Directors have taken advantage of the exemption 
available under section 408 Companies Act 2006 and have not presented an income statement for the Company alone.
The Company is not required to give details of the fees paid to its auditors in accordance with the Companies (Disclosure of 
Auditor Remuneration) Regulations 2005.
2 Employee costs
The Company has no employees other than the two Executive Directors. Full details of the Directors’ remuneration and 
interest are set out in the Remuneration Report on pages 23 to 26, and share-based payments details in note 12 on pages 67 
to 68.
3 Dividends
All dividends relate to the 1p Ordinary Shares.
        2010 2009 
        £’000 £’000
Final for the period ended 28 June 2008 – paid 3.5p      – (6,994)
Interim for the period ended 4 July 2009 – paid 2.0p      – (3,999)
Final for the period ended 4 July 2009 – paid 4.0p      (8,008) –
Interim for the period ended 3 July 2010 – paid 5.0p      (6,021) –
        (14,029) (10,993)
The Directors are proposing a final dividend of 5.0p per Ordinary Share for the period ended 3 July 2010 which equates  
to £10m. The dividend will be paid on 10 December 2010 to shareholders on the register at the close of business on  
26 November 2010. 
4 Investments
Shares in subsidiary undertakings.
         Restated 
         £’000
As at 28 June 2008         45,438
Share-based payments         333
As at 4 July 2009         45,771
Share-based payments         363
As at 3 July 2010         46,134
Principal subsidiaries
The following are the principal subsidiaries as at the end of the year: 
      Proportion of 
      ordinary   Nature 
Subsidiary      shares held   of business
Dunelm (Soft Furnishings) Limited      100%  Retailer of soft furnishings
Dunelm Estates Limited      100%  Property holding company
Both of the above subsidiaries and the Parent Company are registered and operate in England and Wales. 
 
Notes to the Parent Company financial statements
For the 52 weeks ended 3 July 2010
Parent Company financial statements 65
Dunelm Group plc
Annual report and accounts 2010
5 Deferred tax assets
 Assets
        2010 2009 
        £’000 £’000
Share-based payments        630 202
The movement in deferred tax assets is as follows: 
      Balance at  Recognised Recognised Balance at 
      28 June 2008  in income in equity 4 July 2009 
      £’000 £’000  £’000  £’000
Employee benefits      43 138 21 202
      Balance at  Recognised Recognised Balance at 
      5 July 2009  in income in equity 3 July 2010 
      £’000 £’000  £’000  £’000
Employee benefits      202 144 284 630
Deferred tax assets are recognised for other temporary differences to the extent that the realisation of the related tax benefit 
through future taxable profits is probable.
6 Trade and other receivables
        2010 2009 
        £’000 £’000
Amounts owed by subsidiary undertakings       47,870 64,071
Prepayments and accrued income        29 30
Other taxation and social security        11 6
        47,910 64,107
Amounts owed by subsidiary undertakings are immediately repayable. Interest is charged monthly on all intercompany 
balances at an annual rate of 5.25%.
7 Trade and other payables
        2010 2009 
        £’000 £’000
Trade payables        15 14
Accruals and deferred income        820 557
Other creditors        20 20
        855 591
8 Interest bearing loans and borrowings
        2010 2009 
        £’000 £’000
Bank overdraft        – 18
        – 18
On 26 September 2006 the Company entered into a £50m revolving credit facility which is repayable in full on 26 September 
2011. The facility is sub-divided into two elements: a £40m facility and a £10m facility. The £10m facility was cancelled on 
26 May 2009. The £40m facility was not utilised at the balance sheet date.
Interest is payable on the £40m facility at the rate of LIBOR plus 0.35%.
The facility is guaranteed by the Company and its subsidiaries. 66
Dunelm Group plc
Annual report and accounts 2010
9 Financial risk management
Capital management
The following table is a comparison by category of the carrying amounts and fair values of the Company’s financial assets and 
liabilities at 3 July 2010 and 4 July 2009.
