REG - DFS Furniture PLC - FY25 Preliminary Results
Thu 07:00
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RNS Number : 7282A DFS Furniture PLC 25 September 2025
25 September
2025
Immediate release
DFS Furniture plc
Preliminary Full Year Results FY25
Strategic execution drives significant profit growth and reduction in leverage
Customer proposition never been in better shape
Board confident in the growth prospects of the Group
DFS Furniture plc ('the Group'), the market leading retailer of living room
and upholstered furniture in the United Kingdom, today announces its
preliminary results for the 52 weeks ended 29 June 2025 (prior year
comparative period is the 53 weeks ended 30 June 2024).
£m FY25 FY24 Change
52 weeks vs 52 weeks
Like for like order intake growth YoY(1) +10.2% (1.8%) n/a
52 weeks vs 53 weeks
Reported order intake growth YoY(1) +8.7% n/a n/a
Gross sales(2) £1,388.3m £1,311.8m +5.8%
Revenue £1,030.3m £987.1m +4.4%
Gross margin 56.5% 55.8% +0.7%pts
Underlying PBT(A)(2) £30.2m £10.5m +£19.7m
Reported profit/(loss) before tax £32.9m (£1.7m) +£34.6m
Underlying basic EPS 9.2p 1.5p +7.7p
Reported basic EPS 10.5p (1.9p) +12.4p
Net bank debt(2) £107.0m £164.8m £57.8m
Bank leverage(2, 3) 1.4x 2.5x 1.1x
Strategic and operational highlights
Market leading customer proposition: Market share gains, record established
customer net promoter scores and achievement of our £50m Cost to Operate
programme one year ahead of expectations driven by our focus on three key
enablers:
● Leveraging our scale, expertise and vertical integration: High
profile exclusive brand partnership ranges now over 40% of dfs brand sales,
cost of goods optimisation driving gross margin progression and continual
improvements in our manufacturing and Sofa Delivery Company logistics
operations are increasing our efficiency
● Utilising data and technology: Focusing on technology-led product
innovation to remain agile to evolving consumer trends and investing in our
proprietary data and insights platform is enhancing the customer experience
● Harnessing our unique culture: our dedicated and loyal colleagues
are vital to our success - our investment in our people and progress on our
diversity and inclusion agenda is helping drive improved colleague engagement
scores and reduce attrition
Financial overview
● Resilient trading performance with strong like for like (52 week vs
52 week) Group order intake growth, up +10.1%(1) in H1 and 10.3% in H2 in a
subdued market with both the dfs and Sofology brands gaining market share(4)
● Revenue up +4.4% YoY, lower than the reported order intake growth of
+8.7% due to investment in our interest free credit offer to drive demand in
the weak market as well as the impact of Easter falling later in the year and
a shift in customer orders to ranges with longer lead times. As a result, the
Group ended the year with a resilient order bank
● Gross margins expanded by +70bps reflecting continued focus on
optimising the commercial proposition and improved cost of goods
● Underlying profit performance, PBTu(A)(2) up £19.7m YoY to £30.2m,
slightly above previous guidance (£25m-£29m)
● Strong free cash flow generation of £57.8m reducing net bank
debt(2) to £107.0m (FY24: £164.8m) and bank leverage(2, 3) to 1.4x (FY24
2.5x)
● While our financial position has strengthened due to improved profit
performance and disciplined cash management, our current leverage remains
outside our target range of 0.5x-1.0x and the macro environment remains
uncertain. As a result, the Board has taken the decision not to recommend a
FY25 dividend
● We will continue to focus on reducing our debt levels, maintaining
strong discipline on capital investment and bringing our leverage into our
target range.
Current trading and outlook
Trading through the first 12 weeks of the new financial period is in line with
our expectations
● We are comfortable with consensus(5) and are planning for profit
growth in FY26, despite our expectation for a subdued market in the near term,
driven by our compelling customer proposition, further gross margin
progression and continued cost discipline
● A decision will be made at our FY26 interim results on the payment
of an interim dividend based on profit and leverage outturn for the full year
and future outlook
● Longer term the Board remains confident in achieving our medium term
£1.4bn full year revenue and 8% PBT targets
Tim Stacey, Group Chief Executive Officer said:
"I believe that our customer proposition has never been in better shape and
that all elements of our vertically integrated business model are working
efficiently and effectively, leading to record net promoter scores. Through
focusing on what we can control and executing our strategy we have grown
profits and cash flows in a weak market environment. This would not have been
possible without the passion and dedication of our colleagues and I would like
to sincerely thank them all for their hard work and support for our business.
"The market demand drivers for the upholstery sector remain delicately
balanced. Consumer confidence remains below the long term average and
inflation remains elevated but housing transactions have been recovering,
consumer savings levels are relatively high and interest rates look set to
fall.
"Given the market share gains that we have made in the last few years, the
recovery in our gross margins and the significant reduction in our cost base,
despite inflation, I am optimistic about the future. We will continue to focus
on what we can control and, even in a subdued market, we expect to grow our
profit before tax in FY26 and further strengthen our balance sheet. When the
market recovers we are well positioned to achieve strong growth and
importantly profit and cash conversion and remain committed to achieving our
medium term targets of £1.4bn revenue and 8% PBT margins."
(1) Full year order intake growth measured on a 52 week vs 52 week basis
("like for like") was 10.2%
To avoid the distorting impact caused by a different number of winter sale
trading days in each trading period H1 YoY order intake growth (+10.1%) has
been measured using weeks 1-25 of each trading period. H2 YoY (+10.3%) has
been measured using the most comparable 27 weeks.
FY24 was a 53 week reporting period, reported order intake growth measured on
a 52 vs 53 week basis is 8.7% year on year.
FY24 order intake growth calculated by comparing first 52 weeks of the 53 week
FY24 period to the 52 week FY23 period
(2) Definitions and reconciliations of KPIs including Alternative Performance
Measures ("APMs") are provided at the end of this statement in note 12 to the
condensed consolidated financial statements
(3) Banking covenant leverage calculated using IAS17 calculated EBITDA
(4) Proprietary Lloyds banking data covering 13 specialist upholstery
retailers
(5) Company compiled market consensus profit before tax and brand
amortisation: £39.4m
FY25 Results Presentation
A webcast for analysts and investors will be held at 9.00am (UK time) today to
announce the FY25 results. Virtual presentation link:
https://linklaters-events.webex.com/linklaters-events/j.php?MTID=m477dfd03e7c14181395bc6817307ce22
(https://linklaters-events.webex.com/linklaters-events/j.php?MTID=m477dfd03e7c14181395bc6817307ce22)
Webinar number: 2375 395 8228 Password: FAuSJP7z@44 (32875779 when dialling
from a phone or video system)
A copy of the presentation will be made available at:
(https://www.dfscorporate.co.uk/) https://www.dfscorporate.co.uk/
(https://www.dfscorporate.co.uk/)
Enquiries:
DFS (enquiries via Teneo)
Tim Stacey (Group CEO)
Marie Wall (Interim Group CFO)
Phil Hutchinson (Investor Relations)
investor.relations@dfs.co.uk
Teneo
James Macey-White
Jessica Reid
Ayo Sangobowale
+44 (0)20 7353 4200
85fs.dfs@teneo.com
CHAIR'S STATEMENT
This year our revenue performance has improved significantly compared to the
prior year as both our retail brands successfully implemented our growth
initiatives and grew their market share despite the subdued market for
upholstered furniture in the UK. We believe that the outlook for the Group
remains positive despite the challenging economic and geopolitical environment
that we operate in.
We have maintained our focus on disciplined cost management and continued to
improve our gross margins. Delivery against our £50m cost saving plan has
helped limit operating cost increases to 2% year on year despite significant
inflationary headwinds due to the well-publicised increases in the National
Minimum Wage and National Insurance as well as volume related variable cost
increases.
The medium-term prospects for the upholstered furniture market remain strong
and we are optimistic that our market leading position and our long-term
growth strategy will ensure the business is well positioned to take advantage
as the market recovers.
We will continue to actively manage our cost base in FY26 in the face of a
significant increase in business rates in April 2026 and an expected further
increase to the National Minimum Wage. The savings we have made to date
demonstrate our ability to remain agile and reshape our operations in light
of prevailing market conditions.
A retailer is nothing without its colleagues and its customers. At DFS Group
we have built a dedicated and highly capable team of colleagues who have
demonstrated a consistent ability to deliver a product and service proposition
that continues to be highly valued by our customers. This underpins our belief
that our two retail brands can continue to grow their market share.
Financial results
We were pleased that full year underlying PBT(A)(1) of £30.2m was above the
top end of guidance (£25m to £29m) and an increase of £19.7m year on year.
Reported PBT was £32.9m (FY24: loss of £1.7m). Our profit performance was
driven by strong trading, gross margin rate progression and continued
cost discipline.
In an environment of low consumer confidence, the Board and the Group
Leadership Team have been focused on achieving the optimum near term financial
results whilst ensuring that the Group remains primed to respond to a better
market and strengthening our balance sheet to ensure that we can invest for
the future.
Leverage(1) at year end was 1.4x (FY24 year end 2.5x) which showed a
considerable improvement against prior year, although remaining above our
stated target level of 0.5x-1.0x. Bringing the level down towards our target
using the twin levers of absolute debt reduction and profit improvement
remains a key focus for the coming year.
Strategic focus
During the year we undertook a restructure of the leadership team in our two
retail brands, creating new Group Marketing, Commercial and Customer Services
functions to sit alongside the existing Group functions which support our
brands. These changes support our existing pillars and platforms strategy,
provide greater clarity and consistency, and allow the Group to make better
use of its scale.
We continue to leverage our two market-leading complementary retail brands,
dfs and Sofology; they appeal to different customer segments and allow us to
target a wide section of the market with creative direction managed by each
brand team. Each brand curates its own ranges, supported by specialist
in-house design teams. The focus on innovation continued during the year with
further enhancements to our product ranges, incorporating new technology into
several more ranges to appeal to a broader group of customers. This approach
is exemplified by our Cinesound® technology which turns home entertainment
into a 4D immersive experience, packed with state-of-the-art features,
including vibration pads and powered head and footrests. The customer response
has been incredibly positive with these high-end products rapidly becoming a
key differentiator for us in the market.
The dfs team has also focused on developing our wider Home offering,
especially in beds, building stronger relationships direct with suppliers,
with a focus on both quality and improving the delivery time to our
customers.
We have continued to invest in our national network of showrooms across the UK
and the Republic of Ireland and in our websites, to ensure they continue to
inspire our customers and provide a leading customer experience. We were
pleased to open our new Sofology store in Carlisle shortly after year end,
in August 2025.
