CURY Currys Plc

TIDMDC.

RNS Number : 7596G

Dixons Carphone PLC

28 July 2021

28 July 2021

ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING

Dixons Carphone plc (the 'Company') has today published its Annual Report and Accounts 2020/21 and Notice of Annual General Meeting 2021. These documents are available to view on the Company's website at www.dixonscarphone.com/investors . In addition, along with the Form of Proxy for the Annual General Meeting 2021, they have been posted or otherwise made available to shareholders depending on their elected method of communication.

In accordance with Listing Rule 9.6.1, the Annual Report and Accounts 2020/21, Notice of Annual General Meeting 2021 and Form of Proxy have been submitted to the National Storage Mechanism, where they will shortly be available for inspection at

https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

The Company's 2021 Annual General Meeting (the 'AGM') will be held at 9.30am on Wednesday 15 September 2021 at 65 Queen's Gate, London SW7 5JS. In the interests of protecting the health and safety of our shareholders, colleagues and the general public, the directors recommend that shareholders do not attend the AGM in person. Members of the Board (all of whom are shareholders) will form the required quorum for the meeting. No catering or refreshments will be available.

Should there be any changes to UK Government restrictions or guidance between the date of sending the Notice of AGM and the date of the AGM, it may be necessary to change the arrangements for the AGM. As such, please monitor the corporate website www.dixonscarphone.com and the regulatory news services for any announcements.

Shareholders are encouraged to vote on all resolutions proposed in advance of the AGM, and to submit any questions they may have for any member of the Board to cosec@dixonscarphone.com . Please submit your votes and questions before 9.30am on Monday 13 September 2021.

The information included in the Appendix to this announcement has been extracted from the Annual Report and Accounts 2020/21 and is reproduced here solely for the purposes of complying with the requirements of Disclosure Guidance and Transparency Rule ('DTR') 6.3.5 in respect of how to make annual financial reports available to the public.

The content of this announcement, including the Appendix, should be read in conjunction with the Company's Preliminary Results announcement, which was released on 30 June 2021 and is available on the Company's website at

https://otp.tools.investis.com/clients/uk/dixons_carphone_plc4/rns/regulatory-story.aspx?cid=1408&newsid=1487867

Together, these announcements constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the full Annual Report and Accounts 2020/21. Defined terms used in the Appendix refer to terms as defined in the Annual Report and Accounts 2020/21. Page numbers and cross references in the Appendix refer to pages and sections of the Annual Report and Accounts 2020/21.

Appendix

A. Principal risks to achieving the Group's objectives (pages 46 to 52)

The Group recognises that taking risks is an inherent part of doing business and that competitive advantage can be gained through effectively managing risk. The Group has developed and continues to evolve robust risk management processes, and risk management is integrated into business decision-making. The Group's approach to risk management is set out in the Corporate Governance Report on pages 73 to 86. The risks are linked to the strategic priorities on pages 14 to 21.

Our approach to horizon scanning and emerging risks

A successful company is led by an effective and entrepreneurial board, whose role is to promote the long-term sustainable success of the company, generating value for shareholders

and contributing to wider society.

In order to promote sustainable success, the business continues to analyse the risks likely to emerge in the short, medium and longer term that may impact the delivery of our Strategy. To provide a view over the medium to longer term, a horizon scanning approach is required. This looks at future complexity, challenges assumptions and review options for future business planning.

Our approach to undertaking horizon scanning is based on conducting both reviews of thought leadership and also through obtaining the views of key business stakeholders. The horizon scanning exercise is updated semi-annually to ensure that the horizon is consistently scanned for developments and changes that may impact the business. The Group Risk and Compliance Committee is asked to review and discuss the horizon risks and to form a view as to whether any of these should be considered in the Principal Risk process or additional actions should be factored into strategic planning for the business.

During 2020/21 two new risks were added to the Principal Risk Register - Sustainability and People - reflecting the key importance of the effective management of these risks to the delivery of the Group's strategy.

Sustainability

Achieving our ambitions across the Sustainability agenda will require the business to address many challenges, amongst these is tackling climate change.