      2010  2010 2009  2009 
      Carrying value  Fair value  Carrying value  Fair value 
      £’000 £’000 £’000 £’000
Subsidiary loans      47,870 47,870 64,071 64,071
Total financial assets      47,870 47,870 64,071 64,071
    
Short-term borrowings      – – (18) (18)
Trade payables      (15) (15) (14) (14)
Total financial liabilities      (15) (15) (32) (32)
Net financial liabilities      47,855 47,855 64,039 64,039
The fair value on subsidiary loans and trade payables are approximate to the carrying value.
The currency profile of the Company’s net debt is as follows:
        2010 2009 
        £m £m
Sterling        – (18)
        – (18)
10 Share capital
       Number of Number of Number of 
        ordinary shares B shares of ordinary shares 
       of 1p each 21.5p each of 1p each 
       2010 2010 2009
In issue at the start of the period       200,791,400 – 200,791,400
B shares issued via a bonus issue       – 200,723,131 –
B shares redeemed in the year       – (200,723,131) –
Issued during the period in respect of share option schemes    248,748 – –
In issue at the end of the period       201,040,148 – 200,791,400
Proceeds received in relation to shares issued during the period were £238,000 (2009: £nil). 
      2010   2009 
      number  2010 number 2009 
      of shares £’000 of shares £’000
Ordinary Shares of 1p each 
Authorised      500,000,000 5,000 500,000,000 5,000
Allotted, called up and fully paid      201,040,148 2,010 200,791,400 2,008
The holders of the Ordinary Shares are entitled to receive dividends as declared and are entitled to one vote per share.
11 Treasury shares 
      2010  2009 
      Number 2010 Number  2009 
      of shares £’000 of shares £’000
Outstanding at beginning of year      837,135 1,301 951,500 1,522
Purchased during year      – – 127,000 186
Reissued during the period in respect of share option schemes   (737,507) (1,173) (241,365) (407)
Outstanding at end of year      99,628 128 837,135 1,301
In the past the Company has acquired its own shares (‘treasury shares’) for the purpose of delivery to employee share schemes. 
No such purchase was made during the year.
The Company reissued 737,507 (2009: 241,365) treasury shares for a total consideration of £641,843 (2009: £124,453).
The Company has the right to reissue the remaining treasury shares at a later date.
Parent Company financial statements
Notes to the Parent Company financial statements
For the 52 weeks ended 3 July 2010 67
Dunelm Group plc
Annual report and accounts 2010
12 Share-based payments
As at 3 July 2010, the Company operated two share award plans:
a) Dunelm Group Share Option Plan (‘GSOP’)
b) Long-Term Incentive Plan (‘LTIP’)
There were no exercisable options as at 3 July 2010.
a) Dunelm Group Share Option Plan
The GSOP was established in December 2003. Options have a vesting period of three years from date of grant and a 
maximum life of 10 years. All options granted prior to IPO have an exercise price equal to the market value as agreed with 
HMRC at date of grant; there have been no further grants since IPO. There are no performance conditions but there is a 
requirement that the Group’s shares be traded on a public exchange at date of exercise, and the awards are also subject to 
continued employment with the Group.
The fair value of services received in return for share options granted is measured by reference to the fair value of the options, 
assessed using a binomial model. The fair value per option granted and the assumptions used in the calculations are 
as follows:
      August  September December September 
      2006  2005 2004 2004 
      grant grant grant grant
Fair value at measurement date      7.0p 6.3p 6.0p 6.2p
Exercise price      62.1p 57.0p 46.0p 46.0p
Expected volatility (weighted average volatility used in modelling 
– based on historical volatility of comparable quoted companies)   35% 35% 35% 35%
Option life (weighted average life used in modelling)    3 years 3 years 3 years 3 years
Expected dividends      2.5% 8.7% 8.7% 8.7%
Risk-free interest rate      2.8% 4.8% 4.8% 4.8%
The number and weighted average exercise price of options under the GSOP is as follows:
      Weighted   Weighted 
      average  Number average Number 
      exercise  of shares exercise  of shares 
      price under option price under option 
      2010  2010  2009  2009
Outstanding at beginning of year      – – – –
Exercised during year      – – – –
Outstanding at end of year      – – – –
b) Long-Term Incentive Plan
The LTIP was approved by the Board prior to IPO enabling the Company to award shares to particular individuals, normally in 
the form of nominal cost options. The LTIP is administered by the Remuneration Committee. One grant has been made in the 
year, to the Executive Directors only, and is exercisable in September 2010 depending on the level of growth in Group EPS 
relative to RPI. The maximum life of options under LTIP is 10 years from the date of grant. Full details of this plan are included 
in the Remuneration Report on pages 23 to 26.