We will continue to assess the pace and priorities of all our strategic
objectives as market conditions evolve over the next 12 months.
Culture and our people
Our colleagues and their contribution to our culture and values are what make
DFS Group great. They are dedicated, enthusiastic and proud of our
market‑leading position. They put the customer first in everything they do
and work hard to deliver outcomes informed by our values.
The market challenges facing retailers over the last few years are well
understood and the actions taken to manage our cost base, improve our customer
NPS scores, build our market share to a record high and return the Group to a
more stable financial position have required the dedication and commitment of
all our colleagues.
We rely on their skills, knowledge and experience, competence, agility, and
passion for our business to continue to innovate and to continue to deliver
for all our customers in this challenging economic environment. My thanks on
behalf of the Board go to all of them.
Sustainability
We are pleased that during the year our publicly committed net zero plans were
approved by the Science Based Targets initiative, validating both our 2050 and
near-term decarbonisation targets. Given the vertically integrated nature of
our Group our journey to net zero will not be linear. In some areas progress
is dependent on the development of innovative technologies but we are pleased
with the progress we are making, and we remain committed to our ambitious
targets.
Governance and board changes
Good governance is critical for all businesses. At times of continued
geopolitical and economic uncertainty, it plays a particularly key role in
building and retaining trust among a diverse base of stakeholders. DFS Group
operates to a high level of governance and the Board will maintain this
approach going forward.
Having welcomed Bruce Marsh to our Board at the start of the financial year,
in October we announced John Fallon had taken the decision to step down as our
CFO. We thank John and wish him the best for the future. In January we
welcomed Marie Wall to the Board as our Interim Chief Financial Officer.
Marie is an experienced leader who has previously held senior finance roles at
listed FMCG and retail businesses including Imperial Brands PLC, Wolseley PLC
and Dixons Carphone PLC. She brings expertise in retail and finance
transformation and has created value and strengthened our finance team. Then
in February we were pleased to be joined by Tony Buffin, our new Non-Executive
Director. Tony has significant retail experience that is directly relevant to
the Group's long-term strategy and will help to accelerate growth in our
brands and develop our Home offering.
In April Jo Boydell announced her intention to retire from the Board at the
close of the AGM in November. Jo was appointed to the Board in December 2018
and served as Audit and Risk Committee Chair from April 2019 until the
appointment of Bruce Marsh. We thank Jo for her wise counsel and significant
contribution to DFS Group and wish her all the very best for the future.
All the Directors continue to visit different areas of the Group spending
time in our showrooms, customer distribution centres, factories and design
studios as well as with individual members of the Group Leadership Team and
the Employee Voice Forum. This helps to ensure that all of the Non-Executive
Directors have a thorough understanding of the business and that the
Non-Executives' contributions to Board discussions are well informed and
constructive in helping them ensure the views of the wider stakeholder
population are considered in any decision.
Dividend
At the time of the interim results in March 2025 the Board confirmed that due
to the ongoing economic headwinds and the Group's net debt position being
outside our target range it would not approve the payment of an interim
ordinary dividend.
Given the continuing economic uncertainty the Board has concluded that to
build further resilience the focus should be on further reducing net debt and
has therefore concluded that it would not be appropriate to propose a final
dividend. We recognise that this decision may be disappointing for some of our
shareholders. However, we believe that it is in the best long-term interests
of the Group.
Looking ahead
The Group has developed a unique position at the heart of British homemaking
over the past 55 years. We are the UK's largest upholstery retailer and
manufacturer. This, coupled with our in-house two person delivery and service
teams, clear strategy, great leadership team, market-leading position,
innovative products and the strength of our brands will allow us to take
advantage of opportunities to deliver on the expectations of customers and
shareholders and continue to provide a rewarding place for our colleagues
to build their careers.
As detailed in the Chief Executive's outlook statement, the market for
upholstery remains delicately balanced and whilst the Group is not immune to
the impact of the continuing political uncertainty, the Board considers that
the Group is well placed to manage these challenges and remains optimistic
about the future.
I am proud of the Group's achievements in FY25 and remain confident in the
plans that we have for the year ahead.
Annual general meeting
We continue to encourage all shareholders to attend our Annual General
Meeting, which will be held in Doncaster on 14 November 2025. This provides
a great opportunity to hear from and speak with members of the Board and
Group Leadership Team.
STEVE JOHNSON
Chair of the Board
25 September 2025
(1) Definitions and reconciliations of KPIs including Alternative Performance
Measures ("APMs") are provided at the end of this statement in note 12 to the
condensed consolidated financial statements.
CHIEF EXECUTIVE'S REVIEW
Our customer propositions and operating platforms have never been in better
shape with all elements of our vertically integrated business model working
together, efficiently and effectively, leading to record market share(1),
record customer satisfaction scores and high levels of colleague engagement.
Through focusing on what we can control and executing our strategy we have
delivered a resilient performance, growing profits and free cash flow in a
weak market environment.
I am pleased to report that FY25 was a year where we accelerated our momentum
by focusing our energies and efforts on what we can control and relentlessly
executing our strategy. Our customer propositions are in great shape across
both our dfs and Sofology retail brands leading to strong Group order intake
growth, up +10.2% year on year, and continued market share growth in another
year where market demand has remained weak.
The brands have been supported by our operational platforms working
efficiently and effectively. Strong performance across the customer journey
from our commercial and product design teams, our marketing teams, our retail
brands, our manufacturing operations, The Sofa Delivery Company logistics
business and our service teams have collectively resulted in us achieving
record established customer NPS scores. This has been achieved by the hard
work of our fantastic, passionate and dedicated colleagues and our investment
in data and technology which provides insight, improved decision making and
operational efficiency.
All of this has led to revenue and profit growth with underlying profit before
tax and brand amortisation(2) (uPBT(A)) slightly ahead of expectations, up
nearly £20m year on year to £30.2m, and reported PBT up £34.6m year on year
to £32.9m. In addition we have generated good levels of free cash flow
enabling us to reduce our net bank debt by £57.8m and strengthen our balance
sheet.
Stepping back, our Group has evolved considerably over the last five years. We
have simplified our structures, developed Group platforms to leverage
expertise and scale benefits, continued to grow our market share and we have
what I believe is a unique culture that binds and energises our people to help
us win with customers and look after each other. As a result, the Group is
strongly positioned to capitalise on our growth opportunities and any market
recovery.
Strategic update
Our ambition is to profitably and sustainably grow our dfs and Sofology retail
brands and step change our share of the non-upholstery Home market through
leveraging our Sourcing and Manufacturing, Technology and Data, People and
Culture and The Sofa Delivery Company logistics platforms.
The strategic progress we are making is the result of our focus in three key
areas:
Leveraging our scale and vertical integration
Through leveraging our scale and vertical integration we provide a
differentiated customer experience and drive greater efficiency.
The Group has a 39% market share by value(3) with sales densities in DFS Group
over three times that of our nearest competitor. Given our scale, well known
brands want to work with us to develop unique and exclusive sofa ranges. We
have created a unique proposition in dfs through working on an exclusive basis
with high quality brand partners that resonate strongly with the consumer such
as French Connection, Joules and Country Living. Our recently launched
partnerships with Ted Baker (FY24) and La-Z-Boy (FY25) and new ranges with
existing partner brands such as the Joules Gilmorton are all performing well
and our exclusive brand sales mix has reached a record high of over 40%
of total dfs brand sales.
Our sales volumes and demand forecasting capability have enabled us to work
with our third party suppliers to efficiently and effectively service
customers that value obtaining products at speed.
Our suppliers also offer new ranges to us first to sell on an exclusive basis
and as we are a major customer our scale enables us to source efficiently and
deliver industry leading gross margins. We have grown our gross margins 70
basis points in FY25 and through recently combining the commercial buying
teams of the dfs and Sofology brands under one leader we can share best
practices and further leverage our scale in the future. We have a highly
skilled and creative design team that research and identify emerging trends in
the wider home categories that can be applied to our sector. We have the
ability to develop a prototype, test, and put new ranges on our showroom
floors in as little as six weeks enabling us to be first to market.
Interest free credit ('IFC') is a key feature of the UK upholstery market.
Given our scale, we are a major customer of our IFC lending partners enabling
us to offer a market leading proposition. This year we offered IFC on a 48
month term to customers in key periods to drive demand in the weak market
environment and increase average order values contributing to our strong order
intake performance, ahead of the market(1).
Our vertical integration enables us to capture value across the supply chain.
We produce around 20% of what we sell in our UK factories and our scale
enables us to operate them efficiently. They provide the benefits of being
able to offer short lead times and insight to optimise cost pricing for ranges
sourced from third parties. This year we have improved the efficiency of
our factories whilst further enhancing quality.
The Sofa Delivery Company, our logistics operation, is the largest two person
sofa delivery company in the UK. It delivers for both our retail brands using
the same infrastructure and we offer a seven day a week installation and
delivery service which is focused on providing great customer service,
including the removal and recycling of all packaging waste. This is evidenced
by record post-delivery NPS scores achieved at the same time as reducing our
delivery cost per order despite inflationary headwinds.
Utilising data and technology
Through utilising data and technology we drive insight, innovation, better
decisions and a continuous improvement approach to operational efficiency.
We have made significant progress over the last three years in simplifying how
we store, access and connect data and gain insight through developing a data
hub that sources data from around 85 sources. A good example of how we are
utilising data is in The Sofa Delivery Company where we have powerful
dashboards that enable us to drill down in detail to drive performance. For
instance, we can review the individual performance of each delivery vehicle by
the hour and review the reasons for failed deliveries to identify root causes.
Having this knowledge has helped us deliver a 10% efficiency improvement and
reduce failed deliveries to record lows.
The Sofa Delivery Company uses machine learning through its proprietary
software that carries out dynamic real time route scheduling to optimise van
fill and doorstep time ensuring we maximise the use of our assets and provide
great customer service.
Another example is in retail where we are able to significantly improve our
overall store by store performance through the use of store level dynamic
balanced scorecards which improve visibility and provide real time insight
across our people, processes, customer and financial lenses. We are also
utilising data in marketing to improve our efficiency of spend and our team
recently won the Bloomreach 'Data Driven Leader' award, recognising our
effective and impactful use of customer data and analytics.