To achieve real change businesses must address not only direct emissions within their operations but also work in collaboration with all stakeholders within their value chains.

For Dixons Carphone, over 90% of our indirect emissions come from the purchase of goods and services and use of sold products. To support our commitment of Net Zero by 2040, we have become the first UK company to adopt the new Carbon Action Module from EcoVadis, one of the leading providers of business sustainability ratings.

This will increase transparency across our supply chain and enable us to better measure aspects of our Scope 3 emissions, a necessary step in our Net Zero journey. It will provide us the means to drive climate action at scale by collecting and analysing suppliers' critical emissions data. We will use the data to work with suppliers to benchmark, measure and, where needed, develop plans to reduce carbon emissions.

People

Delivering Capable and Committed colleagues requires the business to invest in our people and HR processes.

Our people risk covers three core areas; Leadership capability (including succession planning for business-critical roles); Workforce planning (including capacity, engagement and productivity and culture and values); and, compliance with legal and regulatory requirements.

We actively manage and mitigate these risks. We have a comprehensive programme designed to build leadership capability and annual Board and quarterly ExCo talent reviews providing oversight of succession planning.

We have placed a greater focus on wellbeing to support our colleagues and live our values, we continue to deliver on our D&I strategy and act on insights gained through colleague listening and 'On the Pulse' surveys.

Oversight is provided by the Remuneration Committee on all director and ExCo compensation in alignment with our Corporate Governance Code. An annual process is in place to meet the FCA 'Fit and Proper' requirements.

Risks and potential impacts

The Group continues to develop its risk management processes, fully integrating risk management into business decision-making. The risk management process mirrors the operating model with each business unit responsible for the ongoing identification, assessment and management of their existing and emerging risks. The output of these assessments is ultimately aggregated to compile an overall Group-level view of risk.

The Group's approach to risk management is set out in more detail in the Corporate Governance Report on pages 73 to 86. The risks are linked to the strategy on pages 14 to 21. The principal risks and uncertainties, together with their potential impacts and changes in net risk since the last report, are set out in the tables below along with an illustration of what is being done to mitigate them.

Covid-19

Risk owner: Group Chief Executive

Risk level: High

Risk movement: Decreased

Link to strategy: Omnichannel, Credit, Services, Mobile

Considered in the Viability Statement: Yes

What is the risk?

Failure to adapt the operations of the Group to ensure the safety of colleagues and customers and in compliance with government guidelines.

What is the impact?

   --    Reduced revenue and profitability 
   --    Deteriorating cash flow 
   --    Colleague / customer illness or loss of life 

How we manage it

-- A range of initiatives grouped under three 'Big Priorities' - To Protect Colleagues, Help Customers and Secure Our Future.

   --    For a more detailed review on the response to Covid-19, refer to pages 22, 23 and 29. 

Changes since last report

This risk has decreased due to the group successfully adapting to operating in the Covid environment and wider measures to control the pandemic.

Dependence on key suppliers

Risk owner: Chief Commercial Officer

Risk level: Medium

Risk movement: Stable

Link to strategy: Omnichannel, Credit, Services, Mobile

Considered in the Viability Statement: No

What is the risk?

The Group is dependent on relationships with key suppliers to source products on which availability may be limited.

What is the impact?

   --    Investments by suppliers scaled down 

-- Pricing and stock availability terms could worsen, leading to deceasing sales / reduced margin

   --    Reduced revenue and profitability 
   --    Deteriorating cash flow 
   --    Reduced market share 

How we manage it

   --    Ensuring alignment of key suppliers to the Group's strategy. 

-- Continuing to leverage the scale of operations to strengthen relationships with key suppliers and maintain a good supply of scarce products.

-- Working with suppliers to ensure availability of products through Covid-19 crisis in order to help our customers.

   --    Broadening the range of suppliers to support extended range offerings. 
   --    Ethical supply chain due diligence over our supplier base. 

-- Control structures to ensure appropriate Supplier Relationship Management for GFR, GNFR and OEM.

Changes since last report

This risk has remained stable over 2020/21.