The fair value of services received in return for share options granted is measured by reference to the fair value of the options. 
This has been calculated as follows:
      September September September  March 
      2009 2008 2007  2007 
Share price at date of grant      316.0p 149.0p 196.0p 229.0p
Discount factor, based on dividend yield of 3.0% to vesting date   0.913 0.889 0.913 0.913
Fair value of option      288.5p 132.5p 178.9p 209.0p 68
Dunelm Group plc
Annual report and accounts 2010
12 Share-based payments continued
The number and weighted average exercise price of options under the LTIP at 3 July 2010 is:
      Weighted   Weighted 
      average  Number average Number 
      exercise  of shares exercise  of shares 
      price under option price under option 
      2010  2010  2009  2009
Outstanding at beginning of year       – 1,006,193 – 568,356
Granted during year      – 209,164 – 437,837
Exercised during year      – (155,270) – –
Lapsed during year      – (95,164) – –
Outstanding at end of year      – 964,923 – 1,006,193
The total expense recognised in the income statement arising from share-based payments is as follows:
        2010 2009 
        £’000 £’000
LTIP        935 266
        935 266
13 Contingent liability
The Company and certain subsidiaries have given joint and several guarantees in connection with all bank facilities provided 
by the Group’s principal bankers.
The Group’s banking facilities are subject to a netting facility whereby credit balances may be offset against indebtedness of 
other Group companies.
14 Related party disclosure
The amount due to the Company from subsidiary undertakings is set out in note 6. Transactions between the Company and 
its subsidiaries were as follows:
        2010 2009 
        £’000 £’000
Cash paid to Group undertakings        (69,653) (56,759)
Cash received from Group undertakings       10,997 33,199
Dividends received        40,000 20,000
Net interest receivable        2,454 3,266
 
Notes to the Parent Company financial statements 
continued
Parent Company financial statements Dunelm is a fast 
growing specialist 
out-of-town homewares 
retailer providing a 
comprehensive range 
of products to a wide 
customer base, under 
the brand name 
Dunelm Mill
Contents
Business review
01 Highlights
04 Chairman’s statement
06 Chief Executive’s review
10 Finance Director’s review
15 Directors
Governance
16 Letter from the Chairman
17 Corporate governance report
21 Letter from the Chairman of the Remuneration  
 Committee
23 Remuneration report
27 Directors’ report and business review
31 Corporate social responsibility
35 Statement of Directors’ responsibilities
Financial statements
36 Independent Auditor’s report
37 Consolidated income statement
38 Consolidated statement of comprehensive income
39 Consolidated statement of financial position
40  Consolidated statement of cash flows
41  Consolidated statement of changes in equity
42 Accounting policies
47  Notes to the annual financial statements
59 Parent Company financial statements
Advisers
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Principal Bankers Barclays Bank plc
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Registrars Equiniti
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Financial Public Relations Hogarth Partnership Limited
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 Tel: 020 7357 9477  Dunelm Group plc Annual report 2010
Dunelm Group plc
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Syston
Leicester
Leicestershire
LE7 1NF
Tel: 0116 264 4356
Email: investorrelations@dunelm-mill.co.uk
www.dunelm-mill.com
Dunelm Group plc Annual report 2010