We utilise cutting edge technology to improve the customer experience and
operational performance. Our proprietary Intelligent Lending Platform (ILP)
now has multiple IFC lending partners operating across both dfs and Sofology
enabling high first time acceptance rates and management of subsidy costs,
shortening transaction times, enabling in store conversion uplift in busy
periods. ILP also enables fully digitised processing with no colleague
intervention making the customer journey seamless, offering customers the
credit that is right for them.
We have continued to innovate with more technology included in our sofas such
as wireless charge points, wine coolers, speakers and vibrating seats such as
in our Cinesound® ranges and our recently patented heated seats.
We continually look to improve the customer journey and provide a seamless
experience across all channels. This year we have been enhancing both retail
brands' websites. The dfs brand has recently launched a personalised homepage
that changes content displayed based on where the customer is in their
journey, providing inspirational content for those early in the journey and
returning users to their previous product selections. This personalized
approach has proven to be a hit with customers, reducing bounce rate,
improving click through rate and conversion.
We have made numerous enhancements to the Sofology website including improved
image zoom to provide a detailed view of fabrics, autoplay video content to
capture customer attention and improved 3D augmented reality coverage.
We have begun to utilise artificial intelligence ('AI') across a number of
areas in the business. We are utilising a CRM platform in Sofology to develop
AI driven email marketing campaigns to improve personalisation of individual
communications by tailoring them to the customer's online and offline
interactions. There are early indications that this has yielded a significant
conversion rate and average order value increase. In addition, we have
recently published a case study with our digital creative and activation
platform on the use of AI for both media effectiveness and image generation,
as our work to push our digital capability continues. The advancements we are
making with our media partners led to global first trials with Pinterest and a
Digital Out Of Home award with JCDecaux.
In our customer service operations we are enhancing colleague written emails
by using AI to draft written responses to customer service tickets which has
helped reduce resolution times and increase colleague productivity. Finally,
our in-house creative production capability will continue to provide us with
leading CGI (over 125,000 product images produced) and video technology across
the Group, and a recent 'Inside Out' award nomination globally recognises our
in-house creative excellence.
Harnessing our unique culture to drive performance
We fully recognise that delivering an exceptional customer experience requires
a dedicated and passionate workforce. It's the commitment and talent of our
people that truly drive our business forward. That is why I feel so strongly
about, and take great pride in, the unique culture we have cultivated across
our Group.
We aim to lead our people with an open and empathetic leadership style,
supported by customer centric, aspiring values which drives high engagement
levels and ultimately our performance. We assess colleague engagement levels
through our 'Your Say' survey and we've made good progress with colleague
engagement stepping forwards 11.6%pts year on year.
Expertise in our sector is important. In manufacturing, from sewing to frame
assembly, quality and efficiency are critical. Equally, our retail teams need
to engage effectively with customers to encourage them to shop with us -
because the overall experience truly matters, and in The Sofa Delivery
Company, high service levels are imperative as the sofa delivery is usually
our last touch point with the customer.
We invest in our colleagues to help equip them with the right skills and to
develop and progress. I'm very proud of our Leadership Development Programme
which 12 leaders completed in 2024 with a further 21 taking part in the 2025
cohort. In addition our Group Leadership Academy, which offers opportunities
for colleague development and strengthens our future leader pipeline, has
proved popular with more than 500 managers attending workshops.
To help ensure colleagues stay with us we want to create an environment where
everyone feels welcome, valued and respected. Diversity in our teams helps us
in many ways from obtaining differing perspectives, increasing creativity and
innovation and being better able to serve a wider customer base. Our six
colleague networks, which each have senior leadership representation, help us
connect like minded people and help us to activate change and engagement
initiatives identified in our inclusion agenda. We are constantly seeking to
raise standards and this year we achieved the 'strategic level' in the
Diversity in Retail inclusion maturity curve.
We also want to ensure that our people can work for us whilst managing their
busy lifestyles. Recognising this, we adapted our retail model to increase the
availability of part time roles and in FY25 the part time mix in both brands
grew over 4%pts with dfs's part time mix now over 58%. This model is
facilitated by our workforce management system that predicts footfall and
sales six weeks ahead, helping us to plan to have the right number of
colleagues at peak times and maximise conversion. We are also working towards
equal gender representation in our business and are making progress with 41%
of senior leadership roles now held by female colleagues.
As a result of our strategic progress we have delivered against our three key
financial areas:
Growth - We achieved strong and consistent performance across the year with
like-for-like order intake growth of +10.1% in H1 and +10.3% in H2 with both
brands gaining share in a market that was slightly down year on year(1). The
dfs brand's like-for-like order intake growth of 8.7% was driven by new
product development, our industry leading IFC offer and great customer service
with established customer NPS at a record level of 54.1. Sofology grew order
intake by +16.2% as a result of a significant volume uplift with the range
development and price changes made at the end of FY24 proving very effective.
Gross margin - Our gross margin rate stepped on another 70 basis points year
on year to 56.5% as we target a return to our target and pre-pandemic average
of 58%. Margins improved as a result of product margin progression supported
by cost of goods savings that more than offset headwinds from elevated freight
rates.
Cost to Operate programme - We achieved £25.5m of cost savings in FY25 which
means cumulatively we have now surpassed our £50m annual savings target, a
year ahead of expectation. The Group now has a more efficient cost base and we
have retained operational capacity to capitalise on any market recovery.
Our progress in these areas has led to profit growth with underlying PBT(A)(2)
up £19.7m to £30.2m. We delivered strong free cash flow(2) generation in
the year of £57.8m supported by working capital inflows arising from our
negative working capital model and from disciplined investment choices.
As a result we have strengthened our balance sheet through significantly
reducing debt and our leverage(2) has improved from 2.5x to 1.4x.
Sustainability
We are committed to reducing our impact on the environment and I am pleased to
report that we have obtained validation from the Science Based Targets
initiative of our emissions reduction target to cut emissions by 90% across
Scope 1, 2 and 3 by 2050. Our emissions are heavily weighted to Scope 3 and
we launched an 'In This Together' engagement campaign with our suppliers to
set their own science-based targets. We sought buy-in to cover 20% of our
Scope 3 emissions and surpassed this by achieving support for 59%. I would
like to thank our suppliers for working collaboratively with us on our
journey.
Tackling our Scope 1 emissions is proving challenging due to the significant
investment required to upgrade our legacy electricity infrastructure and the
limited availability of electric/hydrogen heavy goods vehicles on the market.
However, we remain committed to our reduction path and are working to address
these challenges over the next few years.
We are already making good progress to ensure our business can make the most
of the opportunities of a circular economy and deliver sustainable performance
and are working to ensure responsible and sustainable use of materials through
transparency and traceability. All these endeavours will support the future EU
requirement to provide a Digital Product Passport with every product, a
requirement which we have started work on, with a pilot in FY25.
Future growth
The Group has evolved considerably in the last five years. We have simplified
our structure by removing sub-scale loss making entities such as the Sofa
Workshop brand and international operations in Spain and the Netherlands.
We have developed The Sofa Delivery Company to achieve scale economies and
provide a market leading delivery and installation service, right sized UK
manufacturing, and created Group functions since the Sofology acquisition to
create centres of excellence. The Group is well positioned for future
profitable growth through a number of avenues:
● Innovation: Supported by innovative new product development,
leveraging our scale to offer great value for money, providing leading
customer service through our experienced colleagues and creating a seamless
customer journey, enabled by technology.
● Footprint expansion: Sofology new showroom roll out of one to two
showrooms per year, increasing the estate from 57 to between 65 and 70
showrooms. We know the target locations and there is relatively low
cannibalisation when opening near dfs showrooms.
● 58% gross margins: We are targeting a return to our pre-pandemic
gross margins of 58%. Recent organisational design changes will enable better
buying opportunities and margin growth will be further supported by self help
and any Bank of England base rate reductions and freight rate normalisation.
● Core sofa market recovery: Market volumes are c.20% below
pre-pandemic levels. Market recovery is linked to consumer confidence and the
housing market and when the recovery comes, the operational leverage in the
business is expected to result in high profit growth with revenue to profit
drop through at around 40%.
● Growth of share in the £5bn non-upholstery Home market (beds and
mattresses, dining and other living room furniture): We have established the
foundations to enable future growth in the non-upholstery Home market
including the roll out of a warehouse management system, the expansion of some
of our exclusive upholstery brand partnerships to bed frames and consolidated
supply to improve gross margins. We have recently started to invest in digital
marketing to increase customer awareness of our Home proposition and we are
targeting an incremental £100m of revenue in the medium term.
● Business development opportunities: We are currently trialling
providing a two person delivery service to third party retailers through The
Sofa Delivery Company infrastructure. We believe that there will be additional
opportunities especially with seasonal furniture retailers and lower volume
sofa retailers to provide a great customer service and maximise utilisation of
our assets, generating incremental revenue.
Conclusion and outlook
I believe that our customer proposition has never been in better shape and
that all elements of our vertically integrated business model are working
together efficiently and effectively, leading to record NPS scores. Through
focusing on what we can control and executing our strategy we have grown
profits and free cash flow in a weak market environment. This would not have
been possible without the passion and dedication of our colleagues and I would
like to sincerely thank them all for their hard work and support for our
business.
The market demand drivers for the upholstery sector remain delicately
balanced. Consumer confidence is below the long-term average and inflation
remains elevated but housing transactions have been recovering, consumer
savings levels are relatively high and interest rates look set to fall.
Given the market share gains that we have made in the last few years, the
recovery in our gross margins and the significant reduction in our cost base,
despite inflation, I am optimistic about the future. We will continue to focus
on what we can control and, even in a subdued market, we expect to grow our
profit before tax in FY26 and further strengthen our balance sheet. When the
market recovers we are well positioned to achieve strong growth and
importantly profit and cash conversion and remain committed to achieving our
medium term targets of £1.4bn revenue and 8% PBT margin.
TIM STACEY
Chief Executive Officer
25 September 2025
(1) Proprietary banking data covering 13 specialist upholstery retailers.
(2) Definitions and reconciliations of KPIs including Alternative Performance
Measures ("APMs") are provided at the end of this statement in note 12 to the
condensed consolidated financial statements.
(3) GlobalData calendar year 2024 market share (August 2025).
FINANCIAL REVIEW
FY25 was a year of profitable growth, delivering strong cash returns and
building balance sheet resilience. This was achieved in a challenging market
that remained in decline(1) amidst ongoing macro uncertainty.
The Group achieved over 10% like for like order intake growth, 4.4% revenue
growth, 70 basis points of gross margin expansion and tightly managed its cost
base in an ongoing inflationary environment. All of these factors contributed
to underlying profit before tax and brand amortisation(2) increasing £19.7m
to £30.2m. Reported profit before tax increased by a greater extent than the
underlying result, from a loss of £1.7m to a profit of £32.9m due to
recognition of a non-underlying credit in the current year compared with
non-underlying charges in the prior year. These are explained later in the
report.