Business Transformation

Risk owner: Chief Operating Officer

Risk level: Medium

Risk movement: Decreased

Link to strategy: Omnichannel, Credit, Services, Mobile

Considered in the Viability Statement: No

What is the risk?

Failure to respond with a business model that enables the business to compete against a broad range of competitors on service, price and / or product range.

Failure to optimise Digital opportunities.

Failure to respond to changes in consumer preferences and behaviours.

What is the impact?

   --    Reduced revenue and profitability 
   --    Deteriorating cash flow 
   --    Reduced market share 

How we manage it

   --    Continued strengthening of digital expertise as part of omnichannel capability. 
   --    Transformation Management Office established and delivering key strategic objectives. 
   --    Future Mobile Strategy. 
   --    Development of customer credit propositions. 
   --    Development of omnichannel capabilities. 
   --    Enhancement of data analytics capabilities. 

Changes since last report

Significant progress has been made in the delivery of the Transformation Programme and consequently the overall risk is decreasing as projects are being completed.

Non-compliance with Financial Conduct Authority ('FCA') and other financial services regulation

Risk owner: Chief Commercial Officer

Risk level: High

Risk movement: Stable

Link to strategy: Credit, Services

Considered in the Viability Statement: Yes

What is the risk?

Failure to manage the business of the Group in compliance with FCA regulation and other financial services regulation to which the Group is subject in a number of areas including the mobile insurance operations of The Carphone Warehouse Limited and the consumer credit activities of DSG Retail Limited.

What is the impact?

   --    Enforcement action by the regulator 
   --    Loss of authorisation and inability to trade regulated products 
   --    Reputational damage 
   --    Financial penalties 
   --    Reduced revenues and profitability 
   --    Deteriorating cash flow 
   --    Customer compensation 

How we manage it

-- Board oversight and risk management structures actively monitor compliance and ensure that the Company's culture puts good customer outcomes first.

-- Senior Manager and Certification Regime and if required CBI / other regulators certification implemented.

   --    Regulatory Compliance Committee, Product Governance and other internal governance structures. 
   --    Control structures to ensure appropriate compliance. 

-- Compliance monitoring and internal audit review of the operation and effectiveness of compliance standards and controls.

   --    Recruitment, remuneration and training competency programmes. 
   --    Conduct risk and control framework, including defined minimum control standards. 

Changes since last report

This risk has remained stable over 2020/21.

Data Protection

Risk owner: Chief Operating Officer

Risk level: High

Risk movement: Increased

Link to strategy: Omnichannel, Credit, Services, Mobile

Considered in the Viability Statement: Yes

What is the risk?

Major loss of customer, colleague, or business sensitive data.

Adequacy of internal systems, policy, procedures and processes to comply with the requirements of EU General Data Protection Regulation ('GDPR').

What is the impact?

   --    Reputational damage 
   --    Financial penalties 
   --    Reduced revenue and profitability 
   --    Deteriorating cash flow 
   --    Loss of competitive advantage 
   --    Customer compensation 

How we manage it

-- The operation of a Data Management Function to ensure compliance with GDPR compliant operational processes and controls.

-- The operation of a Data Protection Office to ensure appropriate governance and oversight on the Group's data protection activities.

-- Control activities operate over management of customer and employee data in accordance with the Group's data protection policy and processes.

   --    Investment in information security safeguards and IT security controls and monitoring. 

Changes since last report

The risk temporarily increased due to home working but with the introduction of mitigating controls has reduced to the level prior to the Covid-19 outbreak.

IT systems and infrastructure

Risk owner: Chief Operating Officer

Risk level: Medium

Risk movement: Stable

Link to strategy: Omnichannel

Considered in the Viability Statement: No

What is the risk?

A key system becomes unavailable for a period of time.

What is the impact?

   --    Reduced revenue and profitability 
   --    Deteriorating cash flow 
   --    Loss of competitive advantage 
   --    Restricted growth and adaptability 
   --    Reputational damage 

How we manage it

   --    Ongoing IT transformation to align IT infrastructure to Future DC strategy. 

-- PEAK planning and preparation to ensure system stability and availability over high-demand periods.

-- Individual system recovery plans in place in the event of failure which are tested regularly, with full recovery infrastructure available for critical systems.

   --    Long-term partnerships with 'tier 1' application and infrastructure providers established. 
   --    Strengthening Technology leadership team. 

Changes since last report

Whilst the reliance on IT systems and infrastructure increased during the period where the UK and Ireland business traded on-line only, the control environment remained stable over the period.

Information security

Risk owner: Chief Operating Officer

Risk level: High

Risk movement: Increased

Link to strategy: Omnichannel, Credit, Services, Mobile

Considered in the Viability Statement: Yes

What is the risk?

Vulnerability to attack, malware, and associated cyber risks.

What is the impact?

   --    Reputational damage 
   --    Financial penalties 
   --    Reduced revenue and profitability 
   --    Deteriorating cash flow 
   --    Customer compensation 
   --    Loss of competitive advantage 

How we manage it

-- Investment in information security safeguards, IT security controls, monitoring, in-house expertise and resources as part of a managed information security improvement plan.

   --    Information security policy and standards defined and communicated. 
   --    Information Security and Data Protection Committee comprising senior management, set up with responsibility for oversight, co-ordination and monitoring of information security policy and risk. 
   --    Infosec training and awareness programmes for employees. 
   --    Audit programme over key suppliers' information security standards. 
   --    Introduction of enhanced security tooling. 
   --    Ongoing programme of penetration testing. 

Changes since last report

The move to home working during Covid-19 presented additional challenges but these were successfully addressed with the introduction of mitigating controls. The risk now remains at the same level as prior to the Covid-19 outbreak.

Health and Safety

Risk owner: Chief Supply Chain Officer

Risk level: High

Risk movement: Stable

Link to strategy: Omnichannel, Credit, Services, Mobile

Considered in the Viability Statement: Yes

What is the risk?

Failure to effectively protect customers and / or colleagues and / or contractors from injury or loss of life.

What is the impact?

   --    Employee / customer injury or loss of life 
   --    Reputational damage 
   --    Financial penalties 
   --    Legal action 

How we manage it

-- Implementation of Covid-19 controls to protect colleague in the workplace and customers in the retail estate, including continuous monitoring of changing government regulation in all jurisdictions.

   --    Group Health and Safety strategy. 
   --    Comprehensive Health and Safety policies and standards supporting continued improvement. 
   --    Health and Safety management / Governance Committee. 
   --    Operational Health and Safety teams located across business units. 
   --    Risk assessment programme covering retail, support centres, distribution and home services. 
   --    Incident reporting tool and process. 
   --    Health and Safety training and development framework. 
   --    Health and Safety inspection programme. 
   --    Audit programme including factory audits for own brand products and third-party supply chains 

Changes since last report

This risk has remained unchanged over 2020/21.

Business Continuity

Risk owner: Chief Operating Officer

Risk level: Medium

Risk movement: Stable

Link to strategy: Omnichannel, Services.

Considered in the Viability Statement: No

What is the risk?

A major incident impacts the Group's ability to trade and business continuity plans are not effective, resulting in an inadequate incident response.

What is the impact?

   --    Reduced revenue and profitability 
   --    Deteriorating cash flow 
   --    Reputational damage 
   --    Loss of competitive advantage 

How we manage it

-- Business continuity and crisis management plans in place and tested for key business locations.

   --    Enablement of home working for office-based and contact centre colleagues. 
   --    Disaster recovery plans in place and tested for key IT systems and data centres. 
   --    Crisis team appointed to manage response to significant events. 
   --    Major risks insured. 

Changes since last report

This risk has remained unchanged over 2020/21.

Product Safety

Risk owner: Chief Supply Chain Officer

Risk level: Medium

Risk movement: Stable

Link to strategy: Omnichannel, Mobile

Considered in the Viability Statement: No

What is the risk?

Unsuitable procedures and due diligence regarding product safety, particularly in relation to OEM sourced product, may result in poor quality or unsafe products provided to customers which pose risk to customer health and safety.