We have continued to focus on strengthening the Group's balance sheet through
reducing our debt level. Our strong performance for the year has driven
significant free cash flow(2) generation, resulting in net bank debt(2)
decreasing by £57.8m to £107.0m and bank leverage(2) decreasing from
2.5x at the previous year end to 1.4x as we make good progress towards our
0.5x-1.0x target range.
Looking forward, the Group is well placed to grow profit and generate high
levels of free cash flow given its market leading position, ongoing momentum
on strategic initiatives, the underlying operational gearing in the business
and our negative working capital profile.
Basis of reporting
The financial year ended 29 June 2025 represents a 52 week trading period.
FY24 was a 53 week reporting period. All information presented is on a 52
week vs 53 week basis with the exception of order intake growth where we also
refer to a 'like for like' comparison of 52 weeks vs 52 weeks to aid the
readers understanding of performance.
Order intake
The Group achieved strong levels of growth in a market that was marginally
down in value terms year on year(1). Momentum was maintained across both
halves of the year, with order intake relatively consistent at +10% like for
like growth.
Sofology performed very well in the period. The range and pricing changes
implemented at the end of the last financial year have had a positive impact
leading to stronger conversion rates and like for like order intake growth of
+16.2%. The dfs brand also performed well, with like for like order intake
growing by +8.7%, as the continued expansion of our exclusive brands resonated
well with customers. These brands are enhancing our customer proposition, with
perceived quality and on-trend designs contributing to growth in both average
order value and order volumes.
Order intake growth measured on a 52 week vs 53 week basis was 1.5%pts lower
than the like for like growth at +8.7%, reflecting the impact of the 53rd
week in FY24.
Order intake growth:
Order intake
YoY
dfs 8.7%
Sofology 16.2%
Group like for like (52 weeks vs 52 weeks) 10.2%
Group reported (52 weeks vs 53 weeks) 8.7%
Gross sales and revenue
Gross sales(2) increased +5.8% year on year which was lower than the reported
order intake growth of +8.7%. This was due to two factors. Firstly, Easter
fell later in the year meaning some orders placed in this high demand period
could not be manufactured and delivered in the financial year and secondly
there was a shift in customer orders to ranges with longer lead times. As a
result, the Group ended the year with a resilient order bank.
Gross sales(2) and revenue growth by brand:
FY25 FY24 YoY (52
(52 wks) (53 wks) weeks vs
£m £m 53 weeks)
dfs 1,091.3 1,047.0 4.2%
Sofology 297.0 264.8 12.2%
Gross sales 1,388.3 1,311.8 5.8%
Revenue 1,030.3 987.1 4.4%
Reported revenue growth is stated after deducting VAT, the cost of providing
warranty products and interest free credit subsidy costs from Gross sales.
Revenue growth at 4.4% was lower than Gross sales growth and was driven by
the decision in dfs to offer customers extended (48 month) interest free
credit in key promotional periods to increase affordability and drive
conversion and sales in the weak market environment.
Gross margin
Gross margin % of revenue improved by 70 basis points year on year to 56.5%,
representing a third consecutive year of growth and good progress towards our
58% target whilst maintaining our value proposition for customers. Gross
profit increased £30.9m year on year as a result of the revenue growth and
the margin rate improvement.
Gross profit and margin FY24 to FY25:
£m % of
revenue
FY24 gross profit and margin 550.8 55.8%
Volume 23.0 n/a
Product margin 14.6 1.4%
FX 5.2 0.5%
Freight (11.9) (1.2%)
FY25 gross profit and margin 581.7 56.5%
The increase in sales volume drove an incremental £23.0m of gross margin year
on year.
The gross margin rate improvement resulted from strong progress on our
commercial product margins in combination with favourable FX. Together these
more than offset the adverse impact from freight rates linked to the closure
of the Red Sea to shipping lines in FY24.
Our product margins improved 140 basis points or £14.6m through further range
optimisation, product design optimisation and savings from our Cost to Operate
programme which contributed £10.5m to the growth. The Cost to Operate savings
include the benefit from right sizing our own manufacturing operations in FY24
and consolidating supply across our external manufacturing partners, enabling
us to ensure we are sourcing products from the right partners to optimise
quality and reduce cost of goods. In addition, we improved processes to clear
through cancelled orders and damaged items more efficiently.
We benefited from an FX tailwind in FY25 linked to an improved USD rate
applied to our Far East purchases. The average USD/GBP rate paid through the
period was 5 cents favourable year on year resulting in a £5.2m/50 basis
point rate benefit year on year.
Freight rates remained elevated over most of the year and averaged over twice
the amount of the prior year, resulting in a 120 basis point margin rate
reduction. It is worth noting that every $1,000 movement in freight rate per
container impacts our annual freight cost charge by c.£7m-£8m a year.
We are encouraged that our current gross margin would be at our 58% target if
freight rates were at long-term average levels and interest rates were at
market consensus expectations of c.3.5%.
Operating costs
Underlying operating costs include selling and distribution, administration,
depreciation, amortisation and impairment costs. These totalled £514.7m,
an increase of £14.1m year on year, representing a percentage cost of
revenue of 50.0% (FY24: 50.7%). The improved ratio is testament to the success
of our Cost to Operate programme which has mitigated inflationary headwinds.
Underlying operating cost breakdown FY25 vs FY24:
£m FY25 FY24 Total
Selling, distribution and admin costs (424.5) (408.8) (15.7)
Depreciation, amortisation and impairment (90.2) (91.8) 1.6
Underlying operating costs (514.7) (500.6) (14.1)
The absolute operating cost increase is primarily driven by volume related
costs which have increased with the growing revenues of the Group, wage and
NIC inflation, achievement of financial bonus targets, and discrete investment
behind commercial initiatives like new exclusive brands, to continue to
position the business for ongoing growth through the cycle.
These cost increases have been partially offset by £15.0m of savings through
our Cost to Operate programme and lower depreciation, amortisation and
impairment charges.
In FY24, the business took a more disciplined approach to capital spend
prioritisation in response to the more challenging market conditions. The
Group continued this approach in FY25, as we prioritised reducing our debt.
This lower recent level of capital investment is the main driver of the
reduction in depreciation, amortisation and impairment charges of £1.6m.
Cost to Operate programme
We have had another good year of sustainably reducing our cost base through
our Cost to Operate programme. This delivered £25.5m of savings in FY25
bringing cumulative savings to £53.0m, marking the achievement of our £50m
target one year ahead of expectation.
Cumulative savings from Cost to Operate programme:
£m FY25 FY24 Total
COGS 10.5 4.9 15.4
Operating and property costs 15.0 22.6 37.6
Total saving 25.5 27.5 53.0
In FY25 we achieved in year cost of goods savings of £10.5m and £15.0m of
operating and property cost savings.
The operating and property cost savings result from improving the efficiency
of our operations in our retail and customer service teams, The Sofa Delivery
Company logistics operation and Group support functions through restructuring
to leaner operating models, improving and streamlining processes, improved
procurement and utilising data and insightful dashboards to drive operational
efficiency.
A lasting outcome of the programme is that there is a much stronger cost
culture embedded within the business that we will continue to benefit from
going forward and we have line of sight to additional cost savings that we
expect will partially offset future inflationary headwinds.
Finance costs
Underlying finance costs of £38.2m (FY24: £41.1m) are lower year on year
primarily as a result of utilising a high level of free cash flow generation
to reduce our net bank debt. Our average funding cost of c.8% has remained
relatively flat year on year.
Underlying finance costs:
£m FY25 FY24 YoY
Lease interest (24.2) (24.6) 0.4
Debt and other interest (14.0) (16.5) 2.5
Underlying finance costs (38.2) (41.1) 2.9
Profits, tax and earnings per share
Underlying profit before tax and brand amortisation(2) was £30.2m, an
increase of £19.7m resulting from the sales growth, gross margin expansion
and good cost control. This reflects a strong profit drop through of 46% of
the year on year revenue increase and highlights the operational leverage in
the business.
Reported profit before tax increased from a loss of £1.7m in FY24 to a profit
of £32.9m in FY25. The year on year growth is higher than the underlying
profit increase due to the recognition of a non underlying credit in FY25 and
a non underlying charge in FY24, as detailed below.
Underlying profit before tax and brand amortisation to reported profit before
tax reconciliation:
FY25 FY24 YoY
Underlying profit before tax and brand amortisation 30.2 10.5 19.7
Brand amortisation (1.4) (1.4) -
Non-underlying charges 4.1 (10.8) 14.9
Reported profit before tax 32.9 (1.7) 34.6
Non-underlying items
In FY25 a £4.1m non-underlying credit was recognised and in FY24 a
non-underlying £10.8m charge was realised.
Non-underlying items breakdown:
FY25 FY24
Credit/(Cost) Income Cash Income Cash
statement statement
Fair value lease adjustment 4.7 n/a n/a n/a
Restructuring costs (0.7) (0.7) (6.5) (4.1)
Land slippage costs (0.5) - (3.1) (0.2)
Release of lease guarantee 0.6 n/a 0.7 n/a
Refinancing costs n/a n/a (1.9) (0.8)
4.1 (0.7) (10.8) (5.1)
The FY25 credit has arisen from the release of acquisition-related fair value
lease adjustments (£4.7m) relating to properties where the rent has since
been renegotiated and now represents a market rate, and a £0.6m credit in
relation to a non-cash lease guarantee provision release associated with
former subsidiary companies (FY24: £0.7m credit). The fair value lease
adjustment relates to negotiations that took place in previous periods, and
should have been recorded at the time of the negotiation, but as it is not
material to those individual previously reported periods it has been corrected
in the current period. These credits were partially offset by £0.7m of
restructuring costs associated with the Cost to Operate programme (FY24:
£6.5m) and a £0.5m increase in the anticipated cost to remediate land
slippage identified in FY24 at one of our manufacturing sites (FY24: £3.1m).
Tax
The tax charge recognised in the financial statements is £8.7m (FY24 £3.0m)
and the effective tax rate of 26.4% is 1.4% higher than the statutory rate
of 25.0% due to disallowable depreciation on non‑qualifying assets.
The Group updates its Tax Strategy Statement each year, which is published on
the Group's website, in compliance with its duty under the Finance Act 2016,
which sets out details of the Group's attitude to tax planning and tax risk.
EPS
Underlying basic earnings per share was 9.2 pence (FY24: 1.5 pence) and basic
earnings per share was 10.5 pence (FY24: loss of 1.9 pence). There was no
material change in the weighted average number of shares in issue.
Cash flow, net debt, return on capital and debt facilities
Free cash flow generated in FY25 was £57.8m, an increase of £82.3m year on
year driven by stronger trading and working capital inflows, lower interest
and lower non underlying charges.
Summary cash flow and net bank debt FY25 vs FY24:
£m FY25 FY24 YoY
Underlying EBITDA(1) 157.2 142.0 15.2
Capital expenditure (20.9) (21.6) 0.7
Interest (14.0) (18.4) 4.4
Tax (3.7) (3.0) (0.7)
Principal and interest paid on lease liabilities (88.7) (92.4) 3.7
Working capital 24.9 (17.8) 42.7
Other(2) 3.7 1.2 2.5
Underlying free cash flow 58.5 (10.0) 68.5
Non-underlying items (0.7) (5.1) 4.4
Free cash flow 57.8 (15.1) 72.9
Shareholder returns - (9.4) 9.4
Free cash flow after shareholder returns 57.8 (24.5) 82.3
Closing net bank debt (107.0) (164.8) 57.8
1. Underlying operating profit before depreciation, amortisation and
impairment.
2. Other of £3.7m for FY25 and £1.2m for FY24 includes losses/gains
on disposal of assets, FX revaluations, share based payments expense and
adjustment for non-underlying P&L charge/credit.
Our strong free cash flow generation has been supported by our disciplined
approach to capital investment with cash capital expenditure levels well below
historical levels. Maintenance capital has been maintained at our historical
level of c.1.5%-2.0% of sales and growth investment has been focused on lower
risk, short payback projects. In FY25 expenditure focused on showroom
enhancements to showcase new exclusive ranges such as Ted Baker and La-Z-Boy
in dfs and creation of additional selling space through installation of
mezzanines in some showrooms. We continue to invest in technology and data to
ensure our front and mid office systems are supporting both a great customer
experience and efficient operations as noted in the CEO statement.
We expect to incur relatively low levels of capital expenditure, up slightly
year on year to £24m-£28m reflecting at least one new Sofology showroom and
additional showroom refurbishments.
Interest costs reduced £4.4m to £14.0m reflecting lower average levels of
net bank debt in the period and non-recurrence of refinancing costs in FY24.
Corporation tax payments of £3.7m were low relative to our profit performance
due to utilisation of historical overpayments.
Lease liability payments reduced by £3.7m. The prior year was impacted by
additional payments falling into the longer 53 week accounting period.
The majority of our sales are made to order and as such we operate with a
negative working capital model with customer deposits and final payments
occurring before payments fall due to our suppliers. The improved trading
performance in the final quarter along with one fewer VAT payments (reversing
the adverse impact in the 53 week FY24 period) has resulted in a total working
capital inflow of £24.9m.
Finally, total cash flow for the year is supported by not making a dividend
payment, having not declared a final dividend in respect of FY24 or
an interim dividend in respect of FY25.
Return on capital employed
Our return on capital employed (ROCE) of 16.3% has increased from 10.8% in
FY24. This increase was driven by a combination of higher profit performance
and reduced capital employed resulting from a lower tangible asset and right
of use asset base. We expect returns to continue growing over the medium
term supported firstly by improved profitability from growing our market
share, improving our gross profit margin and maintaining a disciplined focus
on costs and secondly our negative working capital model.
Debt facilities and banking covenants
At the end of the year the Group had in place £250m of debt facilities
comprising a £200m unsecured revolving credit facility ('RCF') and £50m of
US private placement notes. A 16 month extension to the RCF was agreed in
December 2024 with a maturity date of January 2029. The Group's existing debt
facilities have a staggered maturing profile as follows: £250m is available
until September 2027 reducing to £225m until September 2028, £200m until
January 2029 and £25m until September 2030. We expect these facilities to
provide sufficient liquidity and a solid foundation for the future.
The debt facilities are subject to half yearly covenant tests of 3.0x maximum
leverage(3) (net debt/EBITDA) and 1.5x minimum fixed charge cover(3) (both
measured on an IAS 17 basis).
In September 2024 we agreed temporarily widened covenants(4) with our lenders
to provide additional headroom in the event of an unanticipated market
downside scenario. These have not been utilised and we have remained
comfortably within the covenants applicable to the standard terms throughout
the financial year. Our bank leverage has reduced from 2.5x last year to
1.4x and our fixed charge cover also improved significantly, both falling
well within the ongoing standard covenant limits.
Capital allocation and dividends
The Group's capital allocation priorities are for the Group to operate with
net debt levels (excluding capitalised lease obligations) of between 0.5x-1.0x
of trailing 12 month EBITDA, to invest to maintain the Group's asset base and
support future growth, to pay ordinary dividends with a dividend cover of
2.25x-2.75x earnings per share and to make special returns when leverage is
expected to fall below the lower end of the leverage target range.
While our financial position has strengthened due to improved profit
performance and disciplined cash management, our current leverage remains
outside our target range of 0.5x-1.0x. Given the continuing economic
uncertainty, the Board has determined that to build further balance sheet
resilience the focus should be on further reducing net debt and has therefore
concluded that it would not be appropriate to propose a final dividend. We
will continue to maintain strong capital discipline to bring our leverage into
our target range.
The Board remains committed to returning to the dividend register and
providing sustainable shareholder returns. A decision will be made in March
2026 on the payment of a FY26 interim dividend based on profit and
leverage outturn expectations for the full year and the future outlook for
the business.
Capital allocation Framework FY25 commentary
Leverage (excluding property leases) 0.5x - 1.0x Expect to continue operating outside the Group's target leverage range in the
near-term
Making progress towards reducing the ratio and deleveraging remains a high
priority
Organic investment Strategic organic capital investment to deliver attractive returns Our maintenance capital requirements currently represent c.1.5%-2.0% of
revenue
In the near-term expect to continue to incur prudent levels of capital
expenditure, up from the very low levels of the last 24 months to £24m-£28m
to pursue growth opportunities where the risk adjusted returns are attractive
Dividend Dividend payout ratio of 2.25x - 2.75x No FY25 dividend
A decision will be made on the payment of a FY26 interim dividend based on
expected profit and leverage outturn for the full year and future outlook
Supplementary shareholder returns When the Group is operating below its target leverage, it will consider No supplementary returns expected given the Group will be operating above its
special dividends / buybacks target leverage ratio in the short term
Looking forward
The Group's performance and position have improved significantly in FY25
reflecting the strength of our strategic execution.
Given demand drivers for our sector are delicately balanced, as referenced in
the CEO statement, we continue to plan prudently with a focus on generating
increased profits through the strength of our commercial initiatives and
ongoing cost discipline and building balance sheet resilience through strong
cash management.
Looking further ahead we remain confident about the Group's prospects and
achieving our medium-term targets.
MARIE WALL
Interim Chief Financial Officer
25 September 2025
(1) Proprietary banking data covering 13 specialist upholstery retailers.
(2) Definitions and reconciliations of KPIs including Alternative Performance
Measures ("APMs") are provided at the end of this statement in note 12 to the
condensed consolidated financial statements.
(3) Bank leverage calculated as net debt divided by last 12 months EBITDA.
Net debt is net bank debt plus a proportion of finance leased assets. Fixed
charge cover is calculated as last 12 months EBITDARent divided by rent +
interest.
(4) The widened leverage covenant is 3.7x at FY25 period end before returning
to 3.0x at H1 FY26 and the widened fixed charge cover covenant is 1.3x at FY25
period end and 1.4x at H1 FY26, before returning to 1.5x at FY26 period end.