What is the impact?

   --    Financial penalties 
   --    Reduced cash flow 
   --    Reputational damage 

How we manage it

   --    Factory Audits conducted over OEM suppliers. 
   --    Technical Evaluation of OEM products prior to production. 
   --    Product inspection of OEM products prior to shipment. 
   --    Monitoring of reported incidents. 
   --    Safety Governance reviews conducted by internal by Technical and Business Standards teams. 
   --    Establish protocols and procedures to manage product recalls. 

Changes since last report

This risk has remained unchanged over 2020/21.

Sustainability

Risk owner: Strategy and Corporate Affairs Director

Risk level: High

Risk movement: New

Link to strategy: Omnichannel, Credit, Services, Mobile

Considered in the Viability Statement: No

What is the risk?

Our commitment to sustainability and being a good corporate citizen is either not delivered or not adequately communicated to or recognised by customers and investors.

What is the impact?

   --    Reduced cash flow as customers shop elsewhere 
   --    Reputational damage 
   --    Loss of competitive advantage 

How we manage it

   --    Roadmap to Net Zero. 
   --    Commitment to EV100. 
   --    Oversight from ESG Committee. 
   --    ESG strategy which is regularly revised. 
   --    Maintenance of a brand tracker. 
   --    Commitment to TCFD ahead of mandatory compliance. 

Changes since last report

Given the number of initiatives, regulatory requirements and expectations of stakeholders this has been added as a new principal risk for 2020/21.

Tax liabilities

Risk owner: Chief Financial Officer

Risk level: Medium

Risk movement: Stable

Link to strategy: Omnichannel, Credit, Services, Mobile

Considered in the Viability Statement: Yes

What is the risk?

Crystallisation of potential tax exposures resulting from legacy corporate transactions, employee and sales taxes arising from periodic tax audits and investigations across the various jurisdictions in which the Group operates.

What is the impact?

   --    Financial penalties 
   --    Reduced cash flow 
   --    Reputational damage 

How we manage it

   --    Board and internal committee oversight that actively monitors tax strategy implementation. 

-- Appropriate engagement of third-party specialists to provide independent advice where deemed appropriate.

Changes since last report

The Group remains committed to achieving a resolution with HMRC in relation to open tax enquiries. The risk remains unchanged over 2020/21.

People

Risk owner: Chief People Officer

Risk level: Medium

Risk movement: New

Link to strategy: Omnichannel, Credit, Services, Mobile

Considered in the Viability Statement: No

What is the risk?

Not having the right workforce capacity, capability, and colleague commitment necessary to deliver on our strategy.

What is the impact?

   --    Reduced revenue and profitability 

-- Failure to achieve strategic objectives without strong leadership and capable and committed colleagues

How we manage it

   --    Strengthening leadership capability and succession. 
   --    Increasing colleague capability and engagement to deliver against customer promise. 
   --    Advancing the People Operations Fix the Fundamentals Transformation. 

-- Approach for remuneration and incentives that supports a high-performance culture, reinforces the right behaviours aligned to our values and supports selling responsibility to customers.

Changes since last report

The challenge to satisfy new working practices and need to develop new skills to achieve our strategy means this has been added as new principal risk for 2020/21.

B. Responsibility Statement (page 130)

We confirm that to the best of our knowledge:

-- the financial statements, prepared in accordance with the relevant financial reporting framework, 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;

-- the Strategic 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; and

-- the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group and the Company's performance, business model and strategy.

By Order of the Board

Alex Baldock, Group Chief Executive

Bruce Marsh, Group Chief Financial Officer

28 July 2021

* The directors of Dixons Carphone plc as at 28 July 2021 are listed on pages 68 and 69 of the Annual Report and Accounts 2020/21.

ENDS

For further information:

   Nigel Paterson            General Counsel and Company Secretary        +44 (0)7843 634 505 
   Assad Malic                Group Strategy & Corporate Affairs Director      +44 (0)7414 191 044 

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July 28, 2021 05:58 ET (09:58 GMT)