Consolidated income statement
52 weeks to 29 June 2025 53 weeks to 30 June 2024
Underlying Non- underlying Total Underlying Non- underlying Total
Note £m £m £m £m £m £m
Gross sales(1) 2 1,388.3 - 1,388.3 1,311.8 - 1,311.8
Revenue 2 1,030.3 - 1,030.3 987.1 - 987.1
Cost of sales (448.6) - (448.6) (436.3) - (436.3)
Gross profit 581.7 - 581.7 550.8 - 550.8
Selling and distribution costs (353.2) - (353.2) (342.9) - (342.9)
Administrative expenses (71.3) (0.6) (71.9) (65.9) (8.9) (74.8)
Operating profit before depreciation and amortisation 3 157.2 (0.6) 156.6 142.0 (8.9) 133.1
Depreciation (75.9) 4.7 (71.2) (77.8) - (77.8)
Amortisation (13.0) - (13.0) (13.7) - (13.7)
Impairment (1.3) - (1.3) (0.3) - (0.3)
Operating profit/(loss) 2, 3 67.0 4.1 71.1 50.2 (8.9) 41.3
Finance income 4 0.4 - 0.4 0.4 - 0.4
Finance expenses 4 (38.6) - (38.6) (41.5) (1.9) (43.4)
Profit/(loss) before tax 28.8 4.1 32.9 9.1 (10.8) (1.7)
Taxation (7.7) (1.0) (8.7) (5.7) 2.7 (3.0)
Profit/(loss) for the period from continuing operations 21.1 3.1 24.2 3.4 (8.1) (4.7)
Profit/(loss) for the period from discontinued operations - - - - 0.3 0.3
Profit/(loss) for the period 21.1 3.1 24.2 3.4 (7.8) (4.4)
Earnings per share
Basic 5
- from continuing operations 9.2p 1.3p 10.5p 1.5p (3.5)p (2.0)p
- from discontinued operations - - - - 0.1p 0.1p
Total 9.2p 1.3p 10.5p 1.5p (3.4)p (1.9)p
Diluted 5
- from continuing operations 9.0p 1.3p 10.3p 1.5p (3.5)p (2.0)p
- from discontinued operations - - - - 0.1p 0.1p
Total 9.0p 1.3p 10.3p 1.5p (3.4)p (1.9)p
(1) Refer to note 12 to the condensed consolidated financial statements for
definitions and reconciliations of alternative performance measures
Consolidated statement of comprehensive income
52 weeks to 53 weeks to 30 June 2024
29 June 2025
£m £m
Profit for the period 24.2 (4.4)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss:
Effective portion of changes in fair value of cash flow hedges (10.7) 5.1
Net change in fair value of cash flow hedges reclassified to profit or loss
- recognised in cost of sales 4.6 (1.3)
Income tax on items that are/may be reclassified subsequently to profit or 1.8 (1.3)
loss
Other comprehensive expense for the period, net of income tax (4.3) 2.5
Total comprehensive income for the period 19.9 (1.9)
Total comprehensive income for the period attributable to owners of the parent
- from continuing operations 19.9 (2.2)
- from discontinued operations - 0.3
19.9 (1.9)
Consolidated balance sheet
Note 29 June 2025 30 June 2024
£m £m
Non-current assets
Property, plant and equipment 75.2 83.8
Right of use assets 276.9 315.0
Intangible assets 531.2 532.9
Deferred tax assets 11.6 10.8
894.9 942.5
Current assets
Inventories 56.6 59.0
Other financial assets - 0.1
Trade and other receivables 15.8 12.0
Current tax assets 2.4 6.1
Cash and cash equivalents 13.9 26.8
88.7 104.0
Total assets 983.6 1,046.5
Current liabilities
Bank overdraft (13.9) (2.6)
Trade payables and other liabilities (231.8) (209.3)
Lease liabilities (64.2) (75.1)
Provisions 9 (13.0) (9.7)
Other financial liabilities (8.1) (1.2)
(331.0) (297.9)
Non-current liabilities
Interest bearing loans and borrowings 10 (105.3) (187.4)
Lease liabilities (288.7) (326.6)
Provisions 9 (6.1) (5.6)
Other financial liabilities (0.3) -
(400.4) (519.6)
Total liabilities (731.4) (817.5)
Net assets 252.2 229.0
Equity attributable to equity holders of the parent
Share capital 23.6 23.6
Share premium 40.4 40.4
Merger reserve 18.6 18.6
Capital redemption reserve 360.1 360.1
Treasury shares (2.9) (2.9)
Employee Benefit Trust shares (5.2) (5.9)
Cash flow hedging reserve (7.2) (1.1)
Retained earnings (175.2) (203.8)
Total equity 252.2 229.0
Consolidated statement of changes in equity
Share Share Merger reserve Capital redemption reserve Cash flow hedging reserve Retained Total
capital premium Treasury shares Employee Benefit Trust shares earnings equity
£m £m £m £m £m £m £m £m £m
Balance at 25 June 2023 24.1 40.4 18.6 359.6 (10.1) (6.6) (4.9) (184.0) 237.1
Profit for the period - - - - - - - (4.4) (4.4)
Other comprehensive income/(expense) - - - - - - 3.8 (1.3) 2.5
Total comprehensive income for the period - - - - - - 3.8 (5.7) (1.9)
Dividends - - - - - - - (9.4) (9.4)
Employee Benefit Trust shares issued - - - - - 0.7 - (0.7) -
Share based payments - - - - - - - 3.2 3.2
Cancellation of treasury shares (0.5) - - 0.5 7.2 - - (7.2) -
Balance at 30 June 2024 23.6 40.4 18.6 360.1 (2.9) (5.9) (1.1) (203.8) 229.0
Profit for the period - - - - - - - 24.2 24.2
Other comprehensive income/(expense) - - - - - - (6.1) 1.8 (4.3)
Total comprehensive income for the period - - - - - - (6.1) 26.0 19.9
Employee Benefit Trust shares issued - - - - - 0.7 - (0.7) -
Share based payments - - - - - - - 2.8 2.8
Tax recognised directly in equity - - - - - - - 0.5 0.5
Balance at 29 June 2025 23.6 40.4 18.6 360.1 (2.9) (5.2) (7.2) (175.2) 252.2
Consolidated cash flow statement
52 weeks to 53 weeks to
29 June 2025
30 June 2024
£m £m
Profit for the period 24.2 (4.4)
Adjustments for:
Income tax expense 8.7 3.0
Finance income (0.4) (0.4)
Finance expenses 38.6 41.5
Exceptional financing costs - 1.9
Depreciation of property, plant and equipment 17.2 22.0
Depreciation of right of use assets 54.0 55.8
Amortisation of intangible assets 13.0 13.7
Impairment of assets 1.3 0.3
Loss on sale of property, plant and equipment 0.3 2.0
Gain on disposal of right of use assets (0.8) (0.6)
Share based payment expense 2.8 3.2
Foreign exchange impact on cash flow hedges 1.1 (1.3)
Increase in trade and other receivables (3.8) (0.9)
Decrease/(increase) in inventories 2.4 (3.2)
Increase/(decrease)in trade and other payables 22.5 (15.9)
Increase in provisions 3.8 2.2
Net cash from operating activities before tax 184.9 118.9
Tax paid (3.7) (3.0)
Net cash from operating activities 181.2 115.9
Investing activities
Proceeds from sale of property, plant and equipment 0.2 1.4
Interest received 0.4 0.4
Acquisition of property, plant and equipment (9.0) (11.6)
Acquisition of PPE - right of use assets (0.6) -
Acquisition of other intangible assets (11.3) (10.0)
Net cash used in investing activities (20.3) (19.8)
Financing activities
Interest paid (14.4) (18.8)
Interest paid on lease liabilities (24.2) (24.8)
Payment of lease liabilities (64.5) (67.6)
Net (repayment)/drawdown of borrowings (82.0) (28.0)
Drawdown of private placement debt - 50.0
Purchase of treasury shares - -
Ordinary dividends paid - (9.4)
Net cash used in financing activities (185.1) (98.6)
Net decrease in cash and cash equivalents (24.2) (2.5)
Cash and cash equivalents at beginning of period 24.2 26.7
Cash and cash equivalents (including bank overdrafts) at end of period - 24.2
Notes to the condensed consolidated financial statements
1 Basis of preparation
The condensed consolidated financial statements have been prepared and
approved by the Directors in accordance with UK adopted international
accounting standards and applicable law. The financial information is derived
from the Group's consolidated financial statements for the period ended 29
June 2025. The financial statements are prepared on the historical cost basis
except for certain financial instruments and share based payment charges which
are measured at their fair value. The financial statements are for the 52
weeks to 29 June 2025 (last year 53 weeks to 30 June 2024) and were approved
by the Directors on 25 September 2025.
The financial information set out above does not constitute the Company's
statutory accounts for the periods ended 29 June 2025 or 30 June 2024 but is
derived from those accounts. Statutory accounts for the period ended 30 June
2024 have been delivered to the registrar of companies, and those for the
period ended 29 June 2025 will be delivered in due course. The auditor has
reported on those accounts; their reports were (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
Going concern
The financial statements are prepared on a going concern basis, which the
Directors believe to be appropriate for the following reasons.
In December 2024 the Group's revolving credit facility (RCF) was extended by
16 months to January 2029. The Group's existing debt facilities are available
as follows: £250m to September 2027, £225m to September 2028, £200m to
January 2029 and £25m to September 2030.
At 18 September 2025, the last practicable date prior to approval of the
annual report, £125.0m of the revolving credit facility remained undrawn, in
addition to cash in hand, at bank of £6.4m.
Covenants applicable to both the revolving credit facility and the private
placement debt are: 3.0x net debt/EBITDA and 1.5x fixed charge cover, and are
assessed on a six-monthly basis at June and December. Temporarily widened
covenants were agreed with the consortium of lending banks to 3.7x net
debt/EBITDA and 1.3x fixed charge cover for the FY25 year end assessment, with
leverage returning to 3.0x and fixed charge increasing to 1.4x for the H1 FY26
assessment.
The Directors have prepared cash flow forecasts and performed a going concern
assessment for the Group covering a period of at least twelve months from the
date of approval of these financial statements (the 'going concern assessment
period'), which indicate that the Group will be in compliance with the agreed
covenants. These forecasts include a number of assumptions in relation to:
market size (assumed to grow by 2% in FY26, from an already low base) and the
resulting order intake volumes for the Group; inflationary impacts on gross
margin and other costs; sector-wide manufacturing and supply chain capacities;
and achievement of cost savings in line with the Group's strategic plans.
The Directors have also prepared severe but plausible downside sensitivity
scenarios which cover the same going concern assessment period as the base
case. These scenarios include significantly reduced customer spending, impacts
on gross margin and other costs from inflationary cost pressures, and a
combination of these scenarios. The Directors have also performed reverse
stress testing analysis to confirm that circumstances resulting in a covenant
breach were beyond those considered plausible.
As part of this analysis, the Directors have considered mitigating actions
within the Group's control which could reduce the impact of these severe but
plausible downside scenarios. These mitigating actions include reducing
discretionary operating expenditure, a pause on expansionary capital
investment, and other measures to protect cash balances. These forecast cash
flows, considering the ability and intention of the Directors to implement
mitigating actions should they need to, indicate that there remains sufficient
headroom in the forecast period for the Group to operate within the committed
facilities and to comply with all relevant banking covenants during the going
concern assessment period.
1 Basis of preparation (continued)
The Directors have considered all of the factors noted above, including the
inherent uncertainty in forecasting the impact of the current economic and
political environment, and are confident that the Group has adequate resources
to continue to meet all liabilities as and when they fall due for at least
twelve months from the date of approval of these financial statements.
Accordingly, the financial statements are prepared on a going concern basis.
2 Segmental Analysis
The Group's operating segments under IFRS 8 have been determined based on
management accounts reports reviewed by the Group Leadership Team. Segment
performance is assessed based upon brand contribution. Brand contribution is
defined as underlying EBITDA (being earnings before interest, tax,
depreciation, amortisation, impairments and non-underlying items) excluding
property costs and central administration costs.
The Group reviews and manages the performance of its operations on a retail
brand basis, and the identified reportable segments and the nature of their
business activities are as follows:
DFS: the retailing of upholstered furniture and related products
through DFS branded stores and website.
Sofology: the retailing of upholstered furniture and related
products through Sofology branded stores and website.
Other segments comprises the manufacture of upholstered furniture and the
supply of contract logistics.
2 Segmental Analysis (continued)
Segment revenue and profit - continuing operations
External gross sales Inter-segment sales Total gross sales
52 weeks to 53 weeks to 52 weeks to 53 weeks to 52 weeks to 53 weeks to
29 June 2025
30 June 2024
29 June 2025
30 June 2024
29 June 2025
30 June 2024
£m £m £m £m £m £m
DFS 1,091.3 1,047.0 - - 1,091.3 1,047.0
Sofology 297.0 264.8 - - 297.0 264.8
Other segments - - 195.5 198.2 195.5 198.2
Eliminations - - (195.5) (198.2) (195.5) (198.2)
Gross sales 1,388.3 1,311.8 - - 1,388.3 1,311.8
52 weeks to 53 weeks to
29 June 2025
30 June 2024
£m £m
Total segments gross sales 1,388.3 1,311.8
Value added and other sales taxes (222.5) (207.3)
Interest free credit subsidy (108.8) (92.4)
Cost of aftercare products (26.7) (25.0)
Revenue 1,030.3 987.1
Of which:
Furniture sales 977.5 935.1
Sales of aftercare products 52.8 52.0
Revenue 1,030.3 987.1
52 weeks to 29 June 2025 - continuing operations
DFS Sofology Other Eliminations Total
£m £m £m £m £m
Revenue 804.6 225.7 195.5 (195.5) 1,030.3
Cost of sales (383.1) (98.1) (48.5) 81.1 (448.6)
Gross profit 421.5 127.6 147.0 (114.4) 581.7
Selling & distribution costs (excluding property costs) (234.8) (62.0) (109.8) 84.6 (322.0)
Brand contribution (segment profit) 186.7 65.6 37.2 (29.8) 259.7
Property costs (31.2)
Underlying administrative expenses (71.3)
Underlying EBITDA 157.2
2 Segmental Analysis (continued)
Segment revenue and profit - continuing operations (continued)
53 weeks to 30 June 2024 - continuing operations
DFS Sofology Other Eliminations Total
£m £m £m £m £m
Revenue 786.5 200.6 198.2 (198.2) 987.1
Cost of sales (376.0) (90.5) (56.1) 86.3 (436.3)
Gross profit 410.5 110.1 142.1 (111.9) 550.8
Selling & distribution costs (excluding property costs) (224.3) (58.8) (114.1) 81.3 (315.9)
Brand contribution (segment profit) 186.2 51.3 28.0 (30.6) 234.9
Property costs (27.0)
Underlying administrative expenses (65.9)
Underlying EBITDA 142.0
52 weeks to 53 weeks to
29 June 2025
30 June 2024
£m £m
Underlying EBITDA 157.2 142.0
Non-underlying items (0.6) (8.9)
Depreciation & amortisation (85.5) (91.8)
Operating profit 71.1 41.3
Finance expenses (38.2) (41.1)
Non-underlying financing costs - (1.9)
Profit before tax 32.9 (1.7)
A geographical analysis of revenue is presented below:
52 weeks to 53 weeks to
29 June 2025
30 June 2024
£m £m
United Kingdom 1,012.2 967.4
Europe 18.1 19.7
Total revenue 1,030.3 987.1
2 Segmental Analysis (continued)
Additions to non-current assets Depreciation, amortisation and impairment
52 weeks to 53 weeks to 52 weeks to 53 weeks to
29 June 2025
30 June 2024
29 June 2025
30 June 2024
£m £m £m £m
DFS 20.6 35.5 61.3 67.5
Sofology 4.2 12.2 18.3 18.0
Other segments 3.5 7.9 5.9 6.3
Total Group 28.3 55.6 85.5 91.8
Additions to non-current assets include both tangible and intangible
non-current assets.
3 Operating profit - continuing operations
Group operating profit is stated after charging/(crediting):
52 weeks to 53 weeks to
29 June 2025
30 June 2024
£m £m
Net foreign exchange (gains)/losses (1.6) 0.8
Depreciation on tangible assets (including depreciation on right of use 71.2 77.8
assets)
Amortisation of intangible assets 13.0 13.7
Impairments 1.3 0.3
Net loss on disposal of property, plant and equipment 0.3 -
Net gain on disposal of right of use assets (0.8) (0.6)
Cost of inventories recognised as an expense 456.4 435.9
Release of provisions (note 9) (0.5) (3.4)
Non-underlying items 52 weeks to 53 weeks to
29 June 2025
30 June 2024
£m £m
Restructuring costs 0.7 6.5
Land slippage costs 0.5 3.1
Release of lease guarantee provision (0.6) (0.7)
Fair value lease adjustment (4.7) -
(4.1) 8.9
Restructuring costs include redundancy costs associated with further
integrating Sofology into the Group.
Land slippage costs relate to costs of remediation works required to an area
of land slippage identified at one of our manufacturing sites.
The release of the lease guarantee provision relates to the property
provisions detailed in note 9.
The fair value lease adjustment arises from the release of acquisition-related
fair value lease adjustments relating to properties where the rent has since
been renegotiated and now represents a market rate. It relates to negotiations
that took place in previous periods, and should have been recorded at the time
of the negotiation, but as it is not material to individual previously
reported periods it has been corrected in the current period.
4 Finance income and expense - continuing operations
52 weeks to 53 weeks to
29 June 2025
30 June 2024
£m £m
Finance income
Interest income on bank deposits 0.3 0.4
Interest on corporation tax 0.1 -
Total finance income 0.4 0.4
Finance expense
Interest payable on senior revolving credit facility (8.7) (12.6)
Interest payable on senior secured notes (4.3) (3.5)
Bank fees (1.4) (0.4)
Unwind of discount on provisions - (0.2)
Interest on lease liabilities (24.2) (24.8)
Total underlying finance expense (38.6) (41.5)
Non-underlying items:
Refinancing costs - (1.9)
Total finance expense (38.6) (43.4)
5 Earnings per share
52 weeks to 53 weeks to
29 June 2025
30 June 2024
pence pence
Basic earnings/(loss) per share
- from continuing operations 10.5 (2.0)
- from discontinued operations - 0.1
Total basic earnings per share 10.5 (1.9)
Diluted earnings/(loss) per share
- from continuing operations 10.3 (2.0)
- from discontinued operations - 0.1
Total diluted earnings per share 10.3 (1.9)
52 weeks to 53 weeks to
29 June 2025
30 June 2024
£m £m
Profit/(loss) attributable to equity holders of the parent company
- from continuing operations 24.2 (4.7)
- from discontinued operations - 0.3
24.2 (4.4)
52 weeks to 53 weeks to
29 June 2025
30 June 2024
No. No.
Weighted average number of shares for basic earnings per share 230,954,285 230,566,306
Dilutive effect of employee share based payment awards 4,018,845 -
Weighted average number of shares for diluted earnings per share 234,973,130 230,566,306
Where a loss has been recorded, the potential ordinary shares would be
anti-dilutive, and therefore in this situation the weighted average number of
shares used does not include the dilutive effect of share based payment
awards.
5 Earnings per share (continued)
Underlying earnings per share
Underlying basic earnings per share and underlying diluted earnings per share
are calculated by dividing the profit for the period attributable to ordinary
equity holders of the parent company, as adjusted to exclude the effect of
non-underlying items, by the applicable weighted average numbers of ordinary
shares.
52 weeks to 53 weeks to
29 June 2025
30 June 2024
Continuing operations £m £m
Profit/(loss) for the year attributable to equity holders of the parent 24.2 (4.7)
company
Non-underlying (profit)/loss after tax (3.1) 8.1
Underlying profit for the period attributable to equity holders of the parent 21.1 3.4
company from continuing operations
52 weeks to 53 weeks to
29 June 2025
30 June 2024
Discontinued operations £m £m
Profit for the year attributable to equity holders of the parent company - 0.3
Non-underlying (profit)/loss after tax - (0.3)
Underlying loss for the period attributable to equity holders of the parent - -
company from discontinued operations
52 weeks to 53 weeks to
29 June 2025
30 June 2024
No. No.
Weighted average number of shares for basic earnings per share 230,954,285 230,566,306
Dilutive effect of employee share based payment awards 4,018,845 452,561
Weighted average number of shares for diluted earnings per share 234,973,130 231,018,867
52 weeks to 53 weeks to
29 June 2025
30 June 2024
pence pence
Underlying basic earnings per share
- from continuing operations 9.2 1.5
- from discontinued operations - -
Total underlying basic earnings per share 9.2 1.5
Underlying diluted earnings per share
- from continuing operations 9.0 1.5
- from discontinued operations - -
Total underlying diluted earnings per share 9.0 1.5
6 Dividends
Pence per ordinary share 52 weeks to 53 weeks to
29 June 2025
30 June 2024
£m
£m
Final dividend for FY23 3.0p - 6.9
Interim ordinary dividend for FY24 1.1p - 2.5
- 9.4
The Directors do not recommend the payment of a final dividend in respect of
the financial period ended 29 June 2025.
7 Financial instruments
All derivatives are categorised as Level 2 under the requirements of IFRS 13
as they are valued using techniques based significantly on observed market
data.
The Directors have reviewed for expected credit losses and consider the amount
of any such losses to be immaterial.
The Directors consider that the fair values of each category of the Group's
financial instruments are materially the same as their carrying values.
8 Capital expenditure
For the 52 weeks to 29 June 2025, additions of property, plant and equipment
(including those acquired under finance leases) totalled £17.0m (2024:
£42.3m).
At 29 June 2025 the Group had contracted capital commitments of £2.6m (2024:
£7.9m) for which no provision has been made in the financial statements.
9 Provisions
Guarantee provision Property provisions Other Total
provisions
£m £m £m £m
Balance at 30 June 2024 6.9 7.5 0.9 15.3
Provisions made during the period 7.7 2.1 1.7 11.5
Provisions used during the period (6.3) (0.9) - (7.2)
Provisions released during the period - (0.2) (0.3) (0.5)
Balance at 29 June 2025 8.3 8.5 2.3 19.1
Current 7.0 4.0 2.0 13.0
Non-current 1.3 4.5 0.3 6.1
8.3 8.5 2.3 19.1
The Group offers a long-term guarantee on its upholstery products and in
accordance with accounting standards a provision is maintained for the
expected future cost of fulfilling these guarantees on products which have
been delivered before the reporting date. An expectation of future claims
under the warranty is made, based on past experience of the proportion of
items where a claim has been made, and the expected average cost per claim. In
calculating this provision the key areas of estimation are the number of
future claims, average cost per claim and the expected period over which
claims will arise (nearly all claims arise within two years of delivery). The
Group has considered the sensitivity of the calculation to these key areas of
estimation, and determined that a 10% change in either the average cost per
claim or the number of expected future calls would change the value of the
calculated provision by £0.6m. The Directors have therefore concluded that
reasonably possible variations in estimate would not result in a material
difference.
Property provisions relate to potential obligations under lease guarantees
offered to former subsidiary companies, the majority of which expire in FY26,
wear and tear costs for Group properties based on anticipated lease expiries
and renewals and experience of costs incurred in relation to similar
properties, which will predominantly be utilised more than five years from the
reporting date, and a provision for the best estimate of the costs of
rectification of an area of land slippage at one of the Group's manufacturing
facilities. Uncertainties exist in relation to the timing and value of the
rectification costs for the land slippage. In calculating the provision
management has assumed that the costs will be as per the best estimate
available from external sources.
Other provisions relate to payment of future refunds to customers, refunds to
customers for payment protection insurance policies and other regulatory costs
and insurance provisions..
10 Net debt
30 June 2024 Cash flow Other non-cash changes 29 June 2025
£m £m £m £m
Cash in hand, at bank 26.8 (12.9) - 13.9
Bank overdraft (2.6) (11.3) - (13.9)
Cash and cash equivalents 24.2 (24.2) - -
Senior revolving credit facility (137.4) 82.0 0.1 (55.3)
Senior secured loan notes (50.0) - - (50.0)
Finance lease liabilities (401.7) 88.7 (39.9) (352.9)
Total net debt (564.9) 146.5 (39.8) (458.2)
25 June 2023 Cash flow Other non-cash changes 30 June 2024
£m £m £m £m
Cash in hand, at bank 26.7 0.1 - 26.8
Bank overdraft - (2.6) - (2.6)
Cash and cash equivalents 26.7 (2.5) - 24.2
Senior revolving credit facility (165.8) 28.0 0.4 (137.4)
Senior secured loan notes - (50.0) - (50.0)
Finance lease liabilities (411.4) 92.4 (82.7) (401.7)
Total net debt (550.5) 67.9 (82.3) (564.9)
Non-cash changes include the addition of leases within the period, lease
remeasurements, disposals of leases, lease interest and the prepayment of debt
issue costs net of amortisation.
11 Annual General Meeting
The Annual General Meeting will be held on 14 November 2025 at 1 Rockingham
Way, Redhouse Interchange, Adwick-le-Street, Doncaster, DN6 7NA. The Annual
Report and Accounts and Notice of Meeting will be sent to shareholders and
copies will be available from the Company's registered office: 1 Rockingham
Way, Redhouse Interchange, Adwick-le-Street, Doncaster, DN6 7NA and on the
Company's website at www.dfscorporate.co.uk (http://www.dfscorporate.co.uk) .
12 Alternative Performance Measures
In reporting the Group's financial performance, the Directors make use of a
number of alternative performance measures ('APMs') in addition to those
defined or specified under UK-adopted International Financial Reporting
Standards ('IFRS'). APMs are not IFRS measures, nor are they intended to be a
substitute for IFRS measures.
The Directors consider that these APMs provide useful additional information
to support understanding of underlying trends and business performance. In
particular, APMs enhance the comparability of information between reporting
periods by adjusting for non-underlying items. APMs are therefore used by the
Group's Directors and management for internal performance analysis, planning
and incentive setting purposes in addition to external communication of the
Group's financial results.
In order to facilitate understanding of the APMs used by the Group, and their
relationship to reported IFRS measures, definitions and numerical
reconciliations are set out below.
Definitions of APMs may vary from business to business and accordingly the
Group's APMs may not be directly comparable to similar APMs reported by other
entities.
APM Definition Rationale
Gross sales Amounts payable by external customers for goods and services supplied by the Key measure of overall sales performance which unlike IFRS revenue is not
Group, including the cost of interest free credit and aftercare services (for affected by the extent to which customers take up the Group's interest free
which the Group acts as an agent), delivery charges and value added and other credit offering.
sales taxes. See note 2 for a reconciliation from gross sales to revenue.
Brand contribution Gross profit less selling and distribution costs, excluding property and Measure of brand-controllable profit as it excludes shared Group costs.
administration costs.
Adjusted EBITDA Earnings before interest, taxation, depreciation and amortisation adjusted to A commonly used profit measure.
exclude impairments.
Non-underlying items Items that are material in size, unusual or non-recurring in nature which the Clear and separate identification of such items facilitates understanding of
Directors believe are not indicative of the Group's underlying business underlying trading performance.
performance.
Underlying EBITDA Earnings before interest, taxation, depreciation and amortisation from Profit measure reflecting underlying trading performance.
continuing operations, adjusted to exclude impairments and non-underlying
items.
Underlying profit before tax and brand amortisation - uPBT(A) Profit before tax from continuing operations adjusted for non-underlying items Profit measure widely used by investors and analysts.
and amortisation associated with the acquired brands of Sofology and Dwell.
Underlying earnings per share Post-tax earnings per share from continuing operations as adjusted for Exclusion of non-underlying items facilitates year on year comparisons of the
non-underlying items. key investor measure of earnings per share.
Net bank debt Balance drawn down on interest-bearing loans, with unamortised issue costs Measure of the Group's cash indebtedness which supports assessment of
added back, less cash and cash equivalents (including bank overdrafts). available liquidity and cash flow generation in the reporting period.
Cash EBITDA Net cash from operating activities before tax less movements on working Measure of the non-underlying operating cash generation of the business,
capital and provisions balances and payments made under lease obligations, normalised to reflect timing differences in working capital movements.
adding back non-underlying items before tax.
Free cash flow The movement in cash and cash equivalents, excluding the impact of Measure of the cash return generated in the period and a key financial target
drawdowns/repayments of financing arrangements, dividends and the cost of for Executive Director remuneration.
purchasing own shares.
Leverage (gearing) The ratio of period end net bank debt to cash EBITDA for the previous twelve Key measure which indicates the relative level of borrowing to operating cash
months. generation, widely used by investors and analysts.
Underlying return on capital employed (underlying ROCE) Underlying post-tax operating profit from continuing activities, expressed as Represents the post-tax return the Group achieves on the investment it has
a percentage of the sum of: property, plant & equipment, computer made in its business.
software, right of use assets and working capital.
12 Alternative Performance Measures (continued)
Reconciliations to IFRS measures
Adjusted EBITDA FY25 FY24
Note £m £m
Operating profit from continuing operations 2 71.1 41.3
Depreciation 3 71.2 77.8
Amortisation 3 13.0 13.7
Impairments 3 1.3 0.3
Adjusted EBITDA from continuing operations 156.6 133.1
Underlying EBITDA FY25 FY24
Note £m £m
Adjusted EBITDA from continuing operations 156.6 133.1
Non-underlying operating items 3 0.6 8.9
Underlying EBITDA from continuing operations 157.2 142.0
Underlying profit before tax and brand amortisation - uPBT(A) FY25 FY24
Note £m £m
Profit before tax from continuing operations 2 32.9 (1.7)
Non-underlying items 3 (4.1) 10.8
Amortisation of brand names 1.4 1.4
Underlying profit before tax and brand amortisation 30.2 10.5
Net bank debt FY25 FY24
£m £m
Interest bearing loans and borrowings 105.3 187.4
Unamortised issue costs 1.7 1.6
Cash and cash equivalents (including bank overdraft) - (24.2)
Net bank debt 107.0 164.8
Closing net bank debt (107.0) (164.8)
Less: Opening net bank debt 164.8 140.3
Movement in net bank debt 57.8 (24.5)
Free cash flow FY25 FY24
Note £m £m
Net decrease in cash and cash equivalents (24.2) (2.5)
Net repayment of senior revolving credit facility 82.0 28.0
Drawdown of private placement debt - (50.0)
Dividends paid 6 - 9.4
Free cash flow 57.8 (15.1)
12 Alternative Performance Measures (continued)
Leverage FY25 FY24
£m £m
Net bank debt (A) 107.0 164.8
Net cash from operating activities before 184.9 118.9
tax
add back:
Pre-tax non-underlying items (4.1) 10.5
less:
Movement in trade and other receivables 3.8 0.9
Movement in inventories (2.4) 3.2
Movement in trade and other payables (22.5) 15.9
Movement in provisions (3.8) (2.2)
Payment of lease liabilities (64.5) (67.6)
Payment of interest on lease liabilities (24.2) (24.8)
Cash EBITDA (B) 67.2 54.8
Leverage (A/B) 1.6x 3.0x
IAS 17 bank covenant difference (0.2x) (0.5x)
Bank leverage 1.4x 2.5x
FY24 cash EBITDA is materially different from bank covenant IAS 17-based
EBITDA due to week 53 cash flows
Underlying return on capital employed from continuing operations FY25 FY24
£m £m
Operating profit from continuing operations 71.1 41.3
Non-underlying items (4.1) 8.9
Pre-tax return 67.0 50.2
Adjusted effective tax rate(1) 26.7% 25.0%
Tax adjusted return (A) 49.1 37.7
Property, plant and equipment 75.2 83.8
ROU assets 276.9 315.0
Computer software 19.3 19.6
371.4 418.4
Inventories 56.6 59.0
Trade receivables 10.5 6.7
Prepayments 4.7 4.0
Accrued income 0.2 0.1
Other receivables 0.4 1.2
Payments received on account (50.4) (40.9)
Trade payables (91.6) (100.4)
Working capital (69.6) (70.3)
Total capital employed (B) 301.8 348.1
Underlying ROCE (A/B) 16.3% 10.8%
1. Effective tax rate for FY24 has been adjusted to eliminate the
disproportionate impact of disallowable depreciation on non-qualifying assets
in the year.
This preliminary results statement, the full text of the Stock Exchange
announcement and the results presentation can be found on the Company's
website at www.dfscorporate.co.uk (http://www.dfscorporate.co.uk)
This report contains statements that constitute forward-looking statements
relating to the business, financial performance and results of the Company and
the industry in which the Company operates. These statements may be
identified by words such as "may", "will", "shall", "anticipate", "believe",
"intend", "project", "goal", "expectation", "belief", "estimate", "plan",
"target", or "forecast" and similar expressions for the negative thereof; or
by forward-looking nature of discussions of strategy, plans or intentions; or
by their context. No representation is made that any of these statements or
forecasts will come to pass or that any forecast results will be achieved.
All statements regarding the future are subject to inherent risks and
uncertainties and various factors that would cause actual future results,
performance or events to differ materially from those described or implied in
these statements. Such forward-looking statements are based on numerous
assumptions regarding the Company's present and future business strategies and
the environment in which the Company will operate in the future. Further,
certain forward-looking statements are based upon assumptions of future events
which may not prove to be accurate and neither the Company nor any other
person accepts any responsibility for the accuracy of the opinions expressed
in this interim report or the underlying assumptions. Past performance is
not an indication of future results and past performance should not be taken
as a representation that trends or activities underlying past performance will
continue in the future. The forward-looking statements in this interim
report speak only as at the date of this interim report and the Company
expressly disclaims any obligation or undertaking to release any updates or
revisions to these forward-looking statements to reflect any change in the
Company's expectations in regard thereto or any change in events, conditions
or circumstances on which any statement is based after the date of this
interim report or to update or to keep current any other information contained
in this interim report or to provide any additional information in relation to
such forward-looking statements. Undue reliance should not therefore be
placed on such forward-looking statements.